Social Studies

(Economics)

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Chapter 2: Sectors of the Indian Economy

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Sectors of the Indian Economy

Economic Activities
Economic activities are performed by three different sectors. They are the primary,
secondary and tertiary sectors.

Primary Secondary Tertiary

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Sector Sector Sector

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The primary sector is involved in natural products which we get from agriculture, fishing,

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dairy and forestry. When these natural products are converted to other forms of

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production through an industrial activity, it is known as the secondary sector. The tertiary
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sector provides services for the production of goods in the primary and secondary sectors.
There are also certain important services such as teaching, medicine, law and information
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technology which may not directly help in the production of goods.
Primary sector: When we produce goods by exploiting natural resources, it is an activity of
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the primary sector. Eg: Farming, forestry, hunting, fishing and mining.
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Secondary sector: Covers activities in which natural products are changed into other forms
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through ways of manufacturing, it is also called as industrial sector. For example, using
cotton fibre from the plant, we spin yarn and weave cloth. Using sugarcane as raw material,
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we make sugar or gur.

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Tertiary sector: These are the activities that

help in the development of the primary &
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secondary sector. These activities by

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themselves do not produce good but they

are an aid and support to the production
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process. Example: Transportation-Goods that

are produced in the primary sector need to
be transported by trucks or trains and than
sold in the wholesale and retail shops;
Storage-at times it is necessary to store these
products in godowns, which is also a service
made available. Communication -talking to
others on telephone); Banking-borrowing
money from the banks. Since these activities
are generate services rather than goods it is
also called Service sector.

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Comparing The Three Sectors

In an economy, there could be one or more sectors which are dominant in terms of total
production and employment, while other sectors are relatively small in size. Therefore,
Comparison can be done among these three sectors on the basis of value of final goods and
services produced.
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 these
sectors gives us gross domestic product (GDP) of a country.
Historical Chane in Sectors: The importance of sectors has changed, At the initial stages of

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development, primary sector was the most important sector of economic activity but over

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a period of time Secondary sector gradually became the most important in total production

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and employment. But there has been a further shift from secondary to tertiary sector in
developed countries. The service sector has become the most important in terms of total

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production.

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In the year 2013-14, the tertiary sector emerged as the largest producing sector in India,
replacing the primary sector. The tertiary sector has become important in India because of
the following reasons:
• Services such as hospitals, educational institutions, post and telegraph services, police
stations, courts, village administrative offices, municipal corporations, defence,

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transport, banks, insurance companies, etc. are considered as basic services and are
necessary for all people.
• The development of agriculture and industry leads to the development of services such
as transport, trade, storage, etc.
• With the rise in the income of people, they start demanding more services like eating
out, tourism, shopping, private hospitals, private schools, professional training, etc.
• Over the past decade, certain new services based on information and communication
technology have become important and essential.
Value of Goods and Services

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Only the final value of goods and services are counted because the value of final goods
includes the value of all the intermediate goods which are used in producing the final good.

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Gross Domestic Product

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The gross domestic product (GDP) is the value of all final goods and services produced

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within a country during a particular year. Sh
Historical Change in Sectors
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Agricultural production was the predominant activity in the initial stage of development.
Most of the people were employed in the primary sector. With the advancement in
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manufacturing, the secondary sector began to increase the total production and
employment level. Gradually, the concentration of technological changes improved the
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efficiency of production in the tertiary sector.

Primary, Secondary and Tertiary Sectors in India
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Over the years, there has been a massive growth in the turnover of all sectors of the
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economy. Therefore, the tertiary sector has been considered one of the largest producing
sectors in India.
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Importance of the Tertiary Sector

• Basic services such as education, health, postal communication, transport and banks are
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essential in daily life.

