Sectors Of The Indian Economy PDF

NOTES FOR THE TEACHER CHAPTER 2: SECTORS OF THE INDIAN ECONOMY An economy is best understood when we industry and services should be related study its components or sectors. Sectoral to the experience of the children by taking classificat...

NOTES FOR THE TEACHER CHAPTER 2: SECTORS OF THE INDIAN ECONOMY An economy is best understood when we industry and services should be related study its components or sectors. Sectoral to the experience of the children by taking classification can be done on the basis of more examples that they may observe in several criteria. In this chapter, three their day-to-day life. Information derived types of classifications are discussed: from the media could be used for this primary/secondary/tertiary; organised/ purpose. You may encourage the students unorganised; and public/private. You can to bring important cuttings and stories create a discussion about these types by from newspapers, which could be taking examples familiar to the students prominently displayed in storyboards, and and relate them to their daily life. It is encourage the class to discuss these important to emphasise the changing issues. While discussing the unorganised roles of sectors. This can be highlighted sector, the key issue of protecting the further by drawing attention of the workers engaged in the sector should be students to the rapid growth of service highlighted. You may also encourage the sector. While elaborating the ideas students to visit persons and enterprises provided in the chapter, the students may in the unorganised sector and get a first need to be familiarised with a few hand experience from real life situation. fundamental concepts such as Gross Domestic Product, Employment etc. Since Sources for Information the students may find this difficult to The GDP data used in this chapter understand, it is necessary to explain to pertaining to Gross Domestic Product at them through examples. Several activities Factor Cost by Industry of Origin at and exercises are suggested in the chapter 2011–12 prices is taken from Real Time to help the students understand how a Handbook of Statistics on Indian Economy. person’s activity could be placed — It is a valuable source of GDP and other whether in the primary, secondary or information relating to the Indian economy. tertiary, organised or unorganised, and For evaluation purposes, particularly to public or private sector. You may develop the analytical ability of learners, encourage the students to talk to various teachers can refer to this report through working people around them (such as the Internet to get data for different years. shop owners, casual workers, vegetable Due to change in methodology, latest data vendors, workshop mechanics, domestic is not used in the chapter. workers etc.) to know more about how they The employment figures are based live and work. Based on such information, on data taken from the five-yearly surveys the students can be encouraged to on employment and unemployment develop their own classification of conducted by the National Sample Survey economic activities. Organisation (NSSO) now known as Another important issue to be National Statistical Office (NSO). NSO is highlighted is about the problems caused an organisation under the Ministry of by the changes in the roles of sectors. Statistics and Programme Implementation, The chapter has taken the example of Government of India. The website you can unemployment and what the government log onto is: http:/mospi.gov.in. Employment can do to solve it. The declining importance data is also available from other sources of agriculture and growing importance of such as Census of India. 18 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25  CHAPTER 2 SECTORS OF THE INDIAN ECONOMY SECTORS OF ECONOMIC ACTIVITIES Let us look at these pictures. You will find that people are engaged in various economic activities. Some of these are activities producing goods. Some others are producing services. These activities are happening around us every minute even as we speak. How do we understand these activities? One way of doing this is to group them (classify them) using some important criterion. These groups are also called sectors. 2024-25  spin yarn and weave cloth. Using at different We begin by looking sugarcane as a raw material, we make ities. kind of economic activ sugar or gur. We convert earth into bricks and use bricks to make houses There are many activities that are and buildings. Since this sector undertaken by directly using gradually became associated with the natural resources. Take, for different kinds of industries that came Primary example, the cultivation of cotton. It (Agriculture) up, it is also called as industrial sector. takes place within a crop season. For Sector the growth of the cotton plant, we After primary and secondary, there depend mainly, but not entirely, is a third category of activities that falls on natural factors like rainfall, under tertiary sector and is different sunshine and climate. The product from the above two. These are of this activity, cotton, is a natural activities that help in the development product. Similarly, in the case of an of the primary and secondary sectors. activity like dairy, we are dependent These activities, by themselves, do not on the biological process of produce a good but they are an aid the animals and availability or a support for the production Tertiary (Service) of fodder etc. The product process. For example, goods that are Sector here, milk, also is a natural produced in the primary or secondary product. Similarly, minerals sector would need to be transported and ores are also natural by trucks or trains and then sold in products. When we produce wholesale and retail shops. At times, a good by exploiting natural it may be necessary to store these in produces resources, it is an activity of godowns. We also may need to talk to