Sectors of the Indian Economy

Sectors of the Indian Economy

Sectors of the Indian Economy carried 5 marks in the 2026-27 sample paper and 6 in February 2026, and about 6 in May 2026, whose 5-marker was best read as coming from this chapter. The sample paper and May 2026 set a GDP-by-sector sum; February 2026 set the 5-marker (primary vs secondary OR organised vs unorganised); the sample paper had a 3-marker on disguised unemployment and 2025 one on the public and private sectors. Classifying an activity, reading a picture of work, and naming a sector from clues are common MCQs.

Marks are most often lost by adding intermediate goods into GDP, by assuming that the sector which produces most also employs most, by mixing up public (ownership) with organised (conditions of work), and by giving remedies for disguised unemployment that do not create any new work.

Revise in 5 Minutes

Three ways to classify: by activity (primary, secondary, tertiary); by conditions of employment (organised, unorganised); by ownership (public, private).

• The sectors depend on one another: a transport strike or a drought hits all three.

Gross Domestic Product (GDP)

• Value of all final goods and services produced within a country in a year.
• Final or intermediate depends on the use: milk bought by a home is final, by a sweet shop intermediate.
• Value added = value of output − value of inputs bought.

India

• Tertiary is now the largest producer: basic government services, growth of farming and industry, rising incomes, IT services; but many service jobs are small and low-paid.
• Employment has not shifted as much: the primary sector still has the largest share of workers.
• Disguised unemployment: more people on a farm than it needs. In towns, casual workers are underemployed.
• Creating rural work: irrigation, roads and transport, storage, small processing units, tourism and crafts, schools and health centres.
• MGNREGA 2005: right to work in rural areas; 100 days a year; unemployment allowance if work is not given; preference to work that raises production from land.

Public vs private: the government owns most assets and aims at public welfare; private owners aim at profit. The government provides what private firms cannot afford to build or will not provide at a low cost: roads, dams, cheap power, food through ration shops, schools, hospitals.

Traps

• Largest producer is not largest employer.
• Public is not the same as organised; a street vendor is tertiary but unorganised.
• A village activity can be secondary.
• Never add intermediate goods or imports to GDP.

How to use this page: try each question on paper first, then read the answer. The marks against each step show what an examiner looks for. The 1-mark MCQs and Assertion-Reason questions are in the quiz at the end, together with questions that test how well you understand the chapter; every quiz answer comes with its explanation.

Short Answer Questions (2 and 3 Marks)

Question 1 (3 marks)

Manoj runs a growing leather-goods workshop with 25 workers in an imaginary town, but he has not registered it with the government. His workers are paid by the piece and get no paid leave.

(i) Give two reasons why he may be keeping the workshop unregistered. (2 marks)

Answer.

Model answer:

1. To avoid paying taxes.
2. To escape laws on minimum wages, working hours, leave and provident fund, which would raise his costs.

Marking scheme:

1. To avoid paying taxes. — 1 mark
2. To avoid laws on minimum wages, working hours, leave and provident fund, which would raise his costs; he can also remove workers whenever he likes. — 1 mark

(ii) Why do his workers put up with these conditions? (1 mark)

Answer.

Model answer:

Regular jobs are few and many others want work, so they fear losing even this one.

Marking scheme:

1. Regular jobs are scarce and many others are waiting for work, so they fear losing even this job if they complain. (Also accept: they need each day's income and have no other work.) — 1 mark

Question 2 (3 marks)

A dairy in an imaginary village sells milk worth ₹6 lakh to households and milk worth ₹4 lakh to a sweet shop. The sweet shop turns this milk into sweets and sells them for ₹9 lakh. Assuming no other inputs are used, how much do these activities add to GDP? Explain your answer.

Answer.

Model answer:

1. Milk sold to households is a final good, so ₹6 lakh counts.
2. Milk sold to the sweet shop is an intermediate good; its value is already in the price of the sweets, so it is not added again.
3. GDP rises by ₹6 lakh + ₹9 lakh = ₹15 lakh.

