Understanding Economic Development Chapter 2 Sectors Of The Indian Economy

has not

tertiary

organised

 large

natural, manufactured

interdependent

C.

ownership of enterprises

A.

primary

B.

 all final goods and services

C.

between 50 per cent to 60 per cent

(i) Tourist guide is the odd one because he comes under organised sector and follow the rules and regulations while others are often uneducated and fall under unorganised sector.

(ii) Vegetable vendor is the odd one, because he is comes in the category of unorganised sector. The others fall under the service and organised sector.

(iii) Cobbler is the odd one because he comes in the category of private sector/service sector as he provides personal service. Others are employed by the government and come under public sector.

(iv) Sahara Airlines is odd one as it is owned by private individuals. Others are public or government sector enterprises

Complete table is given below:

The proportion of workers in the unorganised sector in this city = 70%.

The classification of economic activities into primary, secondary and tertiary sectors is useful due to the reasons as mentioned below :

(i) It shows the employment conditions:The classification of economic activities show the employment conditions in different sectors. For example, in a developing country like India, most of the people are engaged in the primary sector which is also called agriculture and related sector. On the other hand, in the developed countries, like USA most people are employed in secondary and tertiary sectors.

(ii) For Government Planning:The classification of economic activities also helps the government to take steps so that more and more people are employed in non-agricultural sectors, particularly tertiary sector because this sector helps in the development of the primary and secondary sectors.

(iii) To know contribution of the people:Economic activities performed by different groups of people, their percentage and their contribution in G.D.P. Knowing the G.D.P. position:We come to know G.D.P. position through graphs and data of these sectors and their share in percentage.

(iv) Share of sectors:We also come to know through the classification about the share of sectors in employment (percentage). The classification also tells us number of workers engaged in different sectors (in lakhs/millions).

(v) Knowledge of economic activities: Classification of sector informs us economic activities performed in a country.

For each of the sectors mentioned in this chapter, our focus should be on employment and G.D.P. because, growth in GDP and full employment are the common goals of our Five Year Plans.

Yes, the other issues which should be examined are:

(a) Balanced regional development in the country.

(b) Equality of income and wealth among the people of the country.

(c) Alleviation of poverty.

(d) Modernisation of technology.

(e) Self-reliance of the country.

Following is the list of all kinds of work that adults are doing for a living:

Teacher, doctor, engineer, electrician, cattle rearer, shopkeeper, washerman, milk vendor, farmer, insurance manager, government employees, sweeper, domestic worker, factory owner, vegetable grower, work at a construction site.

(i) Primary Sector : Farmer, fruit and flower growers, vegetable grower and cattle rearers.

(ii) Secondary Sector : Work at a construction site, factory owner.

(iii) Tertiary Sector : Engineer, doctor, electrician, teacher, shopkeeper, washerman, insurance manager, government employees, domestic worker, sweeper.

(iv) Organised Sector : Doctor, engineer.

(v) Unorganised Sector : Shopkeeper, electrician, washerman, sweeper, domestic work and insurance manager.

There 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 a support for the production process.

Examples :

(i) Goods that are produced in the primary or secondary sector, would need to be transported by trucks or trains, and then sold in wholesale and retail shops. At times, it may be necessary to store these in godowns.

(ii)We also may need to talk to others over telephone or send letters (communication) or borrow money from bank (banking) to help the production and trade. Transport, storage, communication, banking, trade, etc. are some examples of the tertiary activities.

Disguised unemployment is the situation of under employment, where people are apparently working but all of them are made to work less than their potential. This type of under employment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed.

Examples:

(i)In rural areas there are more people in agriculture that is necessary. Therefore, even if we move a few people out (from agriculture occupation), production will not be affected.

(ii)In urban areas there are thousands of casual workers in the service sector who search for daily employment where they may spend the whole day but earn very little.

No, I do not agree with this statement because of the reasons mentioned below:

(a) The tertiary sector or the service sector in India employs many different kinds of people.

(b) This sector has now become the largest producing sector in India by replacing the primary sector. The share of tertiary sector in GDP is now more than 50%.

Service sector in India employs two different kinds of people. These are:

(i) Highly skilled and educated workers but in less number e.g., advocates, teachers, technicians etc.

(ii) Unskilled workers but in large number e.g., small shopkeepers, repair persons, transport persons, peddlers, hawkers, footpath vendors etc.

Yes, I agree with this view that workers are exploited in the unorganised sector.