natural others over telephone or send letters the primary sector. Why goods (communication) or borrow money primary? This is because it forms the base for all from banks (banking) to help other products that we production and trade. Transport, subsequently make. Since storage, communication, banking, most of the natural trade are some examples of tertiary helps to develop products we get are from activities. Since these activities Secondary other sectors generate services rather than goods, agriculture, dairy, fishing, (Industrial) the tertiary sector is also called the forestry, this sector is also Sector called agriculture and related service sector. sector. Service sector also includes some The secondary sector covers essential services that may not directly activities in which natural products help in the production of goods. For are changed into other forms through example, we require teachers, doctors, ways of manufacturing that we and those who provide personal associate with industrial activity. It is services such as washermen, barbers, the next step after primary. The cobblers, lawyers, and people to do product is not produced by nature administrative and accounting works. but has to be made and therefore In recent times, certain new services some process of manufacturing is based on information technology such produces essential. This could be in a factory, a as internet cafe, ATM booths, call manufactured centres, software companies etc have goods workshop or at home. For example, using cotton fibre from the plant, we become important. 20 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25  t categories, , th ou gh , ar e grouped into three differen Economic activities ples. terdepen de nt. Le t us look at some exam are highly in TABLE 2.1 EXAMPLES OF ECONOMIC ACTIVITIES EXAMPLE WHAT DOES THIS SHOW? Imagine what would happen if farmers This is an example of the secondary or refuse to sell sugarcane to a particular industrial sector being dependent on sugar mill. The mill will have to shut the primary. down. Imagine what would happen to cotton cultivation if companies decide not to buy from the Indian market and import all cotton they need from other countries. Indian cotton cultivation will become less profitable and the farmers may even go bankrupt, if they cannot quickly switch to other crops. Cotton prices will fall. Farmers buy many goods such as tractors, pumpsets, electricity, pesticides and fertilisers. Imagine what would happen if the price of fertilisers or pumpsets go up. Cost of cultivation of the farmers will rise and their profits will be reduced. People working in industrial and service sectors need food. Imagine what would happen if there is a strike by transporters and lorries refuse to take vegetables, milk, etc. from rural areas. Food will become scarce in urban areas whereas farmers will be unable to sell their products. LET’S WORK THESE OUT 1. Complete the above table to show how sectors are dependent on each other. 2. Explain the difference between primary, secondary and tertiary sectors using examples other than those mentioned in the text. 3. Classify the following list of occupations under primary, secondary and tertiary sectors: Tailor Workers in match factory Basket weaver Moneylender Flower cultivator Gardener Milk vendor Potter Fishermen Bee-keeper Priest Astronaut Courier Call centre employee 4. Students in a school are often classified into primary and secondary or junior and senior. What is the criterion that is used? Do you think this is a useful classification? Discuss. S ECTORS OF THE I NDIAN E CONOMY 21 2024-25  COMPARING THE THREE SECTORS The various production activities in the primary, secondary and tertiary sectors produce a very large number of goods and services. Also, the three sectors have a large number of people working in them to produce these goods and services. The next step, therefore, is to see how much goods and services are produced and how many people work in each sector. In an economy there could be one or more sectors which are dominant in terms of total production and employment, while other sectors are relatively small in size. How do we count the various goods and services and know the total production in each sector? With so many thousands of goods and services produced, you might think this is an impossible task! Not only would the task be enormous, you might also wonder how we can add up cars and computers and nails and furniture. It won’t make sense!!! You are right in thinking so. To get around this problem, economists suggest that the values of goods and services should be used rather than adding up the actual numbers. For example, if 10,000 kgs of wheat is sold at Rs 20 per kg, the value of wheat will be Rs 2,00,000. The value of 5000 coconuts at Rs 15 per coconut will be Rs 75,000. Similarly, the value of goods and services in the three sectors are calculated, and then added up. Remember, there is one precaution one has to take. Not every good (or service) that is produced and sold needs to be counted. It makes sense only to include the final goods and services. Take, for instance, a farmer who sells wheat to a flour mill for Rs 20 per kg. The mill grinds the wheat and sells the flour to a biscuit company for Rs 25 per kg. The biscuit company uses the flour and things such as sugar and oil to make four packets of biscuits. It sells biscuits in the market to the consumers for Rs 80 (Rs 20 per packet). Biscuits are the final goods, i.e., goods that reach the consumers. Why are only ‘final goods and services’ counted? In contrast to final goods, goods such as wheat and the wheat flour in this example are intermediate goods. Intermediate goods are used up in producing final goods and services. The value of final goods already includes the value of all the intermediate goods that are used in making the final...BUT I SHOULD BE PAID THE good. Hence, the value of Rs 80 for the biscuits (final good) FULL