Marking scheme:

1. Milk sold to households is used up by them, so it is a final good: ₹6 lakh is counted. — 1 mark
2. Milk sold to the sweet shop is an intermediate good; its value is already inside the ₹9 lakh of sweets, so it is not counted again. — 1 mark
3. Addition to GDP = ₹6 lakh + ₹9 lakh = ₹15 lakh. (Also accept the value-added method: dairy ₹10 lakh + sweet shop ₹5 lakh = ₹15 lakh.) — 1 mark

Question 3 (2 marks)

Bablu, a house painter in a big city, finds work on some days; on others he waits at the labour market and goes home without work. What kind of employment problem does he face? Give two of its features.

Answer.

Model answer:

1. Underemployment: he has some work, but less than he can and wants to do.
2. His work is found day by day, and his income is low and uncertain.

Marking scheme:

1. Underemployment: he has work, but less than he is able and willing to do. (Also accept: disguised unemployment in towns.) — 1 mark
2. Any two features: the work is casual and found day by day; income is low and uncertain; there is no job security or any benefit. — 1 mark

Question 4 (3 marks)

Anita is a nurse in a large registered private hospital. Bina does similar work as a helper in a small clinic run from a house, which is not registered. Distinguish between their jobs as jobs in the organised and unorganised sectors on three bases.

Answer.

Model answer:

1. Rules: Anita's hospital is registered and follows labour laws; Bina's clinic is not.
2. Security: Anita has fixed hours and overtime pay and cannot be removed at will; Bina can be sent away any day.
3. Benefits: Anita gets paid leave, provident fund and medical cover; Bina gets none.

Marking scheme:

1. Registration and rules: Anita's hospital is registered and must follow labour laws; Bina's clinic is not registered, and the rules are not followed. — 1 mark
2. Security and hours: Anita has fixed hours, is paid for overtime and cannot be removed at will; Bina's hours depend on the owner, and she can be told to leave any day. — 1 mark
3. Benefits: Anita gets paid leave, provident fund and medical benefits; Bina gets none of these. (Also accept: regular vs low and irregular pay.) — 1 mark

Question 5 (3 marks)

India's tertiary sector employs software engineers and bank officers, and also a very large number of small shopkeepers, repair workers and cart pullers. Explain three things this tells us about the growth of the tertiary sector.

Answer.

Model answer:

1. Only a few services, like IT and banking, have grown fast and pay skilled people well.
2. Very many service workers earn little and have no security; they are in the unorganised sector.
3. Many take such work only because nothing else is available, and find work only on some days.

Marking scheme:

1. Not all services have grown equally: a small number of services such as IT, banking and communication have grown fast and employ skilled, well-paid people. — 1 mark
2. A very large number of service workers earn little and have no security; they are mostly in the unorganised sector. — 1 mark
3. Many take such service work because no other work is available; they often find work only on some days, so they are underemployed. (Also accept: high-paid services need education and skills that most workers do not have.) — 1 mark

Question 6 (2 marks)

Small farmers in an imaginary block sell their crop at very low prices soon after the harvest, because they have no place to store it and traders are the only buyers who come to the village. Suggest two ways in which the government can support them.

Answer.

Model answer:

1. Government warehouses near the villages, so the crop can be stored until prices improve.
2. A government purchase centre nearby that buys crops at a fair price.

Marking scheme:

1. Storage: government warehouses or cold storages near the villages, so crops can be kept until prices are better. — 1 mark
2. Marketing: a government purchase centre or regulated market nearby, where crops are bought at a fair price. (Also accept: timely supply of seeds and fertilisers; roads to a bigger market.) — 1 mark

Question 7 (3 marks)

In an imaginary district, the State transport corporation runs buses to remote villages where few people travel and the fares do not cover the cost. A private bus company runs only on busy routes. Why does the corporation run such buses? Explain three points.

Answer.

Model answer:

1. It is a public sector body; its aim is public welfare, while the private company runs for profit.
2. Villagers need buses to reach schools, hospitals and markets, which private firms will not serve cheaply.
3. The government meets the loss from taxes and keeps fares low for the poor.

