Monday , May 23 2022

Sectors of Indian Economy: 10 Economics

Question: ‘While estimating the national income, only the value of the final goods and services is used.’ Explain with the help of an example.

Answer: While estimating the performance of a sector, only the value of final goods and services is used. This is for avoiding double counting. “The counting of the only the value of final goods and services is used. This is for avoiding double counting. “The counting of the value of a product more than once is called as double counting.” This leads to the overestimation of the value of goods and services produced. Let us understand the concept with the help of an example- A farmer produces one ton of wheat, and sells it for X 100 to a flour mill. As far as the farmer is concerned, the sale of wheat is a final sale for him. But the purchase of wheat by the flour mill is an intermediate goods. He converts the wheat into flour and sells it to a baker for X 150. The flour mill treats the flour as a final product, but for baker it is an intermediate goods. The baker sells the bread to the shopkeeper for X 200, and the shopkeeper to the consumer for X 250.

Value of output = Farmer (X 100) + Flour mill (X 150) + Baker (X 200) + Shopkeeper {X 250) = X 700.

So while calculating the national income only the value of the final output; i.e., X 250 should be included not X 700.

Question: Why is the tertiary sector becoming so important in India? Give at least four reasons.
Why is tertiary sector growing so rapidly in India? Explain it with four reasons.


  1. Basic services: In any country, several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc., are required. These can be considered as basic services. In a developing country, the government has to take the responsibility for the provision of these services.

    As more and more people are being employed to provide the basic services to the people, the share of the tertiary sector in the Gross Domestic Product, the GDR is increasing.

  2. Development of means of transport and communication: The development of agriculture and industry leads to the development of services such as transport, communication, trade, etc. All these are under the tertiary sector.
  3. More income more services: The per capita income in our country is rising. As the income level rises, people demand more services like tourism, shopping centers, schools, professional training centers, banks, etc.
  4. New services: With modernization and globalization, some new services based on information and communication technology have become important and essential. The production of these services has been rising rapidly.

Question: Explain any four points of importance of Secondary sector in the Indian economy.


  1. The Secondary sector contributes more than 20% to the GDP of India.
  2. It provides employment to the people.
  3. It provides goods to the people like cloth, sugarcane, iron and steel.
  4. The Secondary sector promotes the development of the Primary and the Tertiary sectors

Question: Suggest some ways which can be helpful in creating employment in rural areas.
What steps should be taken to create more employment? Explain.
How to create more employment in rural areas? Explain with examples.


  1. Diversification of agriculture: More than 60 per cent of our workers are employed in agriculture. But ‘our farmers are producing only limited crops. There is need to diversify agriculture. Farmers should be encouraged to adopt pisciculture, horticulture, animal rearing, etc., along with cultivation of crops.
  2. Cheap credit: Most of the farmers depend on informal sources of credit, i.e., moneylenders, relatives, traders, etc., who charge a very high rate of interest. Government should encourage the commercial banks to provide loans to the farmers at cheaper rates.
  3. Provision of basic facilities: Our rural areas lack the basic facilities like roads, transportation, banking, warehouses, markets, etc. The government should invest some money in these sectors so that the Indian villages can be linked to other markets. This activity can provide productive . employment to not just farmers, but also to others such as those in services like transport or trade.
  4. Promotion of local industries and other activities: Another way to tackle this problem is to identify, promote and locate industries, especially the cottage and small- scale industries in semi-rural areas, where a large number of people may be employed. It also includes setting up a flour or rice mill to procure and process these and sell in the cities. In villages, near forest areas, honey collection centres can be started where farmers can come and sell wild honey.

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