Sectors of indian economy Notes | Class 10 Economics

Sectors of Indian Economy

Every individual is doing some activities around us.
Some of them help individual to earn money such activities are called economic activities.
A group of these activities based on some criteria are called sectors.
Sectorisation is necessary to study and analyse economic activities.

Sectors on the basis of Nature of Activity –

Refer video for more details

Comparing the three sectors

Each sector produces large number of goods and services.
Comparison aims at finding the most important sector in terms of total production and employment.

How to find total production

One way to find total production is to count each product or service produced for a particular sector. However it will be difficult task because

We can not count every single product or service which is produced because there are too many goods and services in each sector.
We can not add count of two or more different things because it did not make sense. e.g. 3 apples + 4 bananas = ? , e.g. 5 computers + 10 cars = ?

we can overcome the second problem by adding the values i.e. total amount rather than adding total number of things.

e.g. 3 apples => 50 rupees and 4 bananas=> 20 rupees then total value for 3 apples and 4 bananas will be 50+20=70rupees.

For counting values we must consider only final goods i.e. the goods which are used by end user. This is to avoid double counting i.e. counting same thing more than once. This is because final goods already includes the value of intermediate goods i.e. goods that are used up while manufacturing. e.g. a biscuit packet worth rupees 60 already include prices of wheat (10rupees) and oil ( 20rupees).
Total production is the value of final goods and services produced in each sector for a particular year.
The sum of total production of all three sectors is called GDP i.e Gross Domestic Product of a country.
Greater the GDP, better the economy of the country.
GDP is measured by central government with the help of state governments and union territories. They collect information of all products and services and their prices and then estimates the GDP.

Rising Importance of Tertiary sector

In these years tertiary sector is gaining importance in India this is because of following reasons.
India is a developing country thus the Provision of basic services such as health, education, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transportation, banks, insurance companies is done by government only.
Rapid growth in agriculture and industrial sector increased the demand for support services such as transportation, banking, storage, trade.
With increased income people started enjoying better life such as by eating out, tourism, shopping, professional training etc.
Development in information and communication services created the need in people’s lives.
However the growth in tertiary sector is not equitable this is because the skilled workers in this sector earns a very high income while most peoples are semiskilled and unskilled hence they have very low income levels.

Employment in India

In India even if tertiary sector is dominant still maximum population is employed in primary sector.
Even if the tertiary sector’s contribution in GDP is increased still maximum population is employed in primary sector only. This is because secondary and tertiary sectors are not producing enough employment opportunities.
This signifies that more than half of the workers in the country are employed in primary sector which contributes only quarter part of the GDP.
In contrast to this secondary and tertiary sectors employ less than half population still they produce three fourth of the GDP.
It means that peoples employed in agricultural sector is more than required and no one is fully employed. E.g. A family of five members work in their farm. Even if there is a need of two peoples, still three more peoples in the family are involved for the work. In this way the work is get divided and no one is fully employed. Such kind of situation in which Peoples look to be working but they are made to work less than their potential is called underemployment.
In contrast to an unemployed person, the status of underemployed person is hidden thus it is also called disguised unemployment.

How to Create more Employment

Organised and Unorganised Sectors
Organised Sector

Those places of work where employee get regular employment thus the work is assured is known as organised sector.
These sectors are registered by government and they follow rules and regulations laid by government. such as Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishment Act. etc.
Organised sector always follow some formal processes and procedures. e.g. While hiring employer should give appointment letter to employee, employee get regular salary at the end of the month, employer can not ask the employee to leave the service without a valid reason.
Workers in the organised sectors have following benefits –

Unorganised sector

Normally these are small organisations which are outside the control of government.
The rules and regulations in this sectors are normally not followed
Jobs here are low paid and often not regular.
There is no provision for overtime, paid leave, holidays, leave due to sickness etc.
There is no job security as peoples are hired whenever required and asked to leave when there is no work.
many times they are made to work for long hours without extra money.
Examples of unorganised sectors are small shops, repair works, dhaba or truck stops near highways.
Basically the employment opportunities in organised sectors are very less hence peoples are forced to take jobs in unorganised sectors with low salary. Many times these workers are exploited by the employer. With all these reasons there is a need to protect workers in unorganised sectors.

Private Sector and Public Sector
Private Sector

In this sector the assets are owned and services are delivered by private individuals or companies.
E.g. Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL)
The main motive of private sector organisations is to earn profits.
Peoples who use services offered by private sectors need to pay money in turn.

Public Sector

In this sectors the assets are owned and services are provided by government.
e.g. Railways, Post offices, defense, construction of roads, bridges, generating electricity, providing irrigation through dams etc.
The purpose of public sector is not just to earn profits but to enables services at reasonable cost so that any individual can take benefit of it.
There are things or services that a private sector could not provide at reasonable cost because producing these services may need huge money that may be beyond the capacity of the private sector. Thus government undertake such a huge spendings.

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