The reasons:

(i)The unorganised sector is characterised by small and scattered units which are largely outside the control of the government.

(ii)There are rules and regulations but these are not followed. Jobs here are low-paid and often not regular.

(iii)There is no provision for overtime, paid leave, holidays, leave due to sickness etc. Employment is not secure.

(iv)People can be asked to leave without any reason. When there is less work, such as during some seasons, some people may be asked to leave.

(v)A lot also depends on the whims of the employer. 

The activities are classified in the economy on the basis of nature of activity. Generally the economic activities are divided into organised and unorganised sectors. Organised sector includes those enterprises or places of work where the terms of employment are regular.

Activities of organised sector are registered by the government and one have to follow its rules and regulations which are given in various laws. On the other hand activities of unorganised sector are low paid and often not regular, employment is not secure and people can be asked the leave without any reason.

Employment conditions in organised and unorganised sectors.

Private Sector:

(i) Ownership of assets and delivery of services is in the hands of private individuals or companies.

(ii) This sector is guided by the motive to earn more and more profits.

(iii) Services of this sector can be obtained only on payment hence, the poor people can not afford services of this sector.

(iv) This sector does not render services of public utility.
Example : TISCO, Reliance Petrochemicals, Modi Tyres, Bajaj Scooters, Berger Paints.

Public Sector :

(i) The government owns assets and takes responsibility to deliver services.

(ii) This sector is not guided by profit motive.

(iii) It invests funds to construct structures and infrastructure of public utility e.g. construction of roads, bridges, railways, harbours, generation of electricity, construction of dams, school and college buildings etc.

(iv) All citizens of a country use and obtain services produced by this sector unconditionally.

(v) It collects funds for investment indirectly through taxes on people having certain income and capable to pay them.
Example : Post and telegraph, Railways, C.P.W.D.

In the public or government sector, the services provided by Post Office are better and accessible. On the other hand services provided by DTC and D.J.B. are not satisfactory. These are inadequate and inefficient.

In the private sector, situation is comparatively better.

Examples of Public Sector activities are:

(i) Railway 

(ii) Roads

(iii) Post and Telegraph Office

(iv) BSNL and MTNL

(v) Life Insurance Corporation of India

The government has taken up the above mentioned activities for the defence as well as for economic reasons. The government endeavours to provide essential services in the field of transportation, communication and defence of the country. Every government is supposed to perform certain necessary activities. Most of these activities are essential to maintain internal law and order of the country also.

The public sector contributes to the economic development of a nation in the way explained below:

(i) Public sector raises money through taxes and other ways to meet expenses on the services like construction of roads, bridges, railways etc. for all people of India.

(ii) Goverment runs railways, shipping, aeroplanes, metro and local trains. The government undertakes heavy spending and ensure that such facilities are available for everyone.

(iii)The Government in India buys wheat and rice from farmers at a ‘fair price’. This it stores in its godowns and sells at a lower price to consumers through ration shops. The government has to bear some of the cost. In this way, the government supports both farmers and consumers

The workers in the unorganised sector should be protected on the issue of wages, safety and health:

(a) Wages :

(i)They are made to work more than stipulated hours a day without being paid overtime.

(ii) They get no other allowances apart from daily wages.

(iii) Jobs are low paid.

(iv) There is no job security. They can be asked to leave the job any time without any reason.

(v) They are compelled to accept lower wages.

(b) Safety : They are generally engaged in many hazardous industries like glass, cement, brick, mining and crackers industries where the risk is maximum.

(c) Health : Due to low wages, they are unable to have nutritious food and their health status is very poor. Due to their inhuman working and living conditions, they remain unhealthy.

Workers and their income in Ahmedabad.

The following ways should be adopted for generating more employment in the city :

(i) More industries should be established in public sector, private sector and joint sector.

(ii) Sufficient loan should be provided to city dwellers to create employment for themselves.

(iii) Construction work should be taken for building residential complexes, commercial complexes, roads, lanes, school buildings, hospitals, etc.

(iv) Banking services, ATM, call centres, health facilities, educational institutions, gardens, parks, entertainment centres and financial establishments should be started by government, private enterprises, NRIs.

(i) The share of the three sectors in GDP.

