Class 10 Economics Notes Chapter ‘Sectors of the Indian Economy’

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Notes on Sectors of the Indian Economy

Sectors of the Indian Economy: Key Concepts

1. Classification of Economic Activities

Economic activities are classified into three major sectors:

• Primary Sector:
  • Based on natural resources.
  • Examples: Agriculture, fishing, forestry, mining, dairy.
  • Also called agriculture and related sector.
  • Forms the base for other sectors.
• Secondary Sector:
  • Involves manufacturing and industrial processes.
  • Converts natural products into finished goods.
  • Examples: Cotton to cloth, sugarcane to sugar, brick making, factories.
  • Also called industrial sector.
• Tertiary Sector:
  • Provides services that support primary and secondary sectors.
  • Does not produce goods but generates services.
  • Examples: Transport, communication, banking, education, healthcare.
  • Also called service sector.

2. Interdependence of Sectors

• Sectors are interconnected.
  • Example: Farmers rely on industries for fertilizers, transport for selling crops, and service sector for banking and trade.
• Changes in one sector affect others.

Gross Domestic Product (GDP)

• Definition: Total value of all final goods and services produced within a country in a year.
• Intermediate goods (e.g., flour used in biscuit production) are not included to avoid double counting.
• GDP reflects the size of the economy.

Trends in GDP Contribution by Sectors

• Historically, developed countries transitioned from primary to secondary, and finally to tertiary as the dominant sector.
• In India:
  • Tertiary sector has grown the most between 1973-74 and 2013-14.
  • Tertiary contributes most to GDP, but primary employs the majority.

Employment Patterns

• A mismatch exists in India between GDP contribution and employment by sectors:
  • Primary sector: Employs over half the population but contributes only about one-sixth of GDP.
  • Secondary and tertiary sectors: Contribute more to GDP but employ fewer people.
• Disguised Unemployment:
  • Hidden unemployment where more people are engaged in work than required.
  • Common in agriculture (e.g., small family farms).

Underemployment Solutions

• Create jobs in:
  • Agriculture: Build irrigation, improve seeds, and provide credit.
  • Industries: Establish agro-based and small-scale industries.
  • Services: Invest in education, healthcare, and tourism.
• Example Programs:
  • MGNREGA 2005: Guarantees 100 days of employment in rural areas.

Organised vs Unorganised Sector

• Organised Sector:
  • Regular employment with formal contracts.
  • Benefits include fixed hours, paid leaves, pensions, medical benefits.
  • Examples: Government jobs, large factories.
• Unorganised Sector:
  • Irregular employment, often without contracts.
  • Low wages, no job security, and poor working conditions.
  • Examples: Street vendors, casual labourers, small workshops.

Problems in the Unorganised Sector

• Workers face exploitation.
• Lack social security and healthcare.

Public vs Private Sector

• Public Sector:
  • Owned and managed by the government.
  • Purpose: Welfare over profit.
  • Examples: Railways, post offices.
• Private Sector:
  • Owned by individuals or companies.
  • Purpose: Profit generation.
  • Examples: Reliance, TCS.

Role of the Public Sector

• Provides essential services like education, healthcare, infrastructure, and irrigation.
• Supports industries by supplying affordable electricity and agricultural procurement.

Key Takeaways

• Sectors are interdependent, and their contribution to GDP and employment varies.
• Emphasis is required on creating employment opportunities and addressing underemployment.
• Protection of workers in unorganised sectors is crucial for equitable growth.
• Public sector plays a vital role in providing essential services and addressing developmental needs.

Notes based on Chapter Headings (Sectors of the Indian Economy)

SECTORS OF ECONOMIC ACTIVITIES

Economic activities are classified into sectors based on their nature.

1. Primary Sector (Agriculture and Related Activities)

• Activities involving direct use of natural resources.
• Examples: Agriculture, dairy, fishing, forestry, mining.
• Produces natural goods such as crops, milk, minerals, etc.
• Forms the base for other sectors.

2. Secondary Sector (Industrial Sector)

• Activities that transform natural products into manufactured goods.
• Examples: Cotton to cloth, sugarcane to sugar, bricks for construction.
• Involves industrial processes and manufacturing in factories, workshops, or homes.