VALUE OF THE WHEAT already includes the value of flour (Rs 25). Similarly, the THAT I PRODUCE ! value of all other intermediate goods would have been included. To count the value of the flour and wheat 22 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25 separately is therefore not correct Over a long time (more than because then we would be counting hundred years), and especially the value of the same things a number because new methods of of times. First as wheat, then as flour manufacturing were introduced, and finally as biscuits. factories came up and started The value of final goods and expanding. Those people who had services produced in each sector earlier worked on farms now began during a particular year provides to work in factories in large numbers. the total production of the sector They were forced to do so as you read for that year. And the sum of in history chapters. People began to production in the three sectors gives use many more goods that were what is called the Gross Domestic produced in factories at cheap rates. Product (GDP) of a country. It is the Secondary sector gradually became value of all final goods and services the most important in total production produced within a country during a and employment. Hence, over time, a particular year. GDP shows how big shift had taken place. This means that the economy is. the importance of the sectors had changed. In India, the mammoth task of measuring GDP is undertaken by a In the past 100 years, there has central government ministry. This been a further shift from secondary to Ministry, with the help of various tertiary sector in developed countries. government departments of all the The service sector has become the most Indian states and union territories, important in terms of total production. collects information relating to total Most of the working people are also volume of goods and services and their employed in the service sector. This is prices and then estimates the GDP. the general pattern observed in developed countries. Historical Change in Sectors What is the total production and Generally, it has been noted from the employment in the three sectors in histories of many, now developed, India? Over the years have there been countries that at initial stages of changes similar to the pattern development, primary sector was the observed for the developed countries? most important sector of economic We shall see in the next section. activity. As the methods of farming changed and agriculture sector began LET’S WORK THESE OUT to prosper, it produced much more food than before. Many people could 1. What does the history of developed countries indicate now take up other activities. There about the shifts that have taken place between sectors? were increasing number of craft- 2. Correct and arrange the important aspects for calculating persons and traders. Buying and GDP from this Jumble. selling activities increased many times. To count goods and services we add the numbers that Besides, there were also transporters, are produced. We count all those that were produced in administrators, army etc. However, at the last five years. Since we shouldn’t leave out anything this stage, most of the goods produced we add up all these goods and services. were natural products from the 3. Discuss with your teacher how you could calculate the primary sector and most people were total value of a good or service by using the method of also employed in this sector. value added at each stage. S ECTORS OF THE I NDIAN E CONOMY 23 2024-25  PRIMARY, SECONDARY AND TERTIARY SECTORS IN INDIA Graph 1 shows the production of goods and Graph 1 : GDP by Primary, Secondary and services in the three sectors. Tertiary Sectors This is shown for two years, 1973-74 and 2013-14. We have used the data for these two years because the data are comparable and authentic. You can see how the total production has grown over the forty years. LET’S WORK THESE OUT Answer the following questions by looking at the graph: 1. Which was the largest producing sector in 1973-74? 2. Which is the largest producing sector in 2013-14? 3. Can you say which sector has grown the most over forty years? 4. What was the GDP of India in 2013-14? Why is the tertiary sector becoming so important in India? There could be rison between What does the compa several reasons. 4 show? 1973-74 and 2013-1 n we draw What conclusions ca First, in any country several ? from the comparison services such as hospitals, Let’s find ou t. educational institutions, post and telegraph services, police stations, courts, village administrative offices, Rising Importance of the municipal corporations, defence, Tertiary Sector in Production transport, banks, insurance companies, etc. are required. These Over the forty years between 1973-74 can be considered as basic services. and 2013-14, while production in all In a developing country the the three sectors has increased, it has government has to take responsibility increased the most in the tertiary sector. for the provision of these services. As a result, in the year 2013-14, the tertiary sector has emerged as the Second, the development of largest producing sector in India agriculture and industry leads to the replacing the primary sector. development of services such as 24 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25 transport, trade, storage and the like, as we have already seen. Greater the Graph 2 : Share of Sectors in GDP (%) development of the primary and secondary sectors, more would be the demand for such services. Third, as income levels rise, certain sections of people start demanding many more services like eating out, tourism, shopping, private hospitals, private schools, professional training etc. You can see this change quite sharply in cities, especially in big cities. Fourth, over the past decade or so, certain new services such as those based on information and communication technology have