• The development of the primary and secondary sectors has improved the growth of the
service sector.
• Because of an increase in the income level, people demand services such as tourism,
shopping and dining.
• Recently, the services of advanced information and communication have gained more
importance.
Employment Status

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The share of the agricultural sector has substantially decreased, and the share of the
tertiary sector has grown tremendously. However, the share of employment in these
sectors was not in tune with the GDP, and still the agricultural sector is the largest
employer. It means that there are more people employed in the agricultural sector than
actually required. Even if few agricultural workers stop working, it does not affect the
production level. This is known as disguised employment.
Share of Sectors in GDP (%), 2008

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17.20%
Agriculture

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Industry
53.70%
29.10% Services

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Creation of Employment
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• National Rural Employment Guarantee Act, 2005 (NREGA, 2005) is implemented by the
Central Government for guaranteeing 100 days of employment in a year.
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• The Government provides money or banks provide loans to farmers to construct wells
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for irrigation of land.

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• Under-employment in rural areas can be tackled by creating job opportunities where

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youth are employed in the construction of dams or in the digging of canals.

• Farming co-operatives need to provide cheap credit to farmers for improving farming.
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• Identify and locate job opportunities in industries and services in semi-rural areas.
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• Strengthen the functions of education and health industries.

• Proper planning and support from the Government to facilitate services such as IT and
tourism.
Division of Sectors as Organised and Unorganised
Organised Sector
The organised sector includes enterprises or places of work where the terms of
employment are regular and work is assured. Companies are compelled to follow the rules
and regulations passed under registered acts such as the Factories Act, Minimum Wages
Act, Payment of Gratuity Act, and Shops and Establishments Act. Workers enjoy the security

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of employment and are expected to work only for a fixed number of hours. Over time hours
are paid by the employer, and employees receive several other benefits.
Unorganised Sector
The unorganised sector is small and has scattered units which are mostly out of
government control. Jobs are usually with low wages and are often not regular. An
employee’s job is not secured and there are no provisions for perks and benefits.
• A farmer needs support through adequate facilities for timely delivery of seeds,
agricultural inputs, credit, storage facilities and marketing outlets.
• Small-scale industries require the government’s support for procuring raw material and

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marketing of output.
• The casual worker needs protection in rural and urban areas.

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Organised sector Unorganised sector

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It is a sector where the employment terms are The unorganised sector is characterised by small
fixed and regular, and the employees get assured and scattered units, which are largely outside the

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work. control of the government.
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The job is regular and has fixed working hours. If Jobs are low-paid and often not regular.
people work more, they get paid for the overtime
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by the employer.
Workers enjoy the security of employment. Employment is not secure. People can be asked
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to leave without any reason.

Employes will get medical and several other No benefits are available for the workers.
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benefits.
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Examples: Government employees, registered Examples: Shopkeeping, Farming, Domestic

industrial workers, etc. works, etc.
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Sectors in Term of Ownership: Public and Private Sectors

On the basis of who owns the assets and is accountable for the delivery of services,
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economic activities can be classified into public and private sectors.

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Public Sector
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In the public sector, the Government owns most assets and provides services to the public.
Earning profit is not the motive. Some activities which involve large investment can be
undertaken only by the Government such as constructing roads, bridges, railways;
generating electricity; building ration shops; and providing facilities for health and
education. In these activities, the Government has to support and ensure for everyone.
Private Sector
In the private sector, the ownership of assets and delivery of services are with individuals or
private companies. Earning profit is the main motive. All services provided are to earn
revenue.

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Public Sector Private Sector

This sector is controlled and managed by This sector is owned by a private individual.
the government.
The purpose of the public sector is not just Activities in the private sector are guided by
to earn profits. the motive to earn profits.
This sector focuses on serving the general This sector focuses on constructing a brand
people of the country i.e. public welfare. image.
Capital is obtained by public revenue such Capital can be obtained by issuing shares or
as taxes, bonds, other duties and many loans in this sector.
more.
Extremely secured employment by This doesn’t ensure security of employment,

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parameters of merit, progress or term of totally based on merit and production

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working. output.

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Highly secured job, multiple retirement It doesn’t give any retirement benefit or
facilities etc. allowances.

