CBSE Notes Class 10 Economics Chapter 2 : Sectors of the Indian Economy

Last Updated : 16 Apr, 2025

An economy is understood better when we study its components or sectors. So, in the CBSE Notes Class 10 Economics Chapter 2- Sectors of the Indian Economy, we will learn important aspects of the 3 types of classification of the economy; primary, secondary, and tertiary, organized/unorganized, and public/private sectors. To understand this chapter better, we will relate the topics to daily life and these topics will help us to familiarise ourselves with some fundamental concepts like employment, Gross Domestic Product, and so forth.

Sectors of Economic Activities

A sector is one of the broad economic divisions into which numerous enterprises fall. About a dozen categories can be used to define the entirety of economic activity in any given economy.

In India, there are three distinct economic spheres at play: the primary, secondary, and tertiary levels. The Indian economy can be broken down into two distinct categories: the organized sector and the unorganized sector.

When the production of goods is by extraction and collection of natural resources, it is known as the primary sector. Some examples are farming, forestry, and hunting.
The Secondary sector covers various activities like natural products, which are changed into other forms with the help of manufacturing. It is the next step, following the primary sector. Some of the manufacturing processes are required and are also known as the industrial sector. Some examples are the use of cotton fibers from the plant, the spinning of yarn, and to weave of the cloth.
The tertiary sector includes the activities which help in the development of primary and also secondary sectors. These activities, do not produce goods but help in the production process. It is also known as the service sector. Some examples are teachers, doctors, and washermen.

Comparing the 3 Sectors

The value of the final goods and services which is produced in each sector, during a particular year, provides for the total production of the sector in the given year and the sum of production of all the 3 sectors gives the Gross Domestic Product (GDP) of a country. GDP refers to the value of all the final goods and services which is produced within a country during a given year and shows how an economy is. In the case of India, the task for the measurement of GDP is done by the central government ministry.

The graph below shows the production of goods and services in the three sectors of the Indian Economy:

GDP of three sectors — GDP of the three sectors

In the years 2013-2014, the tertiary sector came to emerge as one of the largest producing sectors present in India the replacement of the primary sector. The tertiary sector has become very important in India because of:

Different services like hospitals, educational institutes, telegraph, police, etc. are considered to be some basic services that are very important for the functioning of the country and its people.
Developments in the agricultural sector and industrial sectors also lead to the development of transport, trade, storage, etc.
With the emergence of an increase in income, people started to demand more services in the aspects of tourism, restaurants, malls, etc.
Over the years, certain new forms of services which is based on information and communication have also played significant roles.

Where are Most People Employed

While there has been a marked shift in the relative importance of three sectors to GDP over the past four decades, this trend is not reflected in the employment numbers.

Employment is highest in the primary industry. Employment in manufacturing increased by a factor of three over this time while industrial output increased by a factor of eight.
Employment in the service sector increased by only a factor of five despite a 14-fold increase in tertiary sector production. More than half of the labor force is thus engaged in the primary sector, primarily agriculture, which accounts for just 25% of GDP. This results in an oversupply of labor in the primary sector and, consequently, underemployment.

Primary Sector	Secondary Sector	Tertiary Sector
About more than half of the workers in India are employed in the primary sector, mostly agriculture.	These sectors employ less than the half of people in comparison to the primary sector.
The primary sector contributes to only a quarter of the GDP.	Both these sectors contribute to four-fifths of the product.

How to Create More Employment

Employment creation is done by identification, promotion, and locating industries and services in semi-rural areas. Every state or region has the potential for increasing the income and also employment for people in the area and can be done with the help of tourism, any regional craft industry, or some new services like IT. A study was conducted by Planning Commission, also known as NITI Aayog; which estimates to nearly about 20 lakh jobs can be created in the sector of education only.

The central government of India has made a law for implementing the Right to Work in around 625 districts of India and which is known as Mahatma Gandhi National Rural Employment Guarantee Act or MGNREGA, 2005; for all those who are able to work in the rural areas would be guaranteed 100 days of employment in a year by the government. If the government fails in its duty for providing employment, it will provide unemployment allowance for the people.

Read More: How to Create More Employment Opportunities

Primary, Secondary, and Tertiary Sectors

Primary Sector

The primary sector (agriculture and related industries) produces items using agricultural and mineral resources. Growing cotton, for instance, is an example of a primary sector activity because of its reliance on the weather, the soil, and the sun.

Secondary Sector

Natural components are the lifeblood of the industry, fueling the creation of services and goods that are ultimately consumed by the public. This industry is first in terms of value creation for consumers. Transportation and production are two important paradigms of this type.

Tertiary Sector

Tertiary areas and sectors are similar to secondary areas and sectors in that they both expressly contribute to the value of the products and services given to consumers. This sector is associated with the last stages of manufacturing natural products.