A remarkable fact about India is become important and essential. The that while there has been a change production of these services has been in the share of the three sectors in rising rapidly. In Chapter 4, we shall GDP, a similar shift has not taken see examples of these new services place in employment. Graph 3 and the reasons for their expansion. shows the share of employment in the three sectors in 1977-78 and However, you must remember that 2017-18. T h e p r i m a r y s e c t o r not all of the service sector is growing continues to be the largest equally well. Service sector in India employer even now. employs many different kinds of people. At one end there are a limited number of services that employ highly Graph 3 : Share of Sectors in Employment (%) skilled and educated workers. At the other end, there are a very large number of workers engaged in services such as small shopkeepers, repair persons, transport persons, etc. These people barely manage to earn a living and yet they perform these services because no alternative opportunities for work are available to them. Hence, only a part of this sector is growing in importance. You shall read more about this in the next section. Where are most of the people employed? Why didn’t a similar shift out of Graph 2 presents percentage share of primary sector happen in case of the three sectors in GDP. Now you can employment? It is because not directly see the changing importance enough jobs were created in the of the sectors over the forty years. secondary and tertiary sectors. Even S ECTORS OF THE I NDIAN E CONOMY 25 2024-25  though industrial output or the underemployment is hidden in production of goods went up by contrast to someone who does not more than nine times during the have a job and is clearly visible as period, employment in the industry unemployed. Hence, it is also went up by around three times. The called disguised unemployment. same applies to the tertiary sector as well. While production in the Now, supposing a landlord, service sector rose by 14 times, Sukhram, comes and hires one or employment in the service sector two members of the family to work rose around five times. on his land. Laxmi’s family is now able to earn some extra income As a result, more than half of the through wages. Since you do not workers in the country are working need five people to look after that in the primary sector, mainly in small plot, two people moving out agriculture, producing only about does not affect production on their one sixth of the GDP. In contrast to farm. In the above example, two this, the secondary and tertiary people may move to work in a sectors produce the rest of the factory. Once again the earnings of produce whereas they employ less the family would increase and they about half the people. Does this mean would also continue to produce as that the workers in agriculture much from their land. are not producing as much as they could? There are lakhs of farmers like Laxmi in India. This means that even What it means is that there if we remove a lot of people from are more people in agriculture than agricultural sector and provide them is necessary. So, even if you move with proper work elsewhere, a few people out, production will agricultural production will not not be affected. In other words, suffer. The incomes of the people who workers in the agricultural sector are underemployed. take up other work would increase the total family income. For instance, take the case of a small farmer, Laxmi, owning about This underemployment can also two hectares of unirrigated land happen in other sectors. For dependent only on rain and example there are thousands of growing crops, like jowar and arhar. casual workers in the service All five members of her family work sector in urban areas who search in the plot throughout the year. for daily employment. They are Why? They have nowhere else to go employed as painters, plumbers, for work. You will see that everyone repair persons and others doing is working, none remains idle, but odd jobs. Many of them don’t find in actual fact, their labour effort work everyday. Similarly, we see gets divided. Each one is doing other people of the service sector some work but no one is fully on the street pushing a cart or employed. This is the situation of selling something where they may underemployment, where people spend the whole day but earn are apparently working but all very little. They are doing this of them are made to work less work because they do not have than their potential. This kind of better opportunities. 26 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25  LET’S WORK THESE OUT 1. Complete the table using the data given in Graphs 2 and 3 and answer the question that follows. Ignore if data are not available for some years. TABLE 2.2 SHARE OF PRIMARY SECTOR IN GDP AND EMPLOYMENT 1973-74 1977-78 2013-14 2017-18 Share in GDP Share in employment What are the changes that you observe in the primary sector over a span of forty years? 2. Choose the correct answer: Underemployment occurs when people (i) do not want to work (ii) are working in a lazy manner (iii) are working less than what they are capable of doing (iv) are not paid for their work 3. Compare and contrast the changes in India with the pattern that was observed for developed countries. What kind of changes between sectors were desired but did not happen in India? 