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Jobs under this sector: Railways, Post Jobs under this sector: Tata Iron and Steel
office, Armed forces, Education etc. Company Limited, Reliance, IT sector etc.

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Responsibilities of Government
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There are a large number of activities which are the primary responsibility of the
government. Here, we have listed a few of them:
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• Government raises money through taxes and other ways to meet expenses on the
services rendered by it.
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• Governments have to undertake heavy spending such as the construction of roads,

bridges, railways, harbours, generating electricity, providing irrigation through dams,
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etc. Also, it has to ensure that these facilities are available for everyone.
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• There are some activities, which the government has to support to encourage the
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private sector to continue their production or business.

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• The government in India buys wheat and rice from farmers at a ‘fair price’ and sells at a
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lower price to consumers through ration shops. In this way, it supports both farmers and
consumers.
• Running proper schools and providing quality education, health and education facilities
for all are some of the duties of the government.
• Government also needs to pay attention to aspects of human development such as
availability of safe drinking water, housing facilities for the poor and food and nutrition,
taking care of the poorest and most ignored regions of the country.

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Important Questions
Multiple Choice questions-
1. The sectors are classified into public and private sector on the basis of :
(a) Employment conditions
(b) The nature of economic activities
(c) Number of workers employed
(d) Ownership of enterprises3
2. When we produce a good by exploiting natural resources, it is an activity of
the:

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(a) Secondary sector
(b) Tertiary sector

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(c) Primary sector
(d) Organised sector

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3. The service sector includes activities such as:

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(a) agriculture, dairy, fishing and forestry Sh
(b) making sugar, gur and bricks
(c) transport, communication and banking
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(d) None of these
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4. Choose the correct meaning of organised sector:

(a) It covers those enterprises where the terms of employment are regular.
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(b) It is outside the control of the government.

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(c) Jobs are not regular.

(d) It provides low salaries.
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5. Which of the following is included in tertiary sector?

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(a) ATM booths

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(b) Call centres

(c) Internet cafe
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(d) All of them

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6. Government owns most of the assets and provides all the services:
(a) Private Sector
(b) Public Sector
(c) Organised Sector
(d) Tertiary Sector
7. The value of all final goods and services produced within a country during a
particular year is called as:
(a) Gross Domestic Product
(b) Net Domestic Product
(c) National Product

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(d) Production of Tertiary Sector

8. A situation in which more persons are employed on a job than are optimally
required is:
(a) Structural unemployment
(b) Disguised unemployment
(c) Cyclical unemployment
(d) Seasonal unemployment
9. Out of 200 million children in the school going age group, how many are
attending schools?

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(a) One-fourth

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(b) Half
(c) Two-thirds

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(d) One-fifth
10. Central government in India made a law, implementing the Right to Work in

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how many districts of India?

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(a) 150 districts Sh
(b) 200 districts
(c) 250 districts
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(d) 625 districts
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11. GDP stands for Gross Domestic Product. What does it show? Pick up the
correct statement given below:
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(a) It shows how big is the economy of a country in a given year in terms of its
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total output.
(b) It shows what the total product of a country in a given year without counting
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the country’s total resources.

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(c) It shows the number of people involved in production in a particular year.

(d) It shows the total value of trade trans-actions of a country in a particular year.
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12. Employment figures of a country are based on data collected from 5-yearly
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survey on employment and unemployment. Which organisation conducts this

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survey?
(a) NSSO—National Sample Survey Organisation
(b) NREGA 2005—National Rural Employment Guarantee Act, 2005
(c) ILO — International Labour Organisation
(d) Census of India
13. Identify the natural product from the list of items given below:
(a) Textile
(b) Wheat flour
(c) Cotton
(d) Tomtao sauce

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14. Which of the following examples does not fall under unorganized sector?
(a) A farmer irrigating his field.
(b) A daily wage labourer working for a contractor.
(c) A doctor in a hospital treating a patient.
(d) A handloom weaver working on a loom in her house.
15. Identify the correct answer from the alternatives provided.
Both Tisco and Reliance Industries are owned by :
(a) The government
(b) Private company

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(c) A cooperative society

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(d) Jointly by private companies and the govt.
Very Short Questions-

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Question 1. Classify the economy on the basis of ownership of enterprises.

