About This Section
This is a collection of important questions with complete model answers covering the whole of Chapter 2 — Sectors of the Indian Economy. It covers the three sectors, GDP and final goods, the historical and Indian sectoral shifts, employment and disguised unemployment, ways to create jobs, the organised/unorganised divide, and the public/private sectors.
Questions and Answers
Q1. Is the classification of activities into primary, secondary and tertiary useful? Explain how.
Answer: Yes, it is very useful. Grouping thousands of activities by the nature of the activity lets us analyse the economy in a manageable way. It helps us measure how much each sector produces (its share in GDP/GVA) and how many people it employs, compare the two, and identify problems — for example, that the primary sector employs the most people but produces little output. This guides policy on production and employment.
Q2. Why is it necessary to count only the value of final goods and services in GDP?
Answer: The value of a final good already includes the value of all intermediate goods used to make it. In the wheat → flour → biscuit example, the biscuit's price (Rs 80) already contains the value of the flour (Rs 25) and the wheat. If we counted wheat, flour and biscuits separately, we would count the same value several times (double counting) and greatly overstate production. So only final goods and services are counted.
Q3. Compare the changes in India's sectors with the pattern of developed countries. What change was desired but did not happen?
Answer: In developed countries, as production shifted from primary to secondary to tertiary, employment shifted too. In India, production shifted (the tertiary sector became the largest producer), but employment did not shift similarly — the primary sector remains the largest employer. The desired change that did not happen was the movement of workers out of agriculture into the secondary and tertiary sectors, because not enough jobs were created there.
Q4. Distinguish between open unemployment and disguised unemployment.
Answer: In open unemployment, a person has no work at all and is clearly visible as unemployed. In disguised unemployment (underemployment), people appear to be working but are actually working less than their potential, so that removing some of them would not reduce output — as in Laxmi's family where five members share the work of a two-hectare farm. Open unemployment is visible; disguised unemployment is hidden.
Q5. What is the difference between the organised and unorganised sectors in terms of job security and benefits?
Answer: In the organised sector, employment is regular and secure; workers get fixed hours, overtime pay, paid leave, provident fund, gratuity, medical benefits and pension, and enterprises follow laws like the Factories Act. In the unorganised sector, jobs are insecure and irregular; there is no job security and no benefits, workers can be dismissed without reason, and rules are not followed.
Q6. Why is the tertiary sector becoming so important in India? State any two reasons.
Answer: Two main reasons: (i) Basic and rising service needs — a developing country needs the government to provide basic services (schools, hospitals, transport, banks), and as incomes rise people demand more services like tourism, eating out and private schooling. (ii) Support to other sectors and new services — the growth of agriculture and industry increases demand for transport, trade, storage and banking, and new ICT-based services have grown rapidly.
Q7. How does the government support both farmers and consumers, and why must it provide public facilities?
Answer: The government buys foodgrains from farmers at a fair price and sells them cheaply to consumers through ration shops, supporting both sides. It must also provide public facilities — roads, bridges, dams, electricity, health and education — because these need huge investment or are not profitable for the private sector, yet are essential and must be available to everyone, especially the poor.