4. Why should we be worried about underemployment? How to Create More Employment? From the above discussion, we can see that there continues to be considerable underemployment in agriculture. There are also people who are not employed at all. In what ways can one increase employment for people? Let us look at some of them. Take the case of Laxmi with her two-hectare plot of unirrigated land. The government can spend some money or banks can provide a loan, to construct a well for her family to irrigate the land. Laxmi will then be able to irrigate her land and take a second crop, wheat, during the rabi season. Let us suppose that one hectare of wheat can provide employment to two people for 50 days (including sowing, watering, fertiliser S ECTORS OF THE I NDIAN E CONOMY 27 2024-25  application and harvesting). So, two interest. If the local bank gives her more members of the family can be credit at a reasonable rate of interest, employed in her own field. Now she will be able to buy all these in time suppose a new dam is constructed and cultivate her land. This means that and canals are dug to irrigate many along with water, we also need to such farms. This could lead to a lot of provide cheap agricultural credit to the employment generation within the farmers for farming to improve. We will agricultural sector itself reducing the look at some of these needs in Chapter problem of underemployment. 3, Money and Credit. Now, suppose Laxmi and other Another way by which we can farmers produce much more than tackle this problem is to identify, before. They would also need to sell some promote and locate industries and of this. For this they may be required to services in semi-rural areas where a transport their products to a nearby large number of people may be town. If the government invests some employed. For instance, suppose money in transportation and storage of many farmers decide to grow arhar crops, or makes better rural roads so and chickpea (pulse crops). Setting that mini-trucks reach everywhere up a dal mill to procure and process several farmers like Laxmi, who now these and sell in the cities is one such have access to water, can continue to example. Opening a cold storage could grow and sell these crops. This activity give an opportunity for farmers to can provide productive employment to store their products like potatoes and not just farmers but also others such as onions and sell them when the price those in services like transport or trade. is good. In villages near forest areas, we can start honey collection centres Laxmi’s need is not confined to where farmers can come and sell wild water alone. To cultivate the land, she honey. It is also possible to set up also needs seeds, fertilisers, industries that process vegetables and agricultural equipment and pumpsets agricultural produce like potato, to draw water. Being a poor farmer, sweet potato, rice, wheat, tomato, she cannot afford many of these. So, fruits, which can be sold in outside she will have to borrow money from Gur Making in markets. This will provide Haryana moneylenders and pay a high rate of employment in industries located in semi-rural areas and not necessarily in large urban centres. What groups of peop le do you think are unemplo yed or underemployed in your ar ea ? Ca n yo u th in k of some measures that could be taken up for them ? Do you know that in India about 60 per cent of the population belongs to the age group 5-29 years? Out of this, only about 51 per cent are attending educational institutions. The rest and particularly those aged less than 18 years may be at home or 2024-25 many of them may be working as child labourers. If these children are to attend schools, we will require more buildings, more teachers and other staff. A study conducted by the erstwhile Planning Commission (now known as NITI Aayog) estimates that nearly 20 lakh jobs can be created in the education sector alone. Similarly, if we are to improve the health situation, we need many more doctors, nurses, health workers etc. to work in rural areas. These are some ways by which jobs would be created and we would also be able to address the important aspects of development talked about in Chapter 1. Every state or region has potential for increasing the income and employment for people in that area. It could be tourism, or regional craft industry, or new services like IT. Some in about 625 districts of India. It is of these would require proper called Mahatma Gandhi National planning and support from the Rural Employment Guarantee Act government. For example, the same 2005 (MGNREGA 2005). Under study by the Planning Commission MGNREGA 2005, all those who are says that if tourism as a sector is able to, and are in need of, work in improved, every year we can give rural areas are guaranteed 100 days additional employment to more than 35 lakh people. of employment in a year by the government. If the government fails in We must realise that some of the its duty to provide employment, it will suggestions discussed above would give unemployment allowances to the take a long time to implement. For the people. The types of work that would short-term, we need some quick measures. Recognising this, the in future help to increase the central government in India made a production from land will be given law implementing the Right to Work preference under the Act. LET’S WORK THESE OUT 1. Why do you think MGNREGA 2005 is referred to as ‘ Right to work’ ? 2. Imagine that you are the village head. In that capacity suggest some activities that you think should be taken up under this Act that would also increase the income of people? Discuss. 3. How would income and employment increase if farmers were provided with irrigation and marketing facilities? 