1. Primary Sector:
    • This sector involves activities that directly use natural resources. For example:
      • Agriculture: Growing crops like cotton depends on natural factors like sunlight and rainfall.
      • Dairy Farming: Rearing animals for milk production relies on biological processes.
      • Fishing, Forestry, and Mining: These are also examples of primary sector activities because they directly extract products from nature.
    • Products from this sector are called natural goods because they come from nature.
  2. Secondary Sector:
    • This sector involves manufacturing or processing raw materials (from the primary sector) into finished goods. For example:
      • Cotton (raw material) is turned into yarn and then woven into cloth.
      • Sugarcane (raw material) is processed to make sugar or gur.
      • Earth is turned into bricks for construction.
    • This is also called the industrial sector because it focuses on production through factories and workshops.
  3. Tertiary Sector:
    • This sector does not produce goods but provides services. It supports the primary and secondary sectors by facilitating the movement, communication, and trade of goods. Some examples:
      • Transport: Moving goods from farms or factories to markets.
      • Communication: Talking through phones or sending letters.
      • Banking: Providing loans or services to facilitate trade.
      • Trade: Wholesale or retail shops selling goods.
      • Other services include education, healthcare, and personal services like washing clothes, cutting hair, etc.
    • The tertiary sector is also called the service sector because it provides services instead of goods.

Interdependence of the Sectors

The three sectors are highly interdependent. For instance:

  • Primary sector depends on the secondary sector to process raw materials into finished products.
  • Tertiary sector supports both primary and secondary sectors by offering services like transport and storage.
  • Secondary sector needs raw materials from the primary sector and services like banking and trade from the tertiary sector.

Example:

  • If farmers refuse to sell sugarcane to a sugar mill, the mill would shut down.
  • If cotton farmers cannot sell to textile factories, the cotton market would collapse.
  • If fertilizer prices rise, farmers’ costs will go up, making it harder for them to grow crops.
  • If transportation strikes, it will disrupt the supply of food from rural areas to cities.

GDP Calculation:

  • GDP (Gross Domestic Product) is the total value of all final goods and services produced in a country in one year.
  • Economists calculate GDP by considering the value of goods and services, not the number of units produced. For example:
    • If 10,000 kg of wheat is sold for Rs 20 per kg, the value of wheat is Rs 2,00,000.
    • If wheat is used to make flour, then to make biscuits, the final product (biscuits) is counted, but the intermediate goods like wheat and flour are not counted again to avoid double counting.
  • This ensures only the final goods are counted in GDP.

Shifts Between Sectors:

  • Historically, the primary sector (like agriculture) was the most important, but as technology advanced, people started working in factories (secondary sector).
  • Over the last century, many developed countries shifted towards the tertiary sector (services) becoming the dominant economic activity.

Sector Growth in India:

  • Between 1973-74 and 2013-14, India saw the tertiary sector (service sector) growing the most, overtaking the primary sector (agriculture).
  • The shift is due to the increasing demand for services like healthcare, education, transport, and communication, and due to the growth of industries that support these services.

Factors Driving Tertiary Sector Growth:

  1. Government Services: As countries develop, services like healthcare, education, and transportation become more crucial.
  2. Support for Agriculture and Industry: Development in farming and industries creates more demand for services like transportation, storage, and trade.
  3. Rising Income: As people’s incomes increase, they demand more services like eating out, shopping, and tourism.
  4. Information Technology: In the last decade, the rise of internet-related services like software companies, call centers, and IT-enabled services has contributed to the growth of the service sector.

Economic Occupations:

  • Jobs like tailors, potters, gardeners, milk vendors, fishermen, etc., are categorized into primary, secondary, or tertiary sectors based on their activities:
    • Primary: Flower cultivator, Fisherman, Milk vendor.
    • Secondary: Potter, Worker in a match factory.
    • Tertiary: Call center employee, Courier, Moneylender.