Marking scheme:

1. The corporation is in the public sector, whose main aim is public welfare; the private company's aim is profit, so it avoids routes that lose money. — 1 mark
2. Villagers need transport to reach schools, hospitals, markets and jobs; the government has to provide such services, which private firms will not offer at a low price. — 1 mark
3. The government can meet the loss from taxes and keep fares low, so that poor people can afford to travel. — 1 mark

Question 8 (2 marks)

Kavita grows cotton on her farm. Her neighbour runs a small ginning unit that removes the seeds from raw cotton and presses it into bales. Distinguish between their activities as primary and secondary activities, giving two points of difference.

Answer.

Model answer:

1. Kavita's farming is primary: she uses natural resources directly to produce cotton.
2. Ginning is secondary: it changes raw cotton into bales by a manufacturing process, using her cotton as raw material.

Marking scheme:

1. Kavita's work is primary: she produces cotton by using natural resources, the soil, water and sunlight, directly. — 1 mark
2. The ginning unit's work is secondary: it takes a natural product and changes it into another form by a manufacturing process, and it depends on the primary sector for its raw material. — 1 mark

Question 9 (2 marks)

The imaginary State of Girinagar needs a large dam and a network of canals to irrigate its dry districts. The project will cost thousands of crores of rupees and take about fifteen years to finish. No private company has offered to build it. Give two reasons why the government, and not a private company, is likely to take it up.

Answer.

Model answer:

1. It needs a huge sum at once, more than a private company will put in; the government can raise it through taxes and borrowing.
2. It will earn nothing for about fifteen years, while a private company wants quick profit.

Marking scheme:

1. It needs a huge sum of money at one time, more than private companies can or will put into one project; the government can raise it through taxes and borrowing. — 1 mark
2. It will earn almost nothing for about fifteen years, while a company that works for profit wants quicker returns. (Also accept: collecting water charges from thousands of farmers is hard, and a private firm would charge rates that small farmers cannot pay.) — 1 mark

Long Answer and Case-Based Questions

Question 10 (5 marks)

Study the hypothetical data for the imaginary country of Deshpur given below and answer the questions that follow (1 crore = 100 lakh).

(a) Which sector employs the most workers, and which sector produces the most? (1 mark)

Answer.

Model answer:

The primary sector employs the most (180 lakh); the tertiary sector produces the most (₹1,16,000 crore).

Marking scheme:

1. The primary sector employs the most (180 lakh workers); the tertiary sector produces the most (₹1,16,000 crore). — 1 mark

(b) Work out the output per worker in the primary and tertiary sectors. What does the gap suggest about the primary sector? (2 marks)

Answer.

Model answer:

1. Primary: ₹36,000 crore ÷ 180 lakh = ₹20,000; tertiary: ₹1,16,000 crore ÷ 80 lakh = ₹1,45,000 per worker.
2. Too many people depend on the primary sector; many are in disguised unemployment and add little to output.

Marking scheme:

1. Primary: ₹36,000 crore ÷ 180 lakh = ₹20,000 per worker; tertiary: ₹1,16,000 crore ÷ 80 lakh = ₹1,45,000 per worker. — 1 mark
2. More people work in the primary sector than are needed; many are in disguised unemployment, so each adds very little to output. (Also accept: farm workers have fewer machines and less irrigation and depend on rain, so each produces less; incomes in farming are much lower.) — 1 mark

(c) Suppose one-third of the primary sector's workers take jobs in new dal mills and cold storages, and farm output does not fall. Explain what happens to (i) output per worker in the primary sector and (ii) Deshpur's GDP. (2 marks)

Answer.

Model answer:

1. 120 lakh remain, so output per worker rises from ₹20,000 to ₹30,000.
2. GDP rises, as farm output is unchanged and the new mills and cold storages add the value of their own work.

Marking scheme:

1. (i) 60 lakh leave and 120 lakh remain, so output per worker rises to ₹36,000 crore ÷ 120 lakh = ₹30,000. — 1 mark
2. (ii) GDP rises: farm output stays the same, and the new mills and cold storages add the value of their own work (value added). — 1 mark

OR

Study the same table and answer the following.