4. In what ways can employment be increased in urban areas? S ECTORS OF THE I NDIAN E CONOMY 29 2024-25  DIVISION OF SECTORS AS ORGANISED AND UNORGANISED Let us examine another way of classifying activities in the economy. This looks at the way people are employed. What are their conditions of work? Are there any rules and regulations that are followed as regards their employment? Ka n ta nds her office from Kanta works in an office. She atte s her salary regularly 9.30 a.m. to 5.30 p.m. She get ition to the salary, at the end of every month. In add as per the rules laid she also gets provident fund also gets medical and down by the government. She s not go to office on other allowances. Kanta doe y. When she joined Sundays. This is a paid holida tment letter stating work, she was given an appoin work. all the terms and conditions of Kamal Kamal is Kanta’s neighbour. He is a da ily wa ge lab our er in a nea rby grocery shop. He goes to the shop at 7:30 in the morning and works till 8:00 p.m. in the evening. He gets no other allowances apart from his wa ges. He is not paid for the days he doe s not work. He has therefore no leave or paid holidays. Nor was he given any formal let ter say ing tha t he ha s bee n employed in the shop. He can be asked to leave anytime by his emplo yer. differences in Do you see the s of w or k th e co n d it io n organised because it has some formal and Kamal? between Kanta processes and procedures. Some of these people may not be employed by Kanta works in the organised anyone but may work on their own sector. Organised sector covers those but they too have to register enterprises or places of work where themselves with the government and the terms of employment are regular follow the rules and regulations. and therefore, people have assured work. They are registered by the Workers in the organised sector government and have to follow its enjoy security of employment. They rules and regulations which are are expected to work only a fixed given in various laws such as the number of hours. If they work more, Factories Act, Minimum Wages Act, they have to be paid overtime by the Payment of Gratuity Act, Shops and employer. They also get several other Establishments Act etc. It is called benefits from the employers. What are 30 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25 these benefits? They get paid leave, low-paid and often not regular. There payment during holidays, provident is no provision for overtime, paid fund, gratuity etc. They are supposed leave, holidays, leave due to sickness to get medical benefits and, under the etc. Employment is not secure. People laws, the factory manager has to can be asked to leave without any ensure facilities like drinking water reason. When there is less work, such and a safe working environment. as during some seasons, some people When they retire, these workers get may be asked to leave. A lot also pensions as well. depends on the whims of the In contrast, Kamal works in the employer. This sector includes a large unorganised sector. The unorganised number of people who are employed sector is characterised by small and on their own doing small jobs such scattered units which are largely as selling on the street or doing repair outside the control of the government. work. Similarly, farmers work on their There are rules and regulations but own and hire labourers as and when these are not followed. Jobs here are they require. LET’S WORK THESE OUT 1. Look at the following examples. Which of these are unorganised sector activities? (i) A teacher taking classes in a school (ii) A headload worker carrying a bag of cement on his back in a market (iii) A farmer irrigating her field (iv) A doctor in a hospital treating a patient (v) A daily wage labourer working under a contractor (vi) A factory worker going to work in a big factory (vii) A handloom weaver working in her house 2. Talk to someone who has a regular job in the organised sector and another who works in the unorganised sector. Compare and contrast their working conditions in all aspects. 3. How would you distinguish between organised and unorganised sectors? Explain in your own words. 4. The table below shows the estimated number of workers in India in the organised and unorganised sectors. Read the table carefully. Fill in the missing data and answer the questions that follow. TABLE 2.3 WORKERS IN DIFFERENT SECTORS (IN MILLIONS) Sector Organised Unorganised Total Primary 1 232 Secondary 41 74 115 Tertiary 40 88 128 Total 82 Total in Percentage 100% · What is the percentage of people in the unorganised sector in agriculture? · Do you agree that agriculture is an unorganised sector activity? Why? · If we look at the country as a whole, we find that ———% of the workers in India are in the unorganised sector. Organised sector employment is available to only about ———% of the workers in India. S ECTORS OF THE I NDIAN E CONOMY 31 2024-25  How to Protect Workers in Who are these vulnerable people the Unorganised Sector? who need protection? In the rural areas, the unorganised sector mostly The organised sector offers jobs that comprises of landless agricultural are the most sought-after. But the labourers, small and marginal employment opportunities in the farmers, sharecroppers and artisans organised sector have been expanding (such as weavers, blacksmiths, very slowly. It is also common to find carpenters and goldsmiths). Nearly many organised sector enterprises in 80 per cent of rural households in the unorganised sector. They adopt India are in small and marginal such strategies to evade taxes and farmer category. These farmers need refuse to follow laws that protect to be supported through adequate labourers. As a result, a large number facility for timely delivery of seeds, of workers are forced to enter the agricultural inputs, credit, storage unorganised sector jobs, which pay a facilities and marketing outlets. very low salary. They are often exploited and not paid a fair wage. In the urban areas, unorganised Their earnings are low and not sector comprises mainly of workers in regular. These jobs are not secure and small-scale industry, casual workers have no other benefits. in construction, trade and transport etc., and those who work as street Since the 1990s, it is also common vendors, head load workers, garment to see a large number of workers makers, rag pickers etc. Small-scale losing their jobs in the organised industry also needs government’s sector. These workers are forced to support for procuring raw material take up jobs in the unorganised and marketing of output. The casual sector with low earnings. Hence, workers in both rural and