QA Sectors of Indian Economy

Chapter 2

Sectors of Indian Economy

Q . What do you understand by economic activities ? Explain different sectors of economic activities.

Answer:

(1) Economic activities : Activities that generate income are called economic activities e.g., to do business, to work in a bank etc.

(2) Sectors of economic activities : The economic activities are classified into three sectors which are given below :

• Primary sector :

• When we produce goods by exploiting natural resources – mineral, ore, milk etc., is an activity of primary sector,

• It is so because it forms the base for all other products that we subsequently make,

• This sector is called agriculture and related sector because most of the natural products are from agriculture, dairy, fishing, forestry.

• Secondary sector :

• This sector covers activities in which natural products are changed into other forms by way of manufacturing, for example, cotton into cloth.

• This process can be done in a factory, a workshop or at home,

• Since this sector is mostly associated with different kinds of industries, it is also called as industrial sector.

• Tertiary sector :

• These are activities that help in the development of the primary and secondary sectors,

• These activities, by themselves, do not produce a good but they are an aid or support for the production process. For example, manufactured goods need to be transported by trucks or trains and then sold in the market. Sometimes goods are stored in godowns. We need a communication system to interact with each other,

• Transport, storage, communication, banking, trade are important tertiary activities,

• Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

Q . “Economic activities, though grouped into three different categories, are highly interdependent.” Discuss.

Answer:

Primary, secondary and tertiary sectors are interdependent as mentioned below :

1. When we produce goods by exploiting natural resources, it is an activity of the primary sector. It is primary because it forms the base for all other products that we subsequently make.

2. The secondary sector covers activities in which natural products are changed into other forms manually or by machines. For example, wheat is used to manufacture bread. So there is a mutual dependency between primary and secondary sectors.

3. The activities that help in the development of the primary and secondary sectors fall under the tertiary sector. These activities by themselves do not produce good but they are an aid or support for the production process. Transport, storage, communication and banking are some examples of tertiary activities.

Q. Describe the essential services that are included in the service sector and may not directly help in the production of goods.

Answer:

The essential services, included in the service sector, that may not directly help in the production of goods are as mentioned below :

1. Teachers.

2. Doctors.

3. Persons who provide personal services such as washerman, barbers, cobblers, lawyers and people to do administrative and accounting works.

4. Recently certain new services based on information technology such as internet cafes, ATM booths, call centers, software companies have become important.

Q . With the example of sugarcane, explain the interdependence of all three sectors of the economy.

Answer:

• The primary sector involves production at the most basic level, i.e., through the exploitation of natural resources. Cultivation of sugarcane is an agricultural activity that comes under the primary sector.

• Raw materials from the primary sector are converted into processed goods through manufacturing in the secondary sector. Using sugarcane as raw material, jaggery and sugar are made in the factories.

• The tertiary or service sector provides support to the process of production. It includes transportation, storage, marketing and sale of products.

• For instance, transportation of sugarcane from the fields to the sugar mills. Further on, the transportation of jaggery and sugar from factories and sugar mills to the markets.

• The farmer (Primary sector) also needs fertilisers and seeds which are processed in some factories (Secondary sector) and which will be delivered to his doorstep by some means of transportation (Tertiary sector). In this way, for every little process, there is the interdependence of the three sectors of the economy on each other.

Q . What are final goods and intermediate goods? How do they help in calculating (GDP) Gross Domestic Product?

Answer:

• Final goods are goods that are ultimately consumed by the consumer rather than used in the production of another good.

• Intermediate goods are goods used as inputs in the production of final goods and services.

• For example, a car sold to a consumer is a final good; components such as a tyre sold to the car manufacturer is an intermediate good. The value of final goods already includes the value of all intermediate goods that are used in making the final good.

• The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year.

• And the sum of production in the three sectors gives the Gross Domestic Product (GDP) of a country. It is the value of all final goods and services produced within a country during a particular year.

Q. What is GDP ? Who undertakes the task of measuring GDP in India ? How is this task done ? What is its importance?

Answer:

1. What is GDP – The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of the production in the three sectors is called the Gross Domestic Product or GDP.

2. Measurement of GDP – The task of measuring GDP is undertaken by a Central Government ministry. The ministry with the help of various government departments of all the Indian states and union territories collects the information relating to the total volume of goods and services and their prices and then estimates the GDP.

3. Importance of GDP – The GDP of a country shows the size of the economy of the country. This reflects whether the country is poor or rich and the status of employment and people.

Q . Give the meaning of tertiary sector. State any three factors that contributed to the growth of this sector.

Answer:

(1) Tertiary sector relates to the activities that help in the development of the primary and secondary sectors. These activities by themselves do not produce good but they are an aid or support for the production process.

(2) The causes for the tertiary sector becoming an important sector in India by replacing the primary sector are as follows:

• Concept of the welfare state and basic services : In a modern welfare state such as India, basic services such as hospitals, educational institutions, post and telegraph services, police stations, courts, transport, banks and insurance companies are required. These have become a necessity. It is the responsibility of the state to provide these services. All these services come in the category of the service sector.

• Development of agriculture and industry : The development of agriculture and industry leads to the development of transport, storage and other services. As these sectors make more development, the service sector too expands and its importance increases accordingly.

• Rise in income : In recent years, there has been a rise in the income of certain sections of people. As a result of it, the demand for tourism, shopping and private hospitals etc. has increased. This has led to the importance of the tertiary sector.

• Development of information technology : The development of information and communication technology has increased the importance of the tertiary sector because now most of the people want to avail these services such as mobile phone, internet cafe etc. The production of these services has been rising rapidly all over the world.

In view of the above factor, the tertiary sector has grown rapidly in comparison to other sectors.

Q . Explain measures that can be adopted to remove disguised unemployment in the agriculture sector.

