Class 10 Social Science Chapter 9 Sectors of the Indian Economy Notes in English

1Sectors of Economic Activities

Look around you. A farmer is growing wheat, a factory worker is stitching shirts, a teacher is taking a class, a courier is delivering a parcel. All of these are economic activities, but they are clearly not the same kind of work. To make sense of an economy with millions of different jobs, economists group similar activities together. Each such group is called a sector. This chapter looks at three different ways of doing this grouping: by the nature of the activity (primary, secondary, tertiary), by employment conditions (organised, unorganised) and by who owns the enterprise (public, private).

1.1 Primary sector

Growing cotton depends mainly on rainfall, sunshine and climate, not on a factory. Getting milk from a cow depends on the animal’s biology and the fodder it eats. Mining ore out of the ground is the same idea: nature has already made the product, and the activity is simply extracting or growing it. Cultivation, dairy farming, fishing, forestry and mining are all primary-sector activities.

1.2 Secondary sector

Cotton fibre is spun into yarn and woven into cloth. Sugarcane is processed into sugar or gur. Earth is turned into bricks, and bricks into buildings. In every case, nature supplies the raw material but a person has to make the final product through some process of manufacturing, whether in a factory, a small workshop or even at home.

1.3 Tertiary sector

Once cotton is grown and cloth is woven, someone still has to move it by truck or train, store it in a godown, sell it in a shop, insure it, or arrange the payment through a bank. Transport, storage, communication, banking and trade are all tertiary activities: none of them make a new physical good, but they are an aid or a support for production and trade.

The tertiary sector also includes many services that do not directly help produce goods at all, but that every society still needs: teachers, doctors, washermen, barbers, cobblers, lawyers, and people doing administrative and accounting work. In recent years, information-technology-based services such as internet cafes, ATM booths, call centres and software companies have also become an important part of this sector.

1.4 The sectors depend on each other

These three sectors do not work in isolation. They are highly interdependent, so a problem in one sector quickly affects the others.

If this happens	What it shows
Farmers refuse to sell sugarcane to a sugar mill	The secondary (industrial) sector depends on the primary sector for raw material
Companies stop buying Indian cotton and import it instead	Indian cotton farmers lose income and may go bankrupt: the primary sector depends on secondary-sector demand
The price of fertilisers or pumpsets goes up	Farming costs rise and farmers’ profits fall: the primary sector depends on goods made in the secondary sector
Transporters go on strike and lorries stop carrying vegetables and milk from villages	Cities run short of food while farmers cannot sell what they grow: both other sectors depend on the tertiary sector

2Comparing the Three Sectors: GDP and GVA

2.1 Why we measure value, not quantity

Once we have grouped activities into three sectors, the next question is how much each sector actually produces, and how many people it employs. But you cannot add up cars, computers, nails and furniture into one number; that would not make sense. So economists add up the value of everything produced instead of the number of items.

2.2 Final goods and intermediate goods

There is one important precaution: not every good that is bought and sold should be counted. Only final goods and services are counted, because counting every stage would count the same value more than once.

The biscuits are the final good, the one that actually reaches the consumer. The wheat and the flour are intermediate goods: they are used up in making the biscuits, and their value is already included inside the ₹80. Counting the value of the wheat, then the flour, then the biscuits separately would count the same wheat three times over.

2.3 GDP and GVA

3Historical Change in Sectors

Looking at the history of countries that are developed today, a clear pattern shows up.

As farming methods improved, agriculture produced more food than before with fewer people, freeing others to take up trading and craft work. Over time, factories came up and people who had worked on farms moved into them: the secondary sector became the biggest source of production and jobs. Then, over roughly the last hundred years, developed countries have seen a further shift from secondary to tertiary: today, in those countries, the service sector produces the most and employs the most people.

4The Three Sectors in India Today

4.1 Total production has grown hugely

The book compares the value of goods and services produced in India in two years, 1977-78 and 2017-18, because reliable, comparable data exists for both. Reading the chapter’s own bar chart, the total GVA of all three sectors together grew from roughly ₹14 lakh crore in 1977-78 to roughly ₹120 lakh crore in 2017-18, at 2011-12 prices.

4.2 Which sector produces the most: GVA share

The chapter’s Graph 2 shows how the three sectors’ share of GVA changed over these forty years. Just like the total-GVA chart above, this particular graph in the book carries no printed percentage labels, only gridlines, so the values below are careful readings against those gridlines and should be treated as approximate.