urban besides the need for more work, there areas need to be protected. is also a need for protection and support of the workers in the We also find that majority of unorganised sector. workers from scheduled castes, tribes and backward communities find themselves in the unorganised sector. Besides getting the irregular and low paid work, these workers also face social discrimination. Protection and support to the unorganised sector workers is thus necessary for both economic and social development. When factories close down, many once regular workers are found selling goods or pushing a cart or doing some other odd job 32 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25  LET’S RECALL With so many activities taking place around us, one needs to use the process of classification to think in a useful manner. The criterion for classification could be many depending on what we desire to find out. The process of classification helps to analyse a situation. In dividing the economic activities into three sectors — primary, secondary, tertiary — the criterion used was the ‘nature of activity’. On the basis of this classification, we were able to analyse the pattern of total production and employment in India. Similarly, we divided the economic activities into organised and unorganised and used the classification to look at employment in the two sectors. What was the most important conclusion that was derived from the classification exercises? What were the problems and solutions that were indicated? Can you summarise the information in the following table? TABLE 2.4 CLASSIFYING ECONOMIC ACTIVITIES Sector Criteria used Most important Problems indicated and conclusion how they can be tackled Primary, Nature Secondary, of activity Tertiary Organised, Unorganised SECTORS IN TERMS OF OWNERSHIP: PUBLIC AND PRIVATE SECTORS Another way of classifying economic To get such services we have to pay activities into sectors could be on the money to these individuals and basis of who owns assets and is companies. The purpose of the public responsible for the delivery of services. sector is not just to earn profits. In the public sector, the government Governments raise money through owns most of the assets and provides taxes and other ways to meet expenses all the services. In the private sector, on the services rendered by it. Modern ownership of assets and delivery of day governments spend on a whole services is in the hands of private range of activities. What are these individuals or companies. Railways or activities? Why do governments spend post office is an example of the public on such activities? Let’s find out. sector whereas companies like Tata There are several things needed by Iron and Steel Company Limited the society as a whole but which the (TISCO) or Reliance Industries private sector will not provide at Limited (RIL) are privately owned. a reasonable cost. Why? Some of Activities in the private sector are these need spending large sums of guided by the motive to earn profits. money, which is beyond the capacity S ECTORS OF THE I NDIAN E CONOMY 33 2024-25  of the private sector. Also, collecting government has to bear some of the money from thousands of people who cost. In this way, the government use these facilities is not easy. Even if supports both farmers and they do provide these things they consumers. would charge a high rate for their use. Examples are construction of There are a large number of roads, bridges, railways, harbours, activities which are the primary generating electricity, providing responsibility of the government. The irrigation through dams etc. Thus, government must spend on these. governments have to undertake such Providing health and education heavy spending and ensure that facilities for all is one example. We have these facilities are available for discussed some of these issues in the everyone. first chapter. Running proper schools and providing quality education, There are some activities, which particularly elementary education, is the government has to support. The the duty of the government. India’s size private sector may not continue their of illiterate population is one of the production or business unless largest in the world. government encourages it. For example, selling electricity at the cost Similarly, we know that nearly half of generation may push up the costs of India’s children are malnourished of production of goods in many and a quarter of them are critically ill. industries. Many units, especially We have read about Infant Mortality small-scale units, might have to shut Rates. The infant mortality rate of down. Government here steps in by Odisha (40) or Madhya Pradesh (48) producing and supplying electricity is higher than some of the poorest at rates which these industries can regions of the world. Government afford. Government has to bear part also needs to pay attention to aspects of the cost. of human development such as Similarly, the Government in India availability of safe drinking water, buys wheat and rice from farmers at housing facilities for the poor and food a ‘fair price’. This it stores in its and nutrition. It is also the duty of godowns and sells at a lower price to the government to take care of the consumers through ration shops. You poorest and most ignored regions of have read about this in the chapter the country through increased on Food Security in Class IX. The spending in such areas. SUMMING UP In this chapter we have looked at ways of what all can be done for increasing classifying economic activities into some employment opportunities in the country. meaningful groups. One way of doing this Another classification is to consider whether is to examine whether the activity relates to people are working in organised or the primary, secondary or tertiary sectors. unorganised sectors. Most people are The data for India, for the last thirty years, working in the unorganised sectors and shows that while goods and services protection is necessary for them. We also produced in the tertiary sector contribute looked at the difference between private and the most to GDP, the employment remains public activities, and why it is important for in the primary sector. We have also seen public activities to focus on certain areas. 