(a) Primary Sector :

in 1950 = 58%, in 2000 = 27%

(b) Secondary Sector:

in 1950 = 14%, in 2000 = 29%

(c) Tertiary Sector:

in 1950 = 28%, in 2000 = 48%

(ii) Presentation through graph:

Share of Sectors in GDP (%)

(iii) We can draw the following conclusion from above bar graph:

(a) In 1950, the contribution of primary sector was the largest. The tertiary sector on the second place while the contribution of secondary sector was the least.

(b) The situation in 2000changed. The contribution of tertiary sector was the maximum. The second place was retained by primary sector while the third place was of secondary sector.

C.

Manufacturing

C.

Reliance Industries

A.

Primary

B.

Secondary

C.

Tertiary

D.

All of these

D.

All of these

D.

Priest

B.

Workers are working less than what they are capable of doing

A.

Primary

C.

Tertiary Sector

A.

2005

C.

between 50% to 60%

A.

C.

Service Sector

A.

It shows how big is the economy of a country in a given year in terms of its total output

B.

National Rural Employment Guarantee Act

D.

All of these

D.

None of the above

A.

National Rural Employment Guarantee Act

B.

Organised

C.

Tertiary Sector—Largest employment provider

C.

Manufacturing

A.

Primary

C.

Social welfare and security

C.

Making of Sugar

B.

Government owns the assets

C.

Employment conditions

E.

Banking

C.

Sugar Industry

D.

Formal processes and procedures are followed

D.

GDP means the sum of goods and services produced in all three sectors

C.

transport, communication and banking

A.

 It covers those enterprises where the terms of employment are regular

C.

Disguised unemployment

A.

Primary

B.

Bee keeping

B.

Government

B.

 Natural products are changed through manufacturing

C.

a farmer irrigating his field

B.

Organised sector

C.

underemployed

B.

She is not paid for leave

(i) Primary occupations:Mining, lumbering and animal rearing.

(ii) Secondary occupations:Iron and steel industry, textile mills, sugar mills.

(iii) Tertiary occupations:Banking, transportation and doctors.

Unorganised sector or unskilled worker of the service sector is not growing in importance.

(i) There are a very large number of workers engaged in service sector such as small shopkeepers, repair persons, transport persons, etc.

(ii) Casual workers in urban areas who have to search for daily employment. They are employed as printers, plumbers, repair persons and doing other odd jobs.

(iii)Many of them don't find work everyday. Sometimes, they may spend the whole day but earn very little.

(i)All activities that give an income return are called economic activities.

Example : People going for work in factories, farms, banks, hospitals, school etc.

(ii)All activities which do not give any income in return are called non-economic activities.

Example : doing social work, helping the poor, going to temple, etc.

Disguised unemployment: This is the situation of underemployment, where people are apparently working but all of them are made to work less than their potential. This kind of underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment

Income and employment would increase if farmers are provided with irrigation and marketing facilities:

(i) Suppose a new dam is constructed and canals are dug to irrigate, it could lead to a lot of employment generation within the agricultural sector itself and in reducing the problem of underemployment.

(ii) Farmers required to transport their products to a nearby town. If the government invest some money in transportation and storage of crops or makes better rural roads so that mini trucks can reach everywhere. This activity can provide productive employment to not just farmers but also others such as those in services like transport or trade.

(iii) Marketing facilities provide better atmosphere for sale of vegetables, fruits, milk and milk products, definitely it will increase income and employment of nearby areas and farmers.

Organised sector covers those enterprises or places of work where the terms of employment are regular and therefore, people have assured work.

Advantages of the organised sector:

(i) Workers enjoy security of employment.

(ii) If they are asked to work for longer hours, they are paid extra money for overtime.

(iii) They get paid leaves, holidays, provident fund and gratuity etc.

Unorganised sector is characterised by small and scattered units which are largely outside the control of the government.

Three disadvantages of unorganised sector:

(i) Employment is not secure.

(ii) Generally jobs in such type of sector are low paid and generally not regular.

(iii) Employers do not make provision for overtime payment, paid leaves or holidays, medical facilities, gratuity and provident fund.

Way to increase employment in urban areas:

(i) Concrete action should be taken to promote decentralisation of industries

(ii) Promotion of small scale industries.

(iii) Development of production techniques which can be implemented with low capital investment.

The unorganised sector mostly comprises landless agricultural labourers. Nearly 80% of rural households in India are in small and marginal farmers category.

These farmers need to be supported through adequate facility for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.

The following are the importance of primary sector in the Indian economy:

(i) It is the base of livelihood of the most of the population.

(ii) This sector includes those activities which directly uses natural resources.

(iii) It forms the base for all other products that we subsequently make.