(a) Work out the average output per worker for Deshpur as a whole. (1 mark)

Answer.

Model answer:

₹2,00,000 crore ÷ 320 lakh = ₹62,500 per worker.

Marking scheme:

1. ₹2,00,000 crore ÷ 320 lakh workers = ₹62,500 per worker. — 1 mark

(b) Explain two reasons why the tertiary sector may have become the largest producing sector. (2 marks)

Answer.

Model answer:

1. The government provides basic services such as hospitals, schools, post offices and banks everywhere.
2. Rising incomes raise the demand for services such as eating out, travel and private schools.

Marking scheme:

1. Basic services such as hospitals, schools, post offices, police and banks are provided by the government in every area. — 1 mark
2. Growth of farming and industry needs more transport, storage and trade; rising incomes raise demand for services like eating out, travel and private schools and hospitals; IT-based services have grown fast. (Any two reasons.) — 1 mark

(c) Going by output per worker, from which sectors should Deshpur's new jobs mainly come? Give a reason from the table. (2 marks)

Answer.

Model answer:

1. From the secondary and tertiary sectors, where output per worker is ₹80,000 and ₹1,45,000, against ₹20,000 in farming.
2. Farming already holds 180 lakh workers who add little; moving them raises output.

Marking scheme:

1. From the secondary and tertiary sectors: output per worker there is ₹80,000 and ₹1,45,000, against only ₹20,000 in the primary sector. — 1 mark
2. The primary sector already holds 180 lakh workers, many of whom add little; moving them to sectors where each worker produces more raises output and incomes. (Accept secondary or tertiary alone, with a reason from the table.) — 1 mark

Question 11 (5 marks)

The imaginary village of Kheripur faces these problems:

• its fields depend on rain and give only one crop a year;
• the road to the town breaks every monsoon;
• vegetables rot because there is nowhere to store them;
• the nearby forest has plenty of bamboo, but nobody in the village is trained to make things from it;
• the village school has too few teachers.

Suggest five ways to create more work in Kheripur, linking each one to a problem above.

Answer.

Model answer:

1. Irrigation: help to build wells or tanks, so a second crop can be grown and farm work lasts longer.
2. Road: an all-weather road lets farmers sell in town and creates work in transport and trade.
3. Storage: a cold storage saves vegetables and gives jobs in storing and selling them.
4. Crafts: training and a small bamboo-craft unit turn a local resource into goods and jobs.
5. School: more teachers means jobs for educated local youth and better schooling.

Marking scheme:

1. Irrigation: government help to build wells, tanks or a canal, so a second crop can be grown and farm work lasts longer. — 1 mark
2. Road: an all-weather road lets farmers sell in the town all year and brings work in transport and trade. — 1 mark
3. Storage: a cold storage near the village saves vegetables and gives jobs in storage and selling. — 1 mark
4. Crafts: training and a small unit making bamboo baskets and furniture turn a local resource into goods, and give work to village families. — 1 mark
5. School: appointing more teachers gives jobs to educated local youth and improves education. (Also accept: health centres, tourism, a small food-processing unit, if linked to a problem.) — 1 mark

OR

Explain one way in which the government can protect each of these workers in the unorganised sector: a sharecropper, a handloom weaver, a street vendor, a fisherman who works on another man's boat, and a helper in a small garment unit.

Answer.

Model answer:

1. Sharecropper: seeds and fertilisers on time from the block office, and a written record of his share of the crop.
2. Handloom weaver: yarn at fair prices and government outlets to sell cloth, so traders cannot cheat him.
3. Street vendor: a licence and a fixed place to sell, so he is not driven away.
4. Fisherman: accident cover for the crew and timely weather warnings.
5. Garment unit helper: registration with a workers' welfare board, with an identity card for health cover and an old-age pension.