34 U NDERST ANDING E CONOMIC D EVEL NDERSTANDING OPMENT EVELOPMENT 2024-25 EXERCISES 1. Fill in the blanks using the correct option given in the bracket: (i) Employment in the service sector _________ increased to the same extent as production. (has / has not) (ii) Workers in the _________ sector do not produce goods. (tertiary / agricultural) (iii) Most of the workers in the _________ sector enjoy job security. (organised / unorganised) (iv) A _________ proportion of labourers in India are working in the unorganised sector. (large / small) (v) Cotton is a _________ product and cloth is a _________ product. [natural /manufactured] (vi) The activities in primary, secondary and tertiary sectors are_________ [independent / interdependent] 2. Choose the most appropriate answer. (a) The sectors are classified into public and private sector on the basis of: (i) employment conditions (ii) the nature of economic activity (iii) ownership of enterprises (iv) number of workers employed in the enterprise (b) Production of a commodity, mostly through the natural process, is an activity in _________ sector. (i) primary (ii) secondary (iii) tertiary (iv) information technology (c) GDP is the total value of _________ produced during a particular year. (i) all goods and services (ii) all final goods and services (iii) all intermediate goods and services (iv) all intermediate and final goods and services (d) In terms of GDP the share of tertiary sector in 2013-14 is between _________ per cent. (i) 20 to 30 (ii) 30 to 40 (iii) 50 to 60 (iv) 60 to 70 S ECTORS OF THE I NDIAN E CONOMY 35 2024-25  3. Match the following: Problems faced by farming sector Some possible measures 1. Unirrigated land (a) Setting up agro-based mills 2. Low prices for crops (b) Cooperative marketing societies 3. Debt burden (c) Procurement of food grains by government 4. No job in the off season (d) Construction of canals by the government 5. Compelled to sell their grains to (e) Banks to provide credit with low interest the local traders soon after harvest 4. Find the odd one out and say why. (i) Tourist guide, dhobi, tailor, potter (ii) Teacher, doctor, vegetable vendor, lawyer (iii) Postman, cobbler, soldier, police constable (iv) MTNL, Indian Railways, Air India, Jet Airways, All India Radio 5. A research scholar looked at the working people in the city of Surat and found the following. Place of work Nature of employment Percentage of working people In offices and factories registered Organised 15 with the government Own shops, office, clinics in 15 marketplaces with formal license People working on the street, construction workers, domestic 20 workers Working in small workshops usually not registered with the government Complete the table. What is the percentage of workers in the unorganised sector in this city? 6. Do you think the classification of economic activities into primary, secondary and tertiary is useful? Explain how. 7. For each of the sectors that we came across in this chapter why should one focus on employment and GDP? Could there be other issues which should be examined? Discuss. 8. Make a long list of all kinds of work that you find adults around you doing for a living. In what way can you classify them? Explain your choice. 9. How is the tertiary sector different from other sectors? Illustrate with a few examples. 10. What do you understand by disguised unemployment? Explain with an example each from the urban and rural areas. 11. Distinguish between open unemployment and disguised unemployment. 12. “Tertiary sector is not playing any significant role in the development of Indian economy.” Do you agree? Give reasons in support of your answer. 36 U UNDERST ANDING E ANDING NDERSTANDING NDERST NDERSTANDING CONOMIC D ECONOMIC DEVEL EVELOPMENT EVELOPMENT OPMENT EVELOPMENT 2024-25 13. Service sector in India employs two different kinds of people. Who are these? 14. Workers are exploited in the unorganised sector. Do you agree with this view? Give reasons in support of your answer. 15. How are the activities in the economy classified on the basis of employment conditions? 16. Compare the employment conditions prevailing in the organised and unorganised sectors. 17. Explain the objective of implementing the MG NREGA 2005. 18. Using examples from your area compare and contrast that activities and functions of private and public sectors. 19. Discuss and fill the following table giving one example each from your area. Well managed organisation Badly managed organisation Public sector Private Sector 20. Give a few examples of public sector activities and explain why the government has taken them up. 21. Explain how public sector contributes to the economic development of a nation. 22. The workers in the unorganised sector need protection on the following issues : wages, safety and health. Explain with examples. 23. A study in Ahmedabad found that out of 15,00,000 workers in the city, 11,00,000 worked in the unorganised sector. The total income of the city in this year (1997-1998) was Rs 60,000 million. Out of this Rs 32,000 million was generated in the organised sector. Present this data as a table. What kind of ways should be thought of for generating more employment in the city? 24. The following table gives the GDP in Rupees (Crores) by the three sectors: Year Primary Secondary Tertiary 2000 52,000 48,500 1,33,500 2013 8,00,500 10,74,000 38,68,000 (i) Calculate the share of the three sectors in GDP for 2000 and 2013. (ii) Show the data as a bar diagram similar to Graph 2 in the chapter. (iii) What conclusions can we draw from the bar graph? S ECTORS OF THE I NDIAN E CONOMY 37 2024-25