Learning Objective
- Sectors of Economic Activities
- Comparing the 3 Sectors
- Primary, Secondary and Tertiary Sectors in India
- Division of Sectors as Organised and Unorganised
- Sectors in Term of Ownership: Public and Private Sectors
Sectors of Economic Activities
- The primary sector involves extracting natural resources, like farming and mining.
- The secondary sector transforms these resources into goods through manufacturing, also known as the industrial sector.
- The tertiary sector consists of service activities that support production, such as teaching, healthcare, and software companies.
Comparing the 3 Sectors
- The primary sector extracts natural resources for goods, such as producing cotton fiber.
- The secondary sector processes these resources into finished products, like weaving cloth from cotton.
- The tertiary sector supports production and connects the primary and secondary sectors to consumers through services like transportation and banking.
Historical Change in Sectors
In developed countries, the economy initially centered around agriculture, but evolved with advancements in farming. This led to the emergence of manufacturing, transitioning many from farming to factory work. Eventually, the service sector became dominant, both in production and employment.
Primary, Secondary and Tertiary Sectors in India
Rising Importance of the Tertiary Sector in Production
In 2013-14, India witnessed the tertiary sector becoming the largest producer, surpassing the primary sector. This shift occurred due to several reasons:
- Essential Services: Basic services like healthcare, education, postal services, law enforcement, and administration are crucial for everyone’s well-being and are integral parts of the tertiary sector.
- Development Synergy: Progress in agriculture and industry stimulates the growth of services such as transportation, trade, and storage, further bolstering the tertiary sector.
- Rising Demands: Increasing incomes prompt higher demand for services like dining out, tourism, shopping, private healthcare, education, and professional training.
- Technological Advancements: In the last decade, information and communication technology-based services have emerged as vital, reflecting the changing landscape of the tertiary sector.
Where are most of the people employed?
- More than half of the workers in India are working in the primary sector, mainly in agriculture. It contributes to only a quarter of the GDP.
- Secondary and Tertiary sectors employ less than half the people as compared to the primary sector. They produce 4/5th of the product.
Underemployment
Underemployment occurs when individuals are employed but are not utilizing their full potential. This situation, often referred to as disguised unemployment, is less visible compared to unemployment since people are working, albeit not to their fullest capacity.
How to Create More Employment?
- Employment opportunities can be generated by establishing industries and services in semi-rural areas.
- Each state or region has the potential to boost income and employment through avenues such as tourism, regional crafts, and emerging sectors like IT.
- According to a study by the Planning Commission (NITI Aayog), the education sector alone has the potential to create nearly 2 million jobs.
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):
The central government in India made this law, implementing the Right to Work in about 625 districts of India. Under MGNREGA 2005, all those who are able to and are in need of work in rural areas are guaranteed 100 days of employment in a year by the government.
Division of Sectors as Organised and Unorganized
- The economy consists of two sectors: the organized and unorganized sectors. In the organized sector, businesses operate under government regulations, offering fixed working hours and defined payroll to employees.
- Conversely, the unorganized sector comprises small, scattered units largely beyond government oversight. Despite existing regulations, they often go unheeded, leading to irregular employment and low wages.
How to Protect Workers in the Unorganized Sector?
To support workers in the unorganized sector, several measures can be taken:
- Setting minimum wage rates and regulating working hours by the government.
- Offering affordable loans to self-employed individuals.
- Providing basic services such as education, healthcare, and food at low costs.
- Introducing new legislation to ensure provisions for overtime pay, paid leave, sick leave, etc.
Sectors in Term of Ownership: Public and Private Sectors
- Economic activities can be categorized into public and private sectors based on asset ownership and service delivery. In the public sector, the government owns assets and provides services, while the private sector operates independently.
- Public services prioritize societal welfare, funded through taxes, and aim beyond profit. Essential services like infrastructure development and food distribution are often unprofitable for the private sector and are subsidized by the government.
- Government interventions ensure fair pricing, accessibility to education, healthcare, and social welfare programs, addressing disparities across regions.
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