Chapter 2: Sectors of the Indian Economy (Economics)

(i) has not (ii) tertiary (iii) organised (iv) large (v) natural; manufactured (vi) interdependent

(a) (iii) ownership of enterprises (b) (i) primary (c) (ii) all final goods and services (d) (iii) 50 to 60

1–(d), 2–(c), 3–(e), 4–(a), 5–(b)

1. Farmer: the only one in the primary sector; the others provide services or make goods for sale outside agriculture.
2. Vegetable vendor: the others are trained professionals with formal qualifications; the vendor is in the unorganised sector.
3. Cobbler: the others are employed by the government (public sector); the cobbler is self-employed in the private, unorganised sector.
4. Air India: it was sold to the Tata Group in 2022 and is now in the private sector; MTNL, Indian Railways and All India Radio are in the public sector.

(i) Farmer (ii) Vegetable vendor (iii) Cobbler (iv) Air India (now privately owned)

The last row is $100-(15+15+20)=50$ per cent. Unorganised sector $=20+50=70$ per cent.

70 per cent of the workers are in the unorganised sector.

Yes. The classification is useful because:

• it shows how much each sector contributes to production (GDP) and employment, and how this changes over time, which tells us the stage of development of the economy;
• it helps the government find problem areas (for example, too many people dependent on agriculture, disguised unemployment) and plan policies for each sector;
• it shows the interdependence of sectors: e.g. farmers need transport and banks (tertiary), and industries need raw materials (primary);
• it helps in comparing the economic structure of different countries and states.

Yes; it shows each sector's contribution to output and jobs, reveals problems, helps plan policies, and shows how the sectors depend on each other.

• GVA shows how much each sector produces, i.e. its contribution to the economy's income and growth.
• Employment shows how many people depend on each sector for their livelihood. Comparing the two reveals important facts: in India the primary sector's share in GVA has fallen sharply, but it still employs the largest number of people, which shows underemployment in agriculture and a lack of jobs elsewhere.

Other issues to examine:

• Quality of jobs: wages, job security, working conditions, social security;
• Income distribution and poverty among workers of each sector;
• Regional balance, gender equality in employment;
• Environmental impact and sustainability of each sector;
• productivity, technology and access to credit.

GVA shows each sector's contribution to output and employment shows how many depend on it; we should also look at the quality of jobs, incomes, inequality, regional balance and environmental effects.

Example list: farmer, dairy farmer, fisherman, brick-kiln worker, carpenter, tailor, factory worker, mason, shopkeeper, vegetable vendor, teacher, doctor, nurse, bank clerk, auto-rickshaw driver, postman, police constable, software engineer, domestic worker, electrician, mobile repairer.

The classification by nature of activity is the most basic, since it tells us what kind of work is done; the other two tell us about job security and ownership.

Jobs can be classified by activity (primary, secondary, tertiary), by employment conditions (organised, unorganised) and by ownership (public, private), as in the table.

• The primary and secondary sectors produce goods: the primary sector exploits natural resources (e.g. growing wheat, fishing, mining), and the secondary sector converts them into other products by manufacturing (e.g. making flour, cloth, steel).
• The tertiary sector does not produce goods; it produces services that support the other sectors and people. Examples: transport (trucks carrying wheat to mills), storage (warehouses), communication, banking (loans to farmers and factories), trade (shops selling cloth), and also services such as teaching, health care, law and IT.

The tertiary sector produces services, not goods; it supports the primary and secondary sectors through transport, banking, trade and communication, and provides services such as education and health.

Disguised unemployment is a situation where more people are working than are actually needed. Everyone seems to be employed, but the extra workers contribute nothing to production; if some of them are removed, total output does not fall. It is also called underemployment.

• Rural example: a small farmer's plot needs only two people, but five members of the family work on it. Three of them are disguisedly unemployed; if they leave, the output stays the same.
• Urban example: casual workers such as painters, plumbers or street vendors who search for work every day and get only a few hours of work; or a small shop run by four family members where one or two could handle the work.