The reasons are mentioned below:

(i) In any country several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc. are required. These can be considered as basic services. In a developing country the government has to take responsibility for the provision of these services.

(ii) The development of agriculture and industry leads to the development of services such as transport, trade, storage and the like, as we have already seen. Greater the development of the primary and secondary sectors, more would be the demand for such services.

(iii) 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.

(iv) Over the past decade or so, certain new services such as those based on information and communication technology have become important and essential. The production of these services has been rising rapidly.

The following important historical changes have been taken place in primary sector :

(i)As the methods of farming changed and agriculture sector began to prosper, it produced much more food than before. Many people could now take up other activities.

(ii)There were increasing number of craftpersons and traders. Buying and selling activities increased many times. Besides, there were also transporters, administrators, army etc.

(iii)However, at this stage, most of the goods produced were natural products from the primary sector and most people were also employed in this sector.

Historical changes brought about in secondary sector are the following :

(i)Over a long time and especially because new methods of manufacturing were introduced, factories came up and started expanding.

(ii)Those people who had earlier worked on farms now began to work in factories in large numbers. People began to use many more goods that were produced in factories at cheap rates. Secondary sector gradually became the most important in total production and employment.

Historical changes that have been brought about in the tertiary sector are the following :

(i) In the passed more than 100 years, there have been a further shift from secondary to tertiary sector in developed countries.

(ii) The service sector have became the most important in terms of total production.

(iii) Most of the working people are also employed in the service sector and this is the general pattern observed in developed countries.

(i) Tertiary sector.

(ii) Primary sector.

(iii) More than half of the workers in the country are still working in the primary sector.

The characteristics of the unorganised sector are stated below:

(i)There are rules and regulations but these are not followed. Jobs here are low-paid and often not regular.

(ii)There is no provision for overtime, paid leave, holidays, leave due to sickness etc.

(iii)Employment is not secure. People can be asked to leave without any reason.

(iv)When there is less work, such as during some seasons, some people may be asked to leave.

(v)A lot also depends on the whims of the employer.

Primary sector employs the highest number of people.

Employment rates continued to remain high in the primary sector because enough jobs have not been created in the secondary and tertiary sectors by the goverment.

There are some activities, which the government has to support.

(i)The private sector may not continue their production or business unless government encourages it.

(ii)For example, selling electricity at the cost of generation may push up the costs of production of goods in many industries. Many units, especially small-scale units, might have to shut down.

(iii)Government here steps in by producing and supplying electricity at rates which these industries can afford. Government has to bear part of the cost.

Those people who had earlier worked on farms now began to work in factories which is also known as disguised unemployment. Opening of cold storage have given opportunity to farmers to store their products like potatoes and onions and sell them when the price is good.

The explanations:

(i) Raw material - Agriculture provides basic raw material to the industrial sector, e.g., cotton to a cloth industry and sugarcane to a sugar industry. Industrial sector, in turn, provides the basic inputs to the agricultural sector. Industrial goods such as tractor, harvesting machines, fertilisers are a few basic inputs that are used by the agricultural sector.

 (ii) Market - Agricultural sector provides market to the industrial sector. This implies that the people engaged in agriculture consume the products produced by the industries. These products, to name a few, include soaps, fridges, televisions and so on.

 (iii) Labour - Agricultural sector provides labour to the industrial sector. In other words, the industrial sector provides employment to the excess labour in the agricultural sector.

(iv) Wage goods - The most important support that agriculture provides to the industries is the wage goods, the food grains. In simple words, agricultural sector feeds the industrial labourers, which keeps them healthy, and thereby makes them more productive.

Agriculture and industry move hand-n-hand in the below mentioned ways:

(i) Usage of machines like tractors, harvesters and threshers have changed the pattern of agriculture from labor-intensive to capital-intensive.

(ii) The raw materials acquired as agricultural produce are processed in industries to obtain the finished goods, which are later sold in the market. For example, cotton is used to produce textile.

(iii) Transportation helps in carrying the raw materials from the fields to the industries. It also helps to bring the finished goods to the market.

The advantages of self-help groups (SHG) for the poor are –

(i) The SHG help borrowers over the problem of lack of collateral

(ii) SHG helps in getting timely loans for a variety of purposes and at a reasonable interest rate.

(iii) SHG builds blocks of organisation of the rural poor.

(iv) They help women to become financially self-reliant.

It has been set up with the objectives of improving productivity.