NCERT Class 10 Economics Chapter 2: Sectors of Indian Economy Complete Notes Part 2 (For CBSE, ICSE, IAS, NET, NRA 2022)

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Sectors of Indian Economy


  • Gross Domestic Product
  • Production of
  • Value of all final goods & services produced within a country during a particular year
  • Shows how big economy is

What is GDP? Or gross domestic product. Now gross domestic product is the summation of the production that is once done through the primary activities, secondary activities as well as the tertiary activities. The value of all these final goods from all these three sector would count towards the gross domestic product and when we talk about the net domestic product it would remove any kind of depreciation from this gross amount and that would give you net product. So you have . Any kind of losses that you are incurring in the process would be subtracted from the final value of goods and services and that would lead you to the net domestic product. Now we will understand classification of GDP.

Changing Paradigms

  • India – Gradual shift from
  • Share of employment in is highest
  • Share in GDP is highest from sector
  • is largest producing sector since 2000 in India
  • Rising basic services in villages
  • Development in Agriculture leads to transport
  • Rising income restaurants, tourism
  • New services ICT

India is predominantly an agriculture land so most of the people here are employed in agriculture sector, so primary sector becomes important us, for China its manufacturing that is important. However if we take example of United States it would be service sector that would have predominant position. However, in India the trade pattern is changing and there is shift from the primary sector activities to tertiary sector activities. Now the most important thing to note here is however there is a shift from primary sector activities to tertiary sector activities the employment, in terms of employment we still have the highest employment for primary sector activities.

However if we talk about the value of the goods and services that we are producing so you have the GDP, in terms of GDP you have tertiary sector that contributes the highest however despite of the fact that most of the people are employed in primary sector that means the employment in primary sector is extra so there are extra people engaged in primary sector activities that means, even if I remove those people I take those people away from the primary sector activities my net output would not change so there would be no impact on my output even if I remove a set of people from that complete primary sector activity, that means you have kind of disguised unemployment that is present or prevalent in the primary sector.

Tertiary sector is the largest producing sector in India since 2000, what is happening is in villages it was predominantly agriculture based till now. However with changing trends there are more services that are moving into villages these services are in form of health care, these are in form of education, these are in form of banking and all these activities are directly or indirectly kind of services sector activities.

Again the changing trends you have kind of decentralization of industrial sector that is taking place and smaller industries are being located to semi urban and rural hinterland. Therefore you have numerous industrial sector or secondary sector that is growing up in the nearby villages. Again with the development of agriculture there is need to increase the transport because whatever is produced must be transported and stored. You have agricultural development that would again lead to development of the tertiary sector, again with increasing income, more people are moving towards tourism, restaurants, all these are tertiary sector activities.

Ponder Around!

  • Industrial output 8 times; employment 2.5 times
  • Services production 11 times; employment by < 1 times
  • > 50 % population in agriculture with < 25 % of GDP implies workers are underemployed or disguised unemployment
  • Even if you pull out workers, no impact on output

Now what is important to think around here is our industrial output has increased 8 times, in the past decades however the employment has risen by only 2.5 times that means we are producing more but the employment for industrial sector is not matching it. Again, service sector production has increased 11 times but employment has increased less than 1 % . When it comes to agriculture we have more than 50 % of the population that is engaged in agriculture, which is contributing less than 25 % of the net GDP of the nation. That means as we talk there is the problem of underemployment or disguised unemployment that is seen and because of this you have extra workers that are present on the field. Even if I remove those worker there would be no impact on the final outcome or the final output. So what should be the ways by which we can create more employment?

Creating Employment

  • Improving irrigation
  • Investing in transport
  • Credit by local banks
  • Locate industries in semi-rural areas
  • Opening cold storage
  • Only 2/3rd children attend school – open schools – more staff
  • Improve health care – more doctors, nurses
  • Improve tourism & cope for extra 35 lakh jobs
  • Right to Work
  • National Rural Employment Guarantee Act 2005 (NREGA) - guaranteed 100 days of employment per year

We can create more employment by providing irrigation facilities so more people would be involved in the talk of irrigating and channelizing or canal diversion, then you have investment in transport sector and more people getting involved in transportation, banking sector, health sector and education sector.

Moving of industries from core urban areas, semi urban and rural vicinities, opening the cold storage facilities for agriculture produce and with the kind of perishable produce that we have asked. The statistics show only two third of the children attend school so there is a need for more education and therefore opening up of school would require more staff, so again there would be increase in the tertiary sector employment. There would be improvement in tourism and there is a scope for extra 35 jobs that could be generated by tourism, one of the mission, that is, National Rural Employment Guarantee Act 2005 state a guarantee of minimum 100 days of employment per year that means if government is unable to fulfill these 100 days of an employment the government would have to pay the compensation in lieu of these 100 days, so these is a kind of employment that is being provided in the rural areas.

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