Sectors of Indian Economy Class 10 Notes Social Science Economics Chapter 2

Sectors of Economic Activities

Various economic activities include activities producing goods and services. These activities happen every minute around us. They can be grouped into sectors. There are many activities that are undertaken by directly using natural resources. If we take the example of cotton, which we obtain after processing a plant, we depend mainly, but not entirely, on natural factors like rainfall, sunshine and climate. Producers are dependent on the biological process of the animals and availability of fodder for the natural product that is milk. Minerals and ores are also natural products.

When we produce goods by exploiting natural resources, it is an activity of the primary sector. It forms the base for all other products that we subsequently make.
Most natural products are obtained through agriculture, dairy, fishing, forestry and hence this sector is also called agriculture and related sector.

The secondary sector covers activities in which naturaL products are processed into other forms through manufacturing associated with industrial activity. The product is artificially created or processed and the process of manufacturing becomes essential. This is the next step after the primary sector.

This could be in a factory, a workshop or at home. For example, yarn could be spun by using cotton fibres obtained through the primary sector. Sugarcane is processed to make jaggery or sugar.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy


  • This sector gradually become associated with the different kinds of industries that came up, it is also called the industrial sector.
  • The third category of activities is called tertiary sector. It is different from the production of goods. This kind produces services which help in the development of the primary and secondary sectors.
  • They do not produce goods but they are an aid or a support for the production process. For example, cotton clothes after finishing would need to be transported by trucks or trains and then sold in wholesale and retail shops.

Transport, storage, communication, banking, trade are some examples of tertiary activities. This sector is also called the service sector because it produces services.

The service sector also includes some essential services that may not directly help in the production of goods. Service people like teachers, doctors, and those who provide personal services such as washermen, barbers, cobblers, lawyers, and people to do administrative and accounting works are also parts of this sector.

Frequently Asked:
In recent times, certain new services based on information technology such as internet cafes, ATM booths, call centers, software companies etc have become important.

Economic activities, though, are grouped into three different categories, are highly interdependent.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Example 1.

Examples of Economic Activities


What does this show?

(A) Imagine what would happen if farmers refuse to sell sugarcane to a particular sugar mill. The mill will have to shut down. This is an example of the secondary or industrial sector being dependent on the primary.
(B) Imagine what would happen to cotton cultivation if companies decide not to buy from the Indian market and import all cotton they need from other countries. Indian cotton cultivation will become less profitable and the farmers may even go bankrupt if they cannot quickly switch to other crops. Cotton prices will fall.
(C) Farmers buy many goods such as tractors, pump sets, electricity, pesticides and fertilizers. Imagine what would happen if the price of fertilizers or pump sets go up. Cost of cultivation of the farmers will rise and their profits will be reduced.
(D) People working in industrial and service sectors need food. Imagine what would happen if there is a strike by transporters and lorries refuse to take vegetables, milk, etc. from rural areas. Food will become scarce in urban areas whereas farmers will be unable to sell their products.

(B) This is an example of the primary sector being dependent upon the Secondary sector
(C) This is an example of the Secondary and primary sectors being dependent upon the tertiary sector.
(D) This is an example of the tertiary sector being dependent on the primary sector.

Comparison of The Three Sectors

The various production activities in the primary, secondary and tertiary sectors produce a very large number of goods and services. They employ a huge workforce. To calculate how many people work in each sector individually and their individual production, economists suggest that the values of final goods and services should be added together.

For total production by a country, the value of goods and services in the three sectors are calculated, and then added up.

Frequently Asked:
Not every good (or service) that is produced and sold is counted to calculate the production of each sector. Only the final goods and services are added to avoid double addition and inaccurate sums.

To understand why, consider this example- a farmer sells corn and chickpeas to a mill for Rs. 20 per kg. The mill grinds the grains and sells the flour to a noodle factory for Rs. 30 per kg. The flour is then converted into ten packs of noodles by using oil, water, salt etc and then sold in the market to the consumers for Rs. 10 in the markets. Noodles are the final goods, i.e., goods that reach the consumers.

It is only the cost of these packets of noodles which should be added up. The prices of intermediary products have already been adjusted in those prices.

One or more sectors could dominate an economy in terms of total production and employment, while other sectors are relatively small in size.

The sum of production of all three sectors is called the Gross Domestic Product (GDP) of a country. It is the value of all final goods and services produced within a country during a particular year. GDP indicates the size of an economy.

GDP is measured by a Central government ministry in India- it is currently the fifth largest economy in the world in terms of GDP. This Ministry, with the help of various government departments of all the Indian states and union territories, collects information relating to total volume of goods and services and their prices and then estimates the GDP.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Example 2.
Correct and arrange the important aspects for calculating GDP from this jumble.
To count goods and services we add the numbers that are produced. We count all those that were produced in the last five years. Since we shouldn’t leave out anything we add up all these goods and services. [NCERT]
This can be arranged in steps.

