Ch. 2 Sectors of the Indian Economy

Q. Why is the tertiary sector becoming more important in India?

A. Over the forty years between 1970-71 and 2010-11, while production in all the three sectors has increased, it has increased the most in the tertiary sector. As a result, in the year 2010-11, the tertiary sector has emerged as the largest producing sector in India. This is because:

・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.

・The development of agriculture and industry leads to the development of services such as transport, trade, storage and the like. Greater the development of the primary and secondary sectors, more would be the demand for such services provided by the tertiary sector.

・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. These changes are visible especially in big cities.

・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.

Q. Explain the objectives of implementing MGNREGA(2005).

A. MGNREGA was introduced to implement the Right to Work. It was introduced by the central government in 2005 in about 625 districts as a short-term measure to provide employment.

Following are the reasons for implementing MGNREGA:

・It aims to provide 100 days of employment in a year, guaranteed by the government to people who are in need of work and are able to work. 

・If the government fails to do so, then it gives employment allowance to those people.

・The types of work that would in future help to increase the production from land will be given preference under the Act.

Q. Differentiate between the employment condition of organised and unorganised sector?

A.

Organised Sector	Unorganised Sector
People employed in this sector work in those enterprises or places of work where the terms of employment are regular and therefore, people have job security.	People employed in this sector work in small and scattered units which are largely outside the control of the government.
They are registered by the government and have to follow its rules and regulations which are given in various laws such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act etc.	There are rules and regulations but these are not followed.
Workers in the organised sector enjoy security of employment. They are expected to work only a fixed number of hours. If they work more, they have to be paid overtime by the employer.	Jobs here are low-paid and often not regular. There is no job security. There is no fixed working hours.
They also get several other benefits from the employers like paid leave, payment during holidays, provident fund, gratuity, medical benefits, safe working environment etc.	There is no provision for overtime, paid leave, holidays, leave due to sickness etc.
People cannot be asked to leave without any reason. To do so, there are processes and procedures which the employer has to follow.	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

Q. Describe certain activities of public interest on which the government has to focus on priority basis?

A. ・ There are several things needed by the society as a whole but which the private sector will not provide at a reasonable cost. Thus government has to undertake such heavy spending projects and ensure that such facilities are available to every citizen of the country. Construction of roads, bridges, railways, harbours, generating electricity, providing irrigation through dams etc.

・Some activities are supported by the government as the private sector may not continue their production or business unless government encourages it. Such as:

Electricity: Selling electricity at the cost of generation may push up the costs of production of goods in many industries. Many small-scale units, might have to shut down. Thus government produces and supplies electricity at subsidised rates to these units.

PDS: The government supports both farmers and consumers. 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 government has to bear some of the cost.

・The government must spend on a large number of activities which are its primary responsibility. Like Providing health and education facilities.

・Government pay attention to aspects of human development such as availability of safe drinking water, housing facilities for the poor and food and nutrition.

・The government takes care of the poorest and most ignored regions of the country through increased spending in such areas.

Q. What is underemployment? In which economic sector is it more prevalent? Why?

A. Underemployment is a situation where people are apparently working but all of them are made to work less than their potential. It means more than required people are working at a particular place and even if some people are removed from the work, the production will not be affected.

・In rural areas, it is prevalent in the primary sector (i.e. in agriculture) because primary sector produces only the quarter of the GDP of the country but employs more than half the workers in the country. More people are employed in agriculture than is necessary.

・In urban areas, underemployment is prevalent in the tertiary/service sector. There are thousands of casual workers are employed as painters, plumbers, repair persons etc. in the service sector who search for daily employment. Many of them don’t find work everyday. They earn very little as they do not have better opportunities.