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(2012)

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Question 2. Classify the economy on the basis of the nature of the activity. (2015)
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Question 3. What is disguised unemployment? (2012)
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Question 4. Production of a commodity, mostly through the natural process is an
activity of which sector? (2013)
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Question 5. Name the sector in which the government owns most of the assets
and provides all the services. (2013)
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Question 6. Name the sector which continued to be the largest employer even in
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the year 2000. (2014)

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Question 7. How many days of guaranteed employment are provided under

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National Rural Employment Guarantee Act, 2005? (2014)

Question 8. ATM is an example of which sector? (2014)
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Question 9. Suggest any one way to create employment opportunity in the rural
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areas. (2015)
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Question 10. Production of a commodity, mostly through the natural process is

an activity of which sector? (2013)
Short Questions-
Question 1. Explain how public sector contributes to the economic development
of a nation. (2012)
Question 2. Why is NREGA also called the Right to work? Explain the objectives of
National Rural Employment Guarantee Act 2005. (2015, 2014, 2013)
Question 3. With the example of sugarcane, explain the interdependence of all
the three sectors of the economy. (2012)

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Question 4. “The problem of underemployment is not confined only to

agriculture”. Support the statement with examples. (2013)
Question 5. What are final goods and intermediate goods? How do they help in
calculating (GDP) Gross Domestic Product? (2013)
Question 6. Explain any three ways to solve the problem of underemployment.
(2013)
Question 7. Why didn’t shift out of primary sector happen in case of employment
although there has been a change in the share of the three sectors in GDP?
(2013)

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Question 8. Classify the economic sectors on the basis of nature of activities.

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Mention the main feature of each. (2014)
Question 9. What is meant by Gross Domestic Product (GDP)? How is GDP

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measured in India? (2015)

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Long Questions-

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Question 1. Describe the importance of Primary sector in the Indian economy.
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Question 2. How can we create more employment in secondary and tertiary
sectors in rural India? (2012)
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Question 3. Explain the importance of the service sector. (2013)
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Or
Explain reasons for the rising importance of the tertiary sector in India. (2012)
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Question 4. How can employment be increased in both rural and urban areas?
Explain. (2013)
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Question 5. “There are several things needed by the society as a whole”. In the
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light of this statement explain as to who can provide them at a reasonable cost,
the private or the public sector and why? (2013)
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Or
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Explain any three demerits of private sector.

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Question 6. Describe any five conditions or aspects that you would consider
before accepting a job? (2014)
Question 7. ‘There has been a big change in the three sectors of economic
activities, but a similar shift has not taken place in the share of employment.’
Explain the above statement on the basis of facts. (2014)
Question 8. Define tertiary sector. Describe about the different kinds of people
employed in this sector in India. (2014)
Question 9. State any five features each of public sector and private sector.
(2015)

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Assertion Reason Questions:

1. DIRECTION: Mark the option which is most suitable:
a. If both assertion (A) and reason (R) are true and reason (R) is the
correct explanation of assertion (A).
b. If both assertion (A) and reason (R) are true, but reason (R) is not the
correct explanation of assertion (A).
c. Assertion (A) is true, but reason (R) is false.
d. Both assertion (A) and reason (R) are false.
Assertion (A): In the public sector, the government owns most of the assets and

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provides all the services.
Reason (R): The purpose of the public sector is not first to earn profits but to

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promote public welfare.

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2. DIRECTION: Mark the option which is most suitable:
a. If both assertion (A) and reason (R) are true and reason (R) is the

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correct explanation of assertion (A).
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b. If both assertion (A) and reason (R) are true, but reason (R) is not the
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correct explanation of assertion (A).
c. Assertion (A) is true, but reason (R) is false.
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d. Both assertion (A) and reason (R) are false.