  1. To count goods and services, we add the numbers that are produced.
  2. Since we shouldn’t leave out anything we add up all these goods and services.
  3. We count all those that were produced in the last five years.

Historical Change In Sectors

It has been reported that in most countries, the primary sector was the most important sector of economic activity during the initial, stages of their development. With growth and advancement in technology, the agriculture sector began to prosper. People were encouraged to take up new activities. There were an increasing number of craftsmen, traders, transporters, administrators and soldiers. Markets grew larger. Most of the goods produced were natural products from the primary sector and most people were also employed in this sector.

With time, new methods of manufacturing were introduced, factories came up and started expanding.

People were attracted to it. People began to use many more goods that were produced in factories at cheap rates. The secondary sector gradually became the most important in total production and employment.
These trends show that the importance of the sectors has changed over time.

In the past 100 years, 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 production. Most of the working people are also employed in the service sector.

Example 3.
Match the following:

Problems faced by the farming sector

Some possible measures

(1) Unirrigated land (a) Setting up agro-based mills
(2) Low prices for crops (b) Cooperative marketing societies
(3) Debt burden (c) Procurement of food grains by government
(4) No job in the off season (d) Construction of canals by the government
(5) Compelled to sell their grains to the local traders soon after harvest (e) Banks to provide credit with low interest


Problems faced by the farming sector

Some possible measures

(1) Unirrigated land (d) Construction of canals by the government
(2) Low prices for crops (c) Procurement of food grains by government
(3) Debt burden (e) Banks to provide credit with low interest
(4) No job in the off season (a) Setting up agro-based mills
(5) Compelled to sell their grains to the local traders soon after harvest (b) Cooperative marketing societies

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Example 4.
Find the odd one out and say why.
(A) Tourist guide, dhobi, tailor, potter
Tourist guide

Explanation: He is appointed by a Government Department. Rest are self employed.

(B) Teacher, doctor, vegetable vendor, lawyer
Vegetable vendor

Explanation: He works in the primary sector, while jobs of teacher, lawyer and doctor come under the tertiary sector.

(C) Postman, cobbler, soldier, police constable

Explanation: He works in the private sector while the postman, soldier and poLice constable work for the public sector or the organised sector.

(D) MTNL, Indian Railways, Air India, Jet Airways, All India Radio
Jet Airways

Explanation: All the others are public sector- enterprises.

Example 5.
A study in Ahmedabad found that out of 15,00,000 workers in the city, 11,00,000 worked in the unorganised sector. The total income of the city in this year (1997-1998) was Rs. 60,000 million. Out of this Rs. 32,000 million was generated in the organised sector. What kind of ways should be thought of for generating more employment in the city?
Despite a lesser number of workers in the organised sector, more revenue was produced. Ways have to be created to offer people jobs in the organised sector. More industries, factories and markets should be opened up. More companies should be set up.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Example 6.
A research scholar looked at the working people in the city of Surat and found the following.

Place of Work Nature of Employment Percentage of Working People
(A) In offices and factories registered with the government.  Organized 15
(B) Own shops, office, clinics in marketplaces with formal license. 15
(C) People working on the street, construction workers, domestic workers. 20
(D) Working in small workshops is usually not registered with the government.

Complete the table. What is the percentage of workers in the unorganized sector in this city?
(B) Unorganised
(C) Unorganised
(D) Unorganised, 50

Explanation: People who work in firms recognized by the government or are self-employed but still have themselves registered belong to organised sectors.

All other forms of firms, companies, self-employed workers are unorganised sector workers.

Rising Importance Of The Tertiary Sector In Production

Over the forty years between 1973-74 and 2013-14, while production in all the three sectors has increased, it has increased the most in the tertiary sector.

The tertiary sector has emerged as the largest producing sector in India replacing the primary sector in 2013-14.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Frequently Asked:
In all countries, basic services like the hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc. are essential. The Governments have to take responsibility for the provision of these services in developing countries.

The second reason is because the development of agriculture and industry leads to the development of services such as transport, trade, storage.

Greater the development of the primary and secondary sectors, more would be the demand for such services. Third, 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.

Fourth, 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. Service sector in India employs many different kinds of people but the entire service sector is not growing in significance together. There are a limited number of services that employ highly skilled and educated workers.

There are also a very large number of workers engaged in services such as small shopkeepers, repair persons, transport persons, etc. They have to provide these services due to lack of alternative opportunities for work.

While there has been a change in the share of the three sectors in GDP, a similar shift has not taken place in employment. The primary sector continues to be the largest employer despite its decreasing share in performance.