Answer:

The following steps can be taken to remove disguised unemployment in the agriculture sector :

• Loans should be provided to small farmers by the government or banks to have more irrigation facilities like wells and tube-wells in order to enable them to grow second crop.

• New dams and canals should be constructed. This will lead to more employment in the agricultural sector.

• Transportation and storage facilities must be improved to provide productive employment to not only the farmers but also others in services like transport and trade.

• Banks should provide agricultural credit to the farmers to improve farming.

• Industries such as dal mill, cold storage, honey collection centres, processing of vegetables should be set up in rural or semi-rural areas. Such industries will get raw materials from the rural areas and will create more employment opportunities for the rural people.

• Schools should be opened in rural areas. This will provide jobs to about 20 lakh people in the education sector.

• Health services should be improved in rural areas by opening dispensaries and hospitals. This will create jobs for doctors, nurses and other staff.

• Tourism, regional craft industry or Information Technology should be encouraged by the government to create more employment opportunities in the rural areas.

• As a short term measure, the government has implemented the Right to Work in 200 districts of India. It is called National Rural Employment Guarantee Act (NREGA) 2005.

Q . Explain the objectives of National Rural Employment Guarantee Act 2005.

Answer:

Main objectives of the NREGA 2005 are:

• to implement the Right to Work in 200 districts of India.

• to guarantee 100 days of employment in a year by the Government. In case the Government fails, it offers unemployment allowance.

• to give preference to the type of work that will help increase the production from land.

Q . How can we create more employment in secondary and tertiary sectors in rural India?

Answer:

1. Investing in basic agricultural infrastructure like construction of dams and canals for irrigation can lead to a lot of employment generation within the agricultural sector itself reducing the problem of under employment.

2. If the government invests some money in the storage and transportation of crops, or makes better rural roads so that mini-trucks reach everywhere, several farmers can continue to grow and sell these crops throughout the year. This activity can provide productive employment to not just farmers but also others such as those in services like transport or trade.

3. Providing credit at a reasonable rate of interest to help farmers buy seeds, fertilisers, agricultural equipments, pumpsets etc. can generate employment in rural banking.

4. The government/banks can provide loans at cheap rates to the small farmers to improve their irrigational facilities like constructing a well so that they can irrigate their land well and get two to three crops a year instead of one. Thus more people can be employed in the same field.

5. Another way is to promote and locate industries and services in semi-rural areas where a large number of people may be employed. For example, setting up a dal mill, opening a cold storage, starting or promoting honey collection, etc.

Q. State any five features each of the public sector and private sector.

Answer:

Public Sector:

1. The government owns most of the assets.

2. All the services are provided by the government.

3. The main motive of the public sector is the welfare of the people (masses). Activities are guided by the interest of the nation as a whole.

4. Employees feel secured and there is discipline and regular work.

5. Governments raise money through taxes and other means.

6. For example, railways, post offices, construction of roads, bridges, harbours, dams, etc.

Private Sector:

1. In the private sector, ownership of assets is in the hands of private individuals or companies.

2. Services are provided or are in the hands of individuals.

3. Activities in the private sector are guided by the motive to earn profits and not the welfare of the people.

4. Jobs of the employees are less secured and the whims of the owners are above all.

5. Private sector charges high rates for the use of services provided by them.

6. For example, Companies like Tata Iron and Steel Co. (TISCO), Reliance Industries, etc.

Q. How can workers in the unorganised sector be protected? Explain giving examples of rural and urban areas.

Answer:

There is a need for protection and support of the workers in the unorganised sector:

1. In the rural areas, this sector comprises of landless agricultural labourers, small and marginal farmers, sharecroppers and artisans (weavers, carpenters, goldsmiths). These farmers need to be supported through the adequate facility for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.

2. In urban areas, workers in the small-scale industry, casual workers in construction, trade and transport, street vendors, head load workers, garment makers, ragpickers etc. are all a part of the unorganised sector. Small scale workers need government aid for procuring raw materials and marketing of their goods.

3. The government must make concerted efforts to ensure that workers in this sector are not exploited and earn fair wages. They must also be provided with job security and other benefits.

Q. Compare the employment conditions prevailing in the Organized and Unorganized sectors.

Answer:

Organized sector:

1. In this sector, terms of employment are regular and people have assured work.

2. They are registered by the government.

3. Workers enjoy security of employment, they have to work for fixed hours, they are paid overtime and enjoy several other benefits like paid leave, payment during holidays, Provident Fund, gratuity, pension, retirement benefits, medical benefits, etc.

4. Entities under Organized sector have to follow the rules and regulations which are given in various laws (Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishment Act).

Unorganized sector:

1. In this sector, employment is not secure and jobs are irregular.

2. Here government rules are not followed as they are outside the control of the government.

3. Usually, they offer low-paid jobs, no provision for overtime, paid leave, holiday leave or sick leave.

4. Employees can be asked to leave without any reason. One can also see a large number of under-employed workers in this sector.

Q. How can employment be increased in both rural and urban areas?

Answer:

Ways to provide more employment opportunities in rural areas:

1. Promote and locate industries and services in semi-rural areas where a large number of people may be employed. For example, setting up a dal mill, opening a cold storage, starting or promoting the honey collection.

2. Promoting small-scale industries, small-scale manufacturing units, agro-processing industries and providing loans for the same. The government/banks can provide loans at cheap rates to the small farmers to improve their irrotational facilities so that they can get two or three crops a year instead of one. Thus more people can be employed in the same field.

3. If more dams are built and canal water is provided to all the small farmers, then a lot of employment can be generated in the agricultural sector.

4. If more money is spent on transportation and storage, then not only small farmers will be benefitted but many more people can be employed in the transport and storage sector.

5. Investing more in tourism and employing more youth in this sector.