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Assertion (A): Disguised unemployment is hidden in contrast to someone who

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does not have a job and is clearly visible as unemployed. Everyone is working,
no one is fully employed.
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Reason (R): In actual fact, labour effort gets divided.

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Case Study Questions:

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1. Read the extract given below and answer the questions that follow:
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Total income is not such a useful measure. Since, countries have different
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populations, comparing total income will not tell us what an average person
is likely to earn. Are people in one country better off than others in a
different country? Hence, we compare the average income which is the total
income of the country divided by its total population. The average income is
also called per capita income. In World Development Reports, brought out
by the World Bank, this criterion is used in classifying countries. Countries
with per captain come of US$ 12,056 per annum and above in 2017, are
called rich countries and those with per capita income of US$ 955 or less are
called low-income countries. India comes in the category of low middle
income countries because its per capita income in 2017was just US$ 1820

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per annum. The rich countries, excluding countries of Middle East and
certain other small countries, are generally called developed countries.
i. Countries with per capita income of US$ 12,056 per annum and
above are called ________ .
a. Low-income countries.
b. Rich countries.
c. Small countries.
d. None of these.
ii. We compare the average income by ________.

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a. Total income of the country divided by the total population.
b. Total population multiplied by total income.

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c. Both A and B.

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d. None of these.

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iii. The rich countries exclude the countries of ________.
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a. Middle East.
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b. Certain other small countries.
c. Sri Lanka.
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d. All of these.
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iv. The average income is:

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a. Income per person.

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b. Income per family.

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c. Income per month.

d. Income per earning person.
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2. Read the extract given below and answer the questions that follow:
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This sector is characterised by small and scattered units which are largely
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outside the control of the government. There are rules and regulations, but
these are 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.
Employment is not secure. 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. A lot also depends on the whims of the employer. This sector
includes a large number of people who are employed on their own doing
small jobs such as selling on the street or doing repair work. Similarly,
farmers work on their own and hire labourers as and when they require:
i. Which sector are we talking about?

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a. Private sector.
b. Public sector.
c. Organised sector.
d. Unorganised sector.
ii. Which of the following is applicable for a worker, who works in the
above-mentioned sector?
a. She gets medical allowance.
b. She got an appointment letter stating the terms and conditions
of work when she joins work.

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c. She gets a regular salary at the end of the month.
d. She is not paid for leave.

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iii. Choose the correct meaning of the organised sector:

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a. It covers those enterprises where the terms of employment are
regular.

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b. It is outside the control of the government.
c. Jobs are not regular.
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d. It provides low salaries.

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iv. Read the statements given below and choose the incorrect options:
1. There is no provision for overtime, paid leave, holidays, etc. in
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the organised sector.

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2. Workers in organised sector enjoy security of employment.

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3. Organised sector covers those places of work where the terms

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of employment are regular.

4. Workers in the organised sector expected to work only a fixed
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number of hours.
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a. Only (1) is incorrect.

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b. (1) and (2) both are incorrect.

c. (2), (3) and (4) are incorrect.
d. Only (4) is incorrect.
MCQ Answers-
1. Answer: d
2. Answer: c
3. Answer: c
4. Answer: a

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5. Answer: d
6. Answer: b
7. Answer: a
8. Answer: b
9. Answer: c
10.Answer: d
11.Answer: a
12.Answer: b

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13.Answer: c

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14.Answer: c

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15.Answer: c
Very Short Answers-

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1. Answer: Public Sector and Private Sector.

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2. Answer: The economy is classified on the basis of economic activities into
three sectors namely Primary sector, Secondary sector and Tertiary sector.
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3. Answer: Disguised unemployment is a situation in which more people are
employed on a job than the required number.
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4. Answer: Primary Sector

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5. Answer: Pubic Sector

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6. Answer: The primary sector continued to be the largest employer even in the
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year 2000.
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7. Answer: 100 days of employment are guaranteed under NREGA, 2005.