Conclusion:

This classification helps us understand the interconnected nature of economic activities. As economies grow and develop, the importance of each sector changes. In India, the shift from agriculture to industrial and service sectors is clear, reflecting global trends. However, while the tertiary sector is growing, it’s not evenly distributed—there’s a divide between highly skilled and poorly paid service workers.

IMPORANT TERMS-

  1. Employment in the Economy:
    • Over half of India’s workers are in agriculture (primary sector), but this sector only contributes about one-sixth of the GDP.
    • Secondary and tertiary sectors contribute more to the GDP but employ fewer people.
    • This imbalance means there are too many people working in agriculture, more than needed for the output. As a result, the sector has underemployment, or disguised unemployment, where people work, but not to their full potential.
  2. Example of Underemployment:
    • Laxmi, a small farmer with two hectares of land, has five family members working on the farm. Despite everyone working, they are all underemployed.
    • If some of the family members work elsewhere, such as for another farmer or in a factory, they can still produce the same amount from the land, and the family income would increase.
  3. Solutions to Underemployment:
    • Irrigation and Infrastructure: If Laxmi’s land is irrigated, she can grow a second crop (like wheat), providing more employment on the farm.
    • Market Access: Investment in roads, storage, and transportation would allow farmers to sell more of their produce, increasing income and employment.
    • Credit for Farmers: Access to affordable loans from banks for buying seeds, fertilizers, and equipment would help farmers like Laxmi expand production and improve income.
    • Rural Industries: Encouraging small industries (e.g., dal mills, cold storage, or honey collection centers) in rural areas could provide jobs for both farmers and workers in related services like transport and trade.
  4. Urban Employment:
    • In urban areas, many casual workers in services like plumbing, repair work, or street vending are also underemployed. They do not work every day and often earn very little.
  5. Government Initiatives:
    • MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act 2005): This law guarantees 100 days of employment annually in rural areas. If the government fails to provide work, it gives unemployment allowances.
    • Education and Health: The government can create jobs by improving education (for teachers) and healthcare (doctors, nurses). This can also address societal issues like child labor and the need for better public health.
  6. Organised vs Unorganised Sectors:
    • Organised Sector: Jobs in this sector have formal rules, regular wages, benefits (like leave, medical allowances), and job security. Examples include office jobs or factory workers in large companies.
    • Unorganised Sector: Jobs here are irregular, with no job security or benefits. These include small-scale industries, casual labor, and street vending. Workers in this sector are often vulnerable and underpaid.
  7. Protecting Unorganised Sector Workers:
    • The unorganised sector includes agricultural laborers, small farmers, artisans, and casual workers. They often face exploitation and poor working conditions.
    • Support is needed in the form of better facilities for credit, seeds, and marketing in rural areas, and better working conditions and support for small industries in urban areas.
    • Social Discrimination: Scheduled castes, tribes, and backward communities are disproportionately represented in the unorganised sector and face both economic and social challenges.
  8. Public vs Private Sector:
    • Public Sector: The government owns assets and provides services like education, healthcare, roads, and electricity. The public sector ensures that essential services are affordable and accessible to all.
    • Private Sector: Owned by individuals or companies, this sector is profit-driven. Examples include companies like Tata and Reliance. The government regulates the private sector to avoid exploitation, especially in essential services like electricity and food.

Extra Knowledge to Understand the Concepts:

  • Underemployment and Disguised Unemployment: Underemployment occurs when people are working less than their potential, often because there are too many workers for the available work. Disguised unemployment is a hidden form of underemployment where workers appear to be employed but their output is low because more people are working than are needed.
  • Government Role in Employment: Governments often step in to provide public goods like roads, education, and health because the private sector cannot always afford or manage these things. Government programs like MGNREGA help reduce unemployment by guaranteeing work in rural areas.

THESE ALL ARE THE NOTES OF CHAPTER 2 ECONOMICS. AND AFTER SOME TIME YOU GET IMPORTANT QUESTIONS HERE. *#THANKS FOR VISITING, VISIT AGAIN#* 😊