Division of Sectors as Organised and Unorganised

There are two other types of work environments: the organised and the unorganised. The organised sector is licensed by the appropriate authority and operates in accordance with its regulations. The unorganised sector, on the other hand, is not registered with the government and is therefore exempt from regulations. The former group includes large-scale endeavors like corporations, governments, and industries, whereas the latter group consists of more modest endeavors like private businesses and sole proprietorships.

Organised Sector	Unorganised Sector
Well-structured governance that is acknowledged by the Indian government	Having a poor structure and receiving no recognition.
The employees are guaranteed to have stable employment conditions, consistent working hours, and consistent pay.	There are no predetermined terms of employment, arbitrary work hours, and no set pay rate.
The employees are eligible to get benefits, including medical care and others.	There is not a single advantage of any kind offered.
The personnel is compensated well and provided with a safe and pleasant working environment.	The workers are not eligible for any benefits or salaries of any kind. In addition, there is no assurance that the workplace will be safe and healthy.
Additionally, organised sectors in India adhere to all applicable laws and regulations, including the Minimum Wages Act, the Factories Act, the Gratuity Payment Act, the Retail Shops & Establishments Act, and others.	The unorganised industry in India does not comply in any way with the laws and regulations that are in place.
Ex- Government-sector jobs, industries, etc	Ex- Farming, bonded labor, shopkeeping, etc

How to Protect Workers in Unorganised Sector

The need for protecting and supporting the workers in the unorganized sector has been in consideration:

The Government fixes the minimum wage rate and also working hours.
The government provides cheap loans for people who are self-employed.
Government can provide cheap as well as affordable services like basic needs of education. health and also nutrition for the workers.
The government can help in framing new laws for providing overtime, paid leaves, paid sick leaves, etc.

Sectors in Terms of Ownership: Public and Private Sectors

Public sector

The part of the economy that falls under the ownership and direction of the government is referred to as the public sector. The provision of essential goods and services to citizens, the encouragement of economic growth, and the defense of the rights and interests of more vulnerable members of society are the primary goals of the public sector.

Private sector

The portion of an economy that is not controlled directly by a government agency is referred to as the private sector, and it is composed of both individual people and businesses. The majority of businesses operating in the private sector are operated with the goal of generating profits.

Public Sector	Private Sector
This industry is under the direction and supervision of the government.	An individual possesses ownership of this portion of the market.
The only pursuit of financial gain is not the objective of the public sector	The desire to increase one's wealth drives all of the endeavors that take place in the private sector.
This sector is primarily concerned with the well-being of the country's populace as a whole, sometimes known as public welfare.	This industry places a strong emphasis on developing a positive brand image.
The acquisition of capital can be accomplished by the collection of public money in the form of taxes, bonds, and many other levies.	In this industry, capital can be raised through the sale of shares or the provision of loans.
Jobs are exceptionally secure due to criteria such as merit, advancement, or length of service.	This does not guarantee job stability because employment is determined only by performance and the amount of output produced.
A highly secure career, several retirement facilities, and other perks, among other things.	It does not provide any pension benefits or allowances of any kind.
Jobs that fall under this category include those in the postal service, education, the armed forces, and railways.	Jobs available in this area include those at Tata Iron and Steel Company Limited, Reliance, and in the information technology sector, amongst others.

Gross Domestic Product

Gross domestic product (GDP) is a common metric used to express a country's economic might; it is the market worth of all final products and services produced inside the country in a given year. GDP is calculated by adding up the value of all new items and services created in a given year, including but not limited to smartphones, automobiles, downloading music online, machines, steel, bananas, and higher education.

Responsibility of the Government

There are different ways that are primarily the responsibility of the government:

Security of private property/safety of the nation: The investment climate and standard of living in a country would suffer if the crime is widespread. Maintaining the rule of law is one of the government's primary responsibilities.
Increasing levies: Governments require tax revenue to finance the provision of public goods and services. This can be accomplished through the imposition of various taxes, such as those on wares (customs duties), earnings, citizens (poll tax), and real estate. The government should think about the most efficient means of generating revenue.
Performing a public function: The free-rider problem makes it such that public goods are rarely delivered in a free market. Therefore, the government should supply these necessities. Street lights, highways, and police protection are all examples of public goods.
Cutting back on poverty and disparity: It's possible that poverty and inequality would increase in a capitalist economy. This is often the result of fortunate family connections. Sometimes monopoly is to blame. The government may feel compelled to provide educational opportunities to all citizens, including those from economically disadvantaged backgrounds.

Right to Work (MGNREGA, 2005)

Services like tourism, craft, small-scale industries, stores, etc. have the potential to increase revenue and employment in every state or region in India, but it will take a long time for these plans to be put into action.

The Right to Work was temporarily legislated by the Indian federal government and is now in effect in roughly 625 Indian districts. MGNREGA 2005 stands for the Mahatma Gandhi National Rural Employment Guarantee Act.
The primary goals of MGNREGA 2005 are as follows:
To ensure that all rural residents who want and need work will be employed for at least 100 days a year. In the event of a government failure, unemployment benefits are provided.
The goal is to prioritize initiatives that will boost agricultural output.