When more people work on a job than needed, so that removing some does not reduce output; e.g. five family members on a small farm needing two, or several family members running a small shop.

In open unemployment a person has no work at all and it is visible; in disguised unemployment more people work than needed, so it is hidden.

No, I disagree. The tertiary sector plays a very significant role:

• It has become the largest producing sector in India: its share in GVA is more than half (about 53 per cent in 2021-22, from the data in Q24).
• It provides basic services such as hospitals, schools, post and telegraph, police, courts, transport, banks and insurance, which every country needs.
• The development of agriculture and industry depends on transport, storage, trade and finance, which are tertiary services.
• As incomes rise, people demand more services such as eating out, tourism, shopping and private schools.
• New services based on information and communication technology (software, call centres) are growing rapidly and earn foreign exchange.

However, not all of it is growing equally: many workers in services (small shopkeepers, repair persons, transport workers) barely earn a living, and the sector has not created enough jobs. Still, its role is very significant.

I disagree: the tertiary sector is now the largest contributor to GVA, supports agriculture and industry, provides essential services and fast-growing IT services, though it has not created enough good jobs.

• At one end, a limited number of highly skilled and educated workers in services such as banking, IT, finance, medicine and teaching, who earn well and have secure jobs.
• At the other end, a very large number of workers in low-paid services such as small shopkeepers, repair persons, transport workers (rickshaw pullers, drivers), street vendors and domestic workers, who barely manage to earn a living, often because no other work is available.

Highly skilled, well-paid workers (IT, banking, doctors) and a much larger number of low-paid, unskilled workers (small shopkeepers, repair persons, vendors).

Yes, I agree.

• Low and irregular wages, often below the legal minimum, and no fixed working hours; overtime is not paid.
• No job security: workers can be asked to leave at any time without a reason; employment is often seasonal.
• No paid leave, holidays, sick leave, provident fund, gratuity or pension.
• Poor working conditions: no safety measures, unhealthy surroundings, no medical benefits.
• The rules and regulations exist but are not followed, as the enterprises are not registered with the government. Most workers are from weaker sections (SCs, STs, landless labourers, women) and cannot bargain.

Yes; unorganised workers get low, irregular wages, no job security, no paid leave or social security, and unsafe working conditions, because laws are not followed.

• Organised sector: enterprises or places of work where the terms of employment are regular, so people have assured work. They are registered by the government and have to follow its rules and regulations (Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act). Workers get job security, fixed hours, paid leave, provident fund and medical benefits.
• Unorganised sector: small and scattered units, largely outside the control of the government. Rules exist but are not followed; jobs are low-paid, often not regular, with no paid leave or job security.

Into the organised sector (registered, regular jobs with security and benefits) and the unorganised sector (small, unregistered units with irregular, insecure jobs).

Organised-sector jobs are regular, secure, well paid and come with benefits; unorganised-sector jobs are irregular, insecure, low paid and without benefits.

The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA) implemented the Right to Work in about 625 districts of India. Its objectives were:

• to guarantee 100 days of employment in a year to all those in rural areas who are able to work and in need of work;
• if the government fails to provide work, to give unemployment allowance to the people;
• to give preference to work that would in future increase production from land (e.g. digging wells and ponds, building check dams, afforestation, rural roads), so that rural incomes rise;
• to reduce poverty and disguised unemployment in rural areas and check migration to cities.

In 2025, MGNREGA was replaced by the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Viksit Bharat-G RAM G 2025), which continues the aim of providing guaranteed wage employment and livelihood support to rural households.

To guarantee rural households wage employment (100 days a year under MGNREGA) or an unemployment allowance, through works that build productive rural assets; the Viksit Bharat-G RAM G Act, 2025 replaced it with the same aim.

Similarity: both provide goods, services and employment, and contribute to the economy.

The public sector is government-owned and works for welfare (government schools, railways, post office); the private sector is privately owned and works for profit (private schools, companies, shops).