8. Answer: Tertiary sector
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9. Answer: Setting up a dal mill, opening a cold storage, starting or promoting

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honey collection are some of the ways of creating employment opportunities

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in rural areas.
10.Answer: Primary Sector
Short Answers-
Answer 1: In the public sector, ownership of assets and delivery of services is
under the government. The government spends huge amounts of money in
providing various services to the public at reasonable costs.
The government thus contributes towards the economic development of the
nation:
By development of infrastructure, i.e.,

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1. Construction of roads, national highways, flyovers, metro-rails, railway

lines, irrigation through dams, etc.
2. The government provides an impetus to industrial growth by supplying
electricity at affordable rates.
3. By running schools and providing good quality of education, the
government is trying to remove illiteracy and taking the nation forward.
Answer 2: Every state or region in India has potential for increasing the income
and employment in that area.
Recognising this, the Central Government in India has passed an act called the

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National Rural Employment Guarantee Act 2005,

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Main objectives of the NREGA 2005 are:
• to implement the Right to Work in 200 districts of India.

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• to guarantee 100 days of employment in a year by the Government. In

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case the Government fails, it offers unemployment allowance.

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• to give preference to the type of work that will help increase the
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production from land.
Answer 3: The primary sector involves production at the most basic level, i.e.,
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through exploitation of natural resources. Cultivation of sugarcane is an
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agricultural activity which 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 is made
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in the factories. The tertiary or service sector provides support to the process of
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production. It includes transportation, storage, marketing and sale of products.

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

other.
Answer 4: The problem of underemployment is not confined only to agriculture.
It can also happen in other sectors.
• For example, there are thousands of casual workers in the service sector in
urban areas who search for daily employment. They are employed as
painters, plumbers, repair persons and other odd jobs. Many of them don’t
find work everyday.
• Similarly, we see other people of the service sector on the street pushing a
cart or selling something where they may spend the whole day but earn

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very little. They are doing such work only due to the lack of better
employment opportunities.
• The unorganised sector includes small and scattered units outside the
government control. Employment is not secure. 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.
Answer 5: 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

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as a tyre sold to the car manufacturer is an intermediate good. The value of final

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goods already includes the value of all intermediate goods that are used in

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making the final good.
The value of final goods and services produced in each sector during a particular

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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

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country. It is the value of all final goods and services produced within a country
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during a particular year.
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Answer 6: There are people who are capable of better work and earning more
than what they are getting. The reason for this is that better jobs for which they
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are qualified are not available. Such people are termed as underemployed, e.g., a
graduate teacher driving a taxi. Underemployment is most prevalent in the
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primary or agricultural sector.

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Three ways to solve the problem of underemployment:

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1. Provision of loans may help in creating jobs for disguised unemployed and
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underemployed workers.
The loan money can be used for the promotion of economic activity of the
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family adding to the family’s earning or for setting up a cottage industry.

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2. Another way is to promote and locate industries and services in semi-rural

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areas where a large number of people may be employed.

Example, Setting up a dal mill, opening a cold storage, starting or
promoting honey collection.
3. If local banks give credit to farmers at a reasonable rate of interest, they
will be able to buy agricultural inputs and increase productivity.
4. Centres for vegetables and fruit processing, health centres, educational
institutions, tourism and IT centres will certainly help in creating jobs.
Answer 7: A remarkable fact about India is that while there has been a change in
the share of the three sectors in GDP, a similar shift has not taken place in
employment.

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02

1. A similar shift out of primary sector did not happen in case of employment
because not enough jobs were created in the secondary and tertiary
sectors.
2. Even though industrial output or the production of goods went up by eight
times during the period, employment in the industry went up by only 2.5
times.
3. While production in the service sector rose by 11 times, employment in
the service sector rose less than three times.
As a result, more than half of the workers in the country are working in the
primary sector, mainly in agriculture, producing only a quarter of the GDP.