For example, the production of goods or industrial output increased by more than nine times during the period, employment rose only by three times. While production in the service sector rose by 14 times, employment in the service sector rose around five times. 50% workers are employed in the primary sector, mainly in agriculture, producing only about one sixth of the GDP. The secondary and tertiary sectors employ less than 50% of the people and manage to produce about five sixth of the total produce.

We can conclude that there are more people in agriculture than what is required. Even if some of them were removed from jobs, the production would not be affected. This means workers in the agricultural sector are underemployed.

On small pieces of lands, numerous people, sometimes an entire family works. Their labour effort gets divided. No one is fully emploued. This is the situation of underemployment, Wiiere people are apparently working but all of them are made to work less than their potential. This kind of underemployment is hidden as opposed to someone who is unemployed. Hence, it is also called disguised unemployment.

If underemployed people from the agricultural sector were provided with proper work elsewhere, agricultural production will not suffer. Their family income would increase. This underemployment is not restricted to the agricultural sector.

There are casual workers in the service sector such as painters, plumbers, repair persons in urban areas who search for daily employment. Street vendors also work very hard but earn very little. This is due to lack of employment opportunities.

Example 7.
Choose the correct answer:
Underemployment occurs when people
(a) do not want to work
(b) are working in a lazy manner
(c) are working less than what they are capable of doing
(d) are not paid for their work
(c) are working Less than what they are capable of doing.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Creation of More Employment Opportunities:
In creating more employment, only the government can help the citizens. The government provides money through schemes and the banks are encouraged to lend more money to the impoverished, to provide these workers with the kind of support they require.

Constructing better dams, provision of subsidized fertilisers and seeds can lead to a lot of employment generation within the agricultural sector itself reducing the problem of underemployment. To help in the transportation of the produce, the government can help construct better infrastructure and help store the crops. This activity can help create employment to those in services like transport or trade.

If the local bank gives these workers easy credit at a reasonable rate of interest, workers can buy any items of input required for their work easily.

Another way to tackle the problem of underemployment is to identify, promote and locate industries and services in semi-rural areas where a large number of people may be employed.

About 60 percent of the population in India belongs to the age group 5-29 years. Out of this, only about 51 percent are attending educational institutions.

Many children are forced to work as child laborers to support their families. If these children are to attend schools, we will require more buildings, more teachers and other staff.

NITI Aayog, earlier known as the Planning Commission estimated that about 20 lakh jobs can be created in the education sector alone. A similar scope could be created in the Health sector. Every state or region has the potential for increasing the income and employment for people in that area in fields like tourism, native craft industry or the IT industry.

It requires government support. If tourism as a sector is improved, it can provide additional employment to 35 lakh people every year. However, these are long-term reforms. For quick reformation, the central government of India implemented the Right to Work in about 625 districts of India through Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA 2005). Under this, all those who want to and can work in rural areas are guaranteed 100 days of employment in a year by the government. If the government fails to provide employment, it will give unemployment allowances to the people. Production-enhancing land activities are the main provider of work under the Act.

Division of Sectors: Organised And Unorganised Organised sector covers those enterprises or places of work where:

  1. Terms of employment are regular
  2. People have assured work
  3. They are registered by the government and are bound to follow its rules and regulations which are given in-laws like the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act etc.
  4. Workers in the organized sector enjoy the security of employment.
  5. They are expected to work only a fixed number of hours. If they work more, they have to be paid overtime by the employer.
  6. They also get several other benefits from the employers like medical leaves, paid leaves, payment during holidays, provident fund, gratuity etc.
  7. Factory manager has to ensure facilities like drinking water and a safe working environment.
  8. These workers get pensions upon retirement as well.

It is called organized because it has some formal processes and procedures. Some of these people may be self-employed but they still have to register themselves with the government and follow the rules and regulations.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

The unorganized sector is characterized by small and scattered units:

  1. Which are largely outside the control of the government.
  2. Rules and regulations are not followed.
  3. Jobs here are low-paid and often not regular.
  4. There is no provision for overtime, paid leave, holidays, leave due to sickness etc.
  5. Employment is not secure. People can be fired anytime, sometimes according to the whims of the employer.
  6. Employment is seasonal.

This sector includes a large number of self-employed in doing small jobs such as repair work. Farmers and farm laborers are both workers of the unorganized sector.

Workers of the Unorganised Sector:
The organized sector offers fascinating jobs but the employment opportunities grow very slowly. It is also common to find many organized sector enterprises in the unorganised sector. These strategies are adopted so as to evade taxes and refuse to follow laws that protect labourers. Workers are forced to enter the low paying unorganized sectorjobs. Earnings are insecure and irregular.