4.3 Which sector employs the most: employment share

Unlike Graph 2, the chapter’s Graph 3 does print exact percentages on the bars, so these numbers are exact, not estimates.

Even though tertiary overtook primary in GVA, the same shift did not happen in employment. In 2017-18 the primary sector still employed the largest single share of workers (44%), more than either secondary (25%) or tertiary (31%) on their own, even though, in the chapter’s words, it was “producing only about one sixth of the GVA” (Graph 2, which has no printed labels, reads a little under one-fifth).

4.4 Why the tertiary sector is growing so fast in India

Not every part of the service sector is growing equally well. At one end are a limited number of services that employ highly skilled and educated workers. At the other end are very large numbers of workers, such as small shopkeepers, repair persons and transport workers, who barely earn a living but keep doing this work because no better opportunity is available to them.

4.5 Why employment didn’t shift the way production did

The reason primary-sector employment stayed high is that not enough new jobs were created in secondary and tertiary activities to absorb the workers moving out of farming.

Production in industry and services grew far faster than the number of jobs they created. With not enough new jobs opening up elsewhere, most workers stayed in agriculture, even though there was not enough farm work to keep them all fully occupied. That situation is explained next.

5Underemployment (Disguised Unemployment)

Underemployment is not limited to farming. It is common among casual urban service-sector workers too, such as painters, plumbers and repair persons who do not find work every day, or street vendors who spend a whole day earning very little because they have no better opportunity.

5.1 Disguised unemployment vs open unemployment

6How to Create More Employment

6.1 Four practical ways

Better health services would also create jobs: to improve the health situation, the chapter says we need many more doctors, nurses and health workers to work in rural areas.

7Organised and Unorganised Sectors

This is a second, completely different way of classifying economic activity, based not on what is produced but on the conditions of employment: is the job registered, regular and protected by law, or not?

7.1 Kanta and Kamal: an example comparison

Organised-sector workers get paid leave, holiday pay, provident fund, gratuity, medical benefits, a safe working environment and a pension on retirement, and are paid overtime if they work extra hours. Unorganised-sector workers get none of these as a right; work can disappear in the off-season purely at the employer’s discretion. Some people in the organised sector are not employed by anyone but work on their own; they too have to register themselves with the government and follow its rules. It is also common to find many organised-sector enterprises in the unorganised sector, adopting such strategies to evade taxes and refuse to follow laws that protect labourers, and since the 1990s many workers who once had organised-sector jobs have been pushed into unorganised ones.

Sector	Organised (millions)	Unorganised (millions)	Total (millions)
Primary	1	231 (calculated)	232
Secondary	41	74	115
Tertiary	40	88	128
Total	82	393 (calculated)	475 (calculated)

Late-1990s estimated data (Table 2.3 of the textbook). The book gives the cells shown in plain type; the values marked “(calculated)” are simple arithmetic on those same given numbers, for example Primary unorganised = 232 total minus 1 organised = 231.

Rural unorganised-sector workers who most need protection include landless agricultural labourers, small and marginal farmers, sharecroppers, and artisans such as weavers, blacksmiths, carpenters and goldsmiths; nearly 80% of rural households fall in the small and marginal farmer category. Urban unorganised workers include small-scale industry workers, casual construction/trade/transport workers, street vendors, head-load workers, garment makers and rag pickers. The book also makes a specific equity point: a majority of workers from Scheduled Castes, Scheduled Tribes and other backward communities are found in the unorganised sector, facing both irregular, low-paid work and social discrimination, which is why protecting these workers matters for social development as much as economic development.

8Public and Private Sectors

This is a third way of classifying economic activity, based on who owns the enterprise and who is responsible for delivering the service.

8.1 Why government runs some activities itself

The government takes on certain activities that the private sector will not, or should not, provide on its own:

Beyond this, there are a large number of activities that are the government’s primary responsibility: providing health and education for all (India has one of the largest illiterate populations in the world), and attending to broader human development, such as safe drinking water, housing for the poor, food and nutrition, especially in the poorest and most-ignored regions.

Both these Infant Mortality Rates are described in the book as higher than some of the poorest regions of the world. The chapter gives these facts while stating that health, education and human development are the government’s duty.