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Answer 8: On the basis of nature of activities, economic sectors are classified
into:

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1. Primary sector

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2. Secondary sector
3. Tertiary sector

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Primary sector forms the base for all other products that we subsequently make.
Since most of the natural products we get, are from agriculture, dairy, fishing,
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forestry, this sector is also called sector for agriculture and related activities
(stone quarrying, animal husbandry, etc.).
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Secondary sector covers activities in which natural products are changed into
other forms through ways of manufacturing. It can take place in a factory,
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workshop or at home.
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Examples:
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(a) Spinning yam from cotton fibre from plants.

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(b) Making sugar from sugarcane.

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It is also called the Industrial sector.

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Tertiary sector. Activities in this sector do not produce any goods. This sector
produces services that act as aid and support to the Primary and Secondary
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sectors. Services like administration, police, army, transport, hospitals,

educational institutions, post and telegraph, courts, municipal corporation,
insurance companies, storage, trade communication and banking are some of
the examples of activities of the Tertiary sector. This sector is also known as
Service sector.
Answer 9: Gross Domestic Product (GDP) of a country is the value of all the final
goods and services produced in each sector within a country during a particular
year. This indicates how big the country’s economy is. GDP is measured by the
Central Government Ministry. This Ministry, with the help of all the Indian States
and Union Territories, collects information relating to total volume of goods and
services and their prices and then makes an estimate of the GDP.

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Long Answers-
Answer 1: Importance of Primary sector:
1. Primary Sector provides the basic needs of economy for food and mineral
ores.
2. It produces some of the raw materials (like jute, cotton, coal extracted
from mines) for the industrial sector.
3. The Primary sector continued to be the largest employer in the economy
even in the year 2000, the reason being that Secondary and Tertiary
sectors still do not create enough jobs.

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4. The agricultural population in the Primary sector provides a very large

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market of consumers for the Secondary sector (for buying finished
products like clothes, goods of daily need, fertilizers, etc.).

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Answer 2: Investing in basic agricultural infrastructure like construction of dams

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and canals for irrigation can lead to a lot of employment generation within the
agricultural sector itself reducing the problem of under employment.

a
Sh
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
M
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
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such as those in services like transport or trade.

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

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rural banking.
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The government/banks can provide loans at cheap rates to the small farmers to
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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.
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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
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mill, opening a cold storage, starting or promoting honey collection, etc.

Answer 3: Tertiary sector or service sector plays a very significant role and its
importance is rising day by day:
1. Greater the development of primary sector and secondary sector more
would be the demand for Services.
2. Tertiary sector has become the largest producer in India because various
kinds of Services such as hospitals, educational institutions, post and
telegraph services, police stations, courts, village administrative offices,
transport, banks, insurance companies, etc. are required.
3. Even development of agriculture and industry leads to the development of

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02

services such as transport, trade and storage, etc.

4. With the rise in income, demand for more services is rising.
For example, eating out in restaurants, tourism, malls and shopping
complexes, schools, professional training, etc.
5. New services like Information Technology and outsourcing have become
very important for modem day trade and industry.
Unfortunately, the rapid growth of the service sector in India has not yet
shown the expected corresponding increase in employment.
Answer 4: Ways to provide more employment opportunities in rural areas:

a
1. Promote and locate industries and services in semi-rural areas where a

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large number of people may be employed. Example, setting up a dal mill,

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opening a cold storage, starting or promoting honey collection.
2. Promoting small-scale industries, small-scale manufacturing units, agro-

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processing industries and providing loans for the same. The
government/banks can provide loans at cheap rates to the small farmers

a
to improve their irrigational facilities so that they can get two or three
Sh
crops a year instead of one. Thus more people can be employed in the
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same field.
3. If more dams are built and canal water is provided to all the small farmers,
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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
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farmers will be benefitted but many more people can be employed in

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transport and storage sector.