Organized workers upon losing jobs find them in unorganized sectors. Thus, there is also a need for the protection and support of the workers in the unorganized sector.

The unorganized sector comprises landless agricultural labourers, small and marginal farmers, sharecroppers and artisans (such as weavers, blacksmiths, carpenters and goldsmiths). Almost 80 per cent of rural households in India has small and marginal farmers. These farmers need to be supported through adequate facilities for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.

The urban unorganized sector comprises mainly workers in small-scale industry, casual workers in construction, trade and transport workers, street vendors, head load workers, garment makers, rag pickers etc. These small scale industries also require Government’s support for procuring raw material and marketing of output.

Majority of workers from scheduled castes, tribes and backward communities find themselves in the unorganised sector. Besides irregular and low paid work, these workers also face social discrimination.

Protection and support to the unorganised sector workers is essential for both economic and social development

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Example 8.
Read the extract given below and answer the questions that follow:
These workers are forced to take up jobs in the unorganised sector with low earnings. Hence, besides the need for more work, there is also a need for protection and support of the workers in the unorganised sector.
Who are these vulnerable people who need protection? In the rural areas, the unorganised sector mostly comprises landless agricultural labourers, small and marginal farmers, sharecroppers and artisans (such as weavers, blacksmiths, carpenters and goldsmiths). Nearly 80 per cent of rural households in India are in the small and marginal farmer category. These farmers need to be supported through adequate facilities for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.
(A) Which of the following is a reason for the need of protection for vulnerable people?
(I) They do not have job security
(II) They are paid less
(III) They have less opportunities for work
(a) (I) only
(b) (II) only
(c) (III) only
(d) (I), (II) & (III)
(d) (I), (II) & (III)

(B) Which of the following can be a way to help these vulnerable sections?
(a) They should be offered clothes
(b) They should be sent to another country
(c) They should be given more food
(d) They should be offered greater, safer and varied opportunities to work.
(d) They should be offered greater, safer and varied opportunities to work.

(C) Mention one type of work which can be categorised under the Unorganised sector.

(D) Assertion (A): Most families in India have people working in Unorganised sectors.
Reason(R): Organised sectors have less opportunities to offer.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is correct but (R) is wrong.
(d) (A) is wrong but (R) is correct.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).

Sectors In Terms of Ownership: Public And Private Sectors

Economic activities could also be classified into two categories on the basis of who owns assets and is responsible for the delivery of services.

  1. Public Sector: the government owns most of the assets and provides all the services. Example: Railways or post office.
  2. Private Sector: private ownership of assets and delivery of services. Example: Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned.

Activities in the private sector are guided by the motive to earn profits. The purpose of the public sector is not just to earn profits.

Governments raise money through taxes and reimburse the expenses of the services used through it.
Several basic and essential items are required by all sections of societies- some of them are not able to afford even those items. The private sector will not provide these at a reasonable cost. Some of these need spending large sums of money, which is beyond the capacity of the private sector.

The collection of money is a long process and cannot be carried out by private individuals. Construction of roads, bridges, railways, harbours, generating electricity, providing irrigation through dams, etc are such activities. Governments thus undertake these activities and ensure their availability to everyone.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

Activities which the private sector may not continue their production or business unless the government encourages it, essentially needs the government’s support. Providing electricity, water and other resources at subsidized rates is an example. Grains are provided at a fair price to the underprivileged through government intervention and support. The government has to bear some of the cost. Through this, the government supports both farmers and consumers.

Providing health and education facilities are some of the most important activities which have to be provided by the government. Running proper schools and providing quality education, particularly elementary education, is the duty of the government.


  • India’s size of illiterate population is one of the largest in the world.
  • Nearly half of India’s children are malnourished and a quarter of them are critically ill.
  • The infant mortality rate of Odisha (41) or Madhya Pradesh (47) is higher than some of the most backward nations of the world.
  • the Government also needs to pay attention to indicators of human development like availability of safe drinking water, housing facilities for the poor and food and nutrition. It is the responsibility of the government to pay attention to the remotest and weakest areas of the country.
  • The government should increase its spending upon various facilities to help develop these areas.

→ Food Security: Food security is a measure of the availability of food and individuals’ ability to access it.

→ Subsidy: A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government.

→ Sharecroppers: A sharecropper is a member of a low social class of farm workers who receive a share of the value of the crop. They pay their farm owners for their shelter and food.

NCERT Class 10 Economics Chapter 2 Notes Sectors of Indian Economy

→ Gratuity: An amount given by an employer to his/her employee for the services rendered by him during the period of employment.

→ Provident Fund: A retirement savings scheme introduced by the government.

→ Enterprises: A business or a firm

→ 2005: Mahatma Gandhi National Rural Employment Guarantee Act was passed.

Class 10 Social Science Notes