Marking scheme:

1. Sharecropper: seeds and fertilisers at fair prices and on time through the block office, and a written record of his share of the crop, so the landowner cannot change it at will. — 1 mark
2. Handloom weaver: help to buy yarn at fair prices and to sell cloth through government outlets, so traders cannot cheat him. — 1 mark
3. Street vendor: a licence and a fixed place to sell, so he is not driven away or fined without reason. — 1 mark
4. Fisherman: accident cover for the crew and timely weather warnings, so a storm or an injury at sea does not leave his family with nothing. — 1 mark
5. Garment unit helper: registration with a workers' welfare board, which gives an identity card for health cover and a small pension in old age. (Accept any suitable protection for each worker.) — 1 mark

Question 12 (4 marks)

Read the source given below and answer the questions that follow.

Before Sunrise at the Mandi

Every morning at four, about two hundred men gather at the gate of the wholesale vegetable market in the imaginary town of Sultanganj. Traders pick the men they need for the day, and the men carry sacks from the trucks to the stalls. They are paid by the load. Nobody has a written contract, and a man who falls ill simply loses his day's wage.

Last month, Kalu hurt his back lifting a sack of onions. The trader paid for one visit to a doctor and hired someone else the next day. Most of the men come from landless families in nearby villages, and many say they would take any job that paid a regular wage.

(a) Classify these workers on the basis of (i) the kind of activity and (ii) the conditions of employment. (1 mark)

Answer.

Model answer:

(i) Tertiary, as carrying goods is a service. (ii) Unorganised.

Marking scheme:

1. (i) Tertiary sector: they carry and move goods, which is a service. — 0.5 marks
2. (ii) Unorganised sector. — 0.5 marks

(b) Give one detail from the passage which shows that they are in the unorganised sector. (1 mark)

Answer.

Model answer:

Nobody has a written contract, and a man who falls ill loses his wage.

Marking scheme:

1. Any one: no written contract; paid by the load; no pay when ill; can be replaced from one day to the next; no help after an injury beyond one doctor's visit. — 1 mark

(c) Many of the men say they would take any job that paid a regular wage. Explain two reasons why a regular job matters so much to them. (2 marks)

Answer.

Model answer:

1. Their income depends on being picked each day, so it is low and uncertain; a regular wage lets them plan.
2. They have no protection when ill or hurt, as Kalu found; a regular job would give security and leave.

Marking scheme:

1. Their present income depends on being picked each day and on the number of loads, so it is low and uncertain; a regular wage would let them plan for food, rent and schooling. — 1 mark
2. They have no protection when ill or injured, as Kalu found; a regular job in the organised sector would give security, paid leave and medical help. (Also accept: they come from landless families with no other income.) — 1 mark

Question 13 (4 marks)

Read the source given below and answer the questions that follow.

A Letter from the Gram Panchayat

To the Block Development Officer, Keshavpur Block (imaginary)

Sir/Madam,

Forty-two households of our village applied for work under the rural employment guarantee law in April. So far only eighteen have been given work, digging a pond that will store rainwater for our fields. The others have been told to wait. Many families have no work until the next sowing season, and some men have already left for the city.

We request that work be given to all the applicants at the earliest, or that the allowance due to them under the law be paid.

Yours faithfully,
Sarpanch, Gram Panchayat Beliya

(a) Name the law under which the households applied for work. (1 mark)

Answer.

Model answer:

The Mahatma Gandhi National Rural Employment Guarantee Act, 2005.

Marking scheme:

1. The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA). — 1 mark

(b) What is the 'allowance due to them under the law'? (1 mark)

Answer.

Model answer:

The unemployment allowance, paid when the government fails to give the guaranteed work.

Marking scheme:

1. The unemployment allowance, which the government must pay if it fails to provide the guaranteed work. — 1 mark

(c) Explain two ways in which work like digging the pond helps the village beyond the wages paid. (2 marks)

Answer.

Model answer:

1. The pond stores rainwater for irrigation, so more crops can be grown on the land.
2. With more farm work in the village, fewer people have to leave for the city.

Marking scheme:

1. The pond stores rainwater for irrigation, so more land can be farmed or a second crop grown, which raises production from land. (Accept: it also recharges groundwater.) — 1 mark
2. With more farm work and local income, fewer people are forced to leave for the city in search of work. — 1 mark