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

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Answer 5: Society as a whole needs several things which the private sector will
not be able to provide at a reasonable cost.
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Reasons for this are:

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

2. There are several services needed by the society which the private sector
cannot provide at a reasonable price. Activities like construction of roads,
bridges, railways, irrigation through dams etc., require huge amount of
money which is beyond the capacity of the Private sector. Private sector
charges high rates for the use of these services.
3. It is difficult for the Private sector to collect money from thousands of
people who use these services.
4. The Private sector sometimes ignores regional balanced development,
equality of income and development of basic industries.

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5. Private sector charges include profit margins whereas the government

will charge a reasonable price for services. It is the primary duty of the
government to ensure the provision of public facilities with a service
motto.
Answer 6: Before accepting a job many factors need to be considered apart from
income—
1. These include factors such as facilities for families, working atmosphere,
or opportunity to learn.
2. In another case, a job may give less pay but may offer regular
employment that enhances sense of security. Another job however, may

a
offer high pay but no job security and also leave no time for family.

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3. The terms of employment are as per government rules and regulations.

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4. The enterprise also gives several other benefits like paid leave, provident
fund, gratuity, etc.

sh
5. The employer also makes provisions for medical benefits and safe

a
working environment. A safe and secure environment may allow more
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women to take up a variety of jobs.
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Answer 7: Though there has been a change in the share of the three sectors in
GDP, similar shift has not taken place in the structure of employment. The
by

Primary sector continues to be the largest employer even in the year 2000. The
reason for this is that not enough jobs are created in the Secondary and Tertiary
sectors. More than half of the workers in the country are working in the Primary
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sector, mainly in agriculture, producing only a quarter of GDP. In contrast to this,

Secondary and Tertiary sectors produce three- fourths of the produce though
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they employ less than half of the people.

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Reasons:
1. During the last thirty years in the Indian economy, not enough jobs have
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been created in the Secondary and Tertiary sectors, although their output
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has increased many folds. As a result more than half of the workers in the
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country are working in the primary sector, mainly agriculture, causing

gross underemployment due to overcrowding in the sector.
2. There are more people engaged in agricultural activities than is necessary.
The situation is such that even if we remove a lot of people from
agriculture, the production of this sector will not be affected.
Answer 8: Tertiary sector. Activities in this sector do not produce any goods. This
sector produces services that act as aid and support to the primary and
secondary sector. Services like administration, police, army, transport, hospitals,
educational institutions, post & telegraph, courts, municipal corporation, banking
& insurance, storage, trade and communications are examples of activities in the
tertiary sector. This sector is also known as the Service Sector.

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1. The first kind of people are the highly skilled and educated people
providing specialised services. E.g., doctors, lawyers, accountants, etc.
There are a limited number of services that employ highly skilled and
educated workers and offer big salaries.
2. There are also a very large number of workers engaged in services, such
as small shopkeepers, repair persons, transport persons. These people
barely manage to earn a living and yet they perform these services
because no alternative opportunities for work are available to them.
Hence, only a part of this sector is growing in importance.
Answer 9:

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Public Sector:
1. The government owns most of the assets.

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2. All the services are provided by the government.

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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.

a
Sh
4. Employees feel secured and there is discipline and regular work.
5. Governments raise money through taxes and other meAnswer:
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6. For example, railways, post offices, construction of roads, bridges,

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harbours, dams, etc.

Private Sector:
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1. In the private sector, ownership of assets is in the hands of private

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

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3. Activities in the private sector are guided by the motive to earn profits
and not welfare of the people.
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4. Jobs of the employees are less secured and the whims of the owners are
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above all.
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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.
Assertion Reason Answer:
1. (b) If both assertion (A) and reason (R) are true and reason (R) is the correct
explanation of assertion (A).
2. (b) If both assertion (A) and reason (R) are true, but reason (R) is not the
correct explanation of assertion (A).
Case Study Answer:

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1. i (b) Rich countries.

ii. (a) Total income of the country divided by the total population.
iii. (d) All of these.
iv. (a) Income per person.
2. i (d) Unorganised sector.
ii. (d) She is not paid for leave.
iii. (a) It covers those enterprises where the terms of employment are regular.
iv. (a) Only (1) is incorrect.

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