3. Tertiary Sector (Service Sector)

• Provides support services to the primary and secondary sectors.
• Examples: Transport, storage, communication, banking, trade, healthcare, and education.
• Generates services rather than goods.
• Includes modern services like IT, call centers, and software development.

COMPARING THE THREE SECTORS

Interdependence of Sectors

• The three sectors are interlinked:
  • Example: Primary sector produces raw materials for secondary industries.
  • Secondary industries rely on tertiary services like transport and banking.
• Each sector supports the others in production and trade.

GDP and Final Goods

• GDP (Gross Domestic Product): Total value of all final goods and services produced within a country in a year.
• Only final goods are counted to avoid double counting (e.g., biscuits include the value of flour and wheat).

Sectoral Contribution to GDP and Employment

• In India, primary sector employs the majority but contributes the least to GDP.
• Secondary and tertiary sectors contribute more to GDP but employ fewer people.

HISTORICAL CHANGE IN SECTORS

Global Trends

• Developed countries shifted from primary to secondary and then to tertiary sectors over time.

India’s Pattern

• Primary sector was dominant initially.
• Secondary sector grew with industrialization.
• In recent decades, the tertiary sector has emerged as the largest contributor to GDP.

RISING IMPORTANCE OF THE TERTIARY SECTOR IN PRODUCTION

Reasons for Growth

1. Basic services required for the functioning of a country (e.g., hospitals, schools, police, transport).
2. Growth in agriculture and industry increases demand for services like trade and transport.
3. Rising incomes lead to demand for luxury services (e.g., tourism, private schools, shopping malls).
4. Expansion of IT and communication-based services in recent years.

Unequal Growth

• High-skill jobs in the service sector are growing rapidly, but low-skill jobs remain stagnant with low wages.

WHERE ARE MOST PEOPLE EMPLOYED?

Employment Trends

• Primary sector: Employs over 50% but contributes only 1/6th of GDP.
• Secondary and tertiary sectors: Contribute more to GDP but employ fewer people.

Underemployment (Disguised Unemployment)

• More people are engaged in work than needed.
• Common in agriculture (e.g., small farms with multiple family members working).
• Exists in urban areas among casual laborers and street vendors.

HOW TO CREATE MORE EMPLOYMENT?

Suggestions

1. Agriculture:
   • Invest in irrigation, better seeds, and fertilizers.
   • Provide credit facilities and marketing support.
2. Industries:
   • Develop agro-based and small-scale industries.
   • Set up cold storage and processing units.
3. Services:
   • Expand education and healthcare facilities.
   • Promote tourism and regional crafts.
4. Government Schemes:
   • MGNREGA 2005: Guarantees 100 days of wage employment in rural areas.

DIVISION OF SECTORS AS ORGANISED AND UNORGANISED

1. Organised Sector

• Includes enterprises with formal processes and regulations.
• Workers have job security, fixed hours, and benefits like pensions, paid leave, and medical facilities.
• Examples: Government jobs, large companies.

2. Unorganised Sector

• Small and scattered units with irregular employment.
• Workers lack security, benefits, and face low wages and poor conditions.
• Examples: Street vendors, small workshops, casual laborers.

Problems in Unorganised Sector

• Exploitation and social discrimination.
• Requires protection through better wages, safety measures, and social benefits.

SECTORS IN TERMS OF OWNERSHIP: PUBLIC AND PRIVATE SECTORS

1. Public Sector

• Owned and managed by the government.
• Purpose: Welfare, not profit.
• Examples: Railways, post offices, public schools.
• Provides essential services like education, healthcare, and infrastructure.

2. Private Sector

• Owned by individuals or companies.
• Purpose: Profit generation.
• Examples: Reliance Industries, Tata Steel.

Role of the Public Sector

1. Provides infrastructure and essential services (e.g., roads, electricity).
2. Supports small industries and farmers (e.g., fair price procurement of crops).
3. Focuses on human development (e.g., education, healthcare, clean water).

SUMMING UP NOTES (Sectors of the Indian Economy)

• Economic activities are classified into primary, secondary, and tertiary sectors based on the nature of activity.
• India’s GDP is dominated by the tertiary sector, but most people work in the primary sector.
• Protection of organized sector workers is essential for equitable growth.
• Public sector plays a key role in ensuring welfare and economic development.