Fill in the actual names of organisations from your own area after discussing with your classmates.

Examples vary by area; the table shows the kind of organisations to list.

Examples: railways, post offices, roads, bridges, ports, irrigation (dams and canals), electricity generation, schools and colleges, hospitals, the public distribution system (ration shops), police and courts, water supply and sanitation.

Why the government takes them up:

• Some require huge spending that is beyond the capacity of the private sector (railways, dams, power plants).
• Collecting money from thousands of users for things like roads and street lights is difficult, so private firms will not provide them, but they are needed by all.
• Some activities must be supported to keep prices low, such as electricity for farmers and industries, and food grains for the poor.
• Providing health and education for all, and food and nutrition for the poor, is the duty of a welfare government; private firms would charge high prices.

Railways, roads, power, irrigation, schools, hospitals and ration shops; the government runs them because they need huge investment, private firms will not supply them at affordable prices, and the welfare of all citizens depends on them.

• It builds infrastructure (roads, railways, ports, power, irrigation), which is essential for agriculture and industry to grow.
• It provides essential services such as health, education, water and sanitation, which improve human development.
• It creates employment on a large scale.
• It promotes balanced regional development by setting up industries and services in backward areas.
• It supplies goods at reasonable prices (electricity, food grains through the PDS), protecting the poor and small producers.
• It reduces inequality and supports the weaker sections through welfare schemes.
• It uses its earnings for further development and nation-building.

By building infrastructure, providing health and education, creating jobs, developing backward regions, keeping essential goods affordable and reducing inequality.

• Wages: unorganised workers are often paid less than the minimum wage. Example: construction and agricultural labourers, and domestic workers, who may be paid very little with no fixed rates. The government should enforce minimum wages and ensure timely payment.
• Safety: many work in hazardous conditions without safety equipment. Example: workers in fireworks or chemical units, brick kilns, construction sites and manual scavenging. Safety rules must be enforced.
• Health: they get no medical benefits or paid sick leave, and long hours and unhealthy surroundings damage their health. Example: rag pickers and workers in small textile or bidi units. Health insurance and medical facilities are needed.

The government should also give support through cheap credit, training, social security schemes and registration of workers.

Unorganised workers need minimum wages (e.g. construction labour, domestic workers), safety at work (e.g. fireworks units, brick kilns) and health benefits (e.g. rag pickers, bidi workers).

So about a quarter of the workers earn more than half the city's income, while nearly three-quarters share the rest.

Ways to generate more (and better) employment:

• Set up more small-scale and cottage industries, with cheap credit from banks.
• Promote the service sector: tourism, IT, transport, health and education.
• Give skill training and vocational education to workers.
• Invest in infrastructure (housing, roads, metro), which creates jobs.
• Help unorganised enterprises to register and grow, and protect workers with minimum wages and social security.

The organised sector has 4 lakh workers earning Rs 32,000 million, the unorganised 11 lakh earning Rs 28,000 million; more jobs can come from small industries, services, skill training, infrastructure and cheap credit.

(i) Share $=\frac{\text{GVA of the sector}}{\text{total GVA}}\times 100$. (The question in the book says "2000 and 2013", but the table gives 2001-02 and 2021-22, so we use these years.)

(ii) Bar diagram:

(iii) Conclusions:

• The tertiary sector is the largest, and its share has grown from 45 to about 53 per cent: it now produces more than half of India's output.
• The share of the primary sector has fallen sharply, from about 31 to 18 per cent, even though its output has nearly doubled in value.
• The secondary sector's share has risen, from about 24 to 29 per cent.
• So India's economy has shifted from agriculture towards services and industry, though (as the chapter shows) employment has not shifted in the same way.

Shares: 2001-02 – primary 30.8%, secondary 24.2%, tertiary 45.0%; 2021-22 – 17.9%, 29.3%, 52.8%. The tertiary sector has grown to over half of GVA while the primary sector's share has fallen sharply.