CBSE Class 10 Social Science Economics Revision Notes Chapter 2

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

The Class 10 Economics Chapter 2 Notes give a comprehensive account of the sectoral categorisation in the economy based on different components and sectors. Sectors can be explained as a category of people working in diverse areas, including the production of goods and services. Chapter 2 Economics Class 10 Notes will help students understand the three major sectors of the economy – primary, secondary, and tertiary sectors. 

CBSE Class 10 Social Science Economics Revision Notes for the Year 2022-23

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CBSE Class 10 Social Science Economics Revision Notes
Sr No. Chapters
1 Chapter 1 – Development
2 Chapter 2 – Sectors of the Indian Economy
3 Chapter 3 – Money and Credit
4 Chapter 4 – Globalisation and the Indian Economy
5 Chapter 5 – Consumer Rights

Sectors of the Indian Economy Class 10 Notes Economics Chapter 2 


Sectoral classification of the economy is a must to understand the economy. 

Different Sectors of the Economy: 

There are three important sectors in the economy, including the primary sector, secondary sector, and tertiary sector. 

Difference between the Three Sectors of the Economy: 

The primary sector is the use and exploitation of natural resources to produce goods. For instance, producing cotton fibre. The secondary sector involves using natural resources and making a finished product out of them, like weaving cloth from cotton. Finally, the tertiary sector helps in the production of goods and acts as a bridge between the primary and secondary sectors to make the products available to consumers. For example, transportation, banking, etc. 

Historical Changes in Sectors:  

There has been a dramatic shift from the primary sector to the secondary sector and then to the tertiary sector. However, it has been observed in the history of many nations that the primary sector was the most important sector, as most people were involved in agricultural activities and most goods were produced naturally. 

Let’s have a look at this transformation point by point: 

  • According to the GDP of the three sectors, the primary sector was the major producing sector between 1973 to 1974. The reason was obvious: as the agriculture sector began to grow and prosper, much more food was produced than before. 
  • Moreover, during this time, most of the goods produced were natural products, and most people were employed in the primary sector. 
  • As we read in history, the industrial revolution changed the landscape of the economies. Moreover, the secondary sector became the most important sector in the economy as new manufacturing methods came into the limelight. Those people who were earlier working on farms now they were working in factories.  
  • The secondary sector gradually became the most significant of the three sectors, employing the majority of the workforce. The rationale behind this drastic shift was that the people were purchasing goods made in factories at cheap rates.  
  • Eventually, the tertiary sector became the most important sector in the past 100 years. Today, if you observe, most people are employed in the service sector. 
  • According to the GDP of India, in the year 2013 to 2014, the tertiary sector became the largest producing sector. 

There are four major reasons why the tertiary sector became the economy’s most important sector.  

  1. Services like hospitals, banking, communication, police station, courts, municipal corporation, banks, transport, insurance, etc., are basic services in any country. 
  2. The second and most important reason is the development of the primary and secondary sectors will eventually lead to the requirement for services like transport, trade, storage, etc. Thus, higher development of these two sectors will eventually increase the demand for tertiary services. 
  3. The third crucial rationale is the standard of living. As people’s income level and standard of living start rising, certain specific sections of people start demanding extra services like private hospitals, private schools, tourism, shopping, professional training and coaching, etc. 
  4. The fourth reason is the origination of new services like information and technology-based services. The production of these services is rapidly rising and showing a whopping growth. 

Moreover, according to the statistics, India’s service sector employs different kinds of people. A limited number of services employ highly skilled and educated people in one place. However, on the other hand, many people are engaged in small activities like being a shopkeeper, repair person, transport person, etc. Though these people cannot earn a living out of these small jobs, they do not have an alternative.  

Where are most of the people employed? 

Most of the output produced in the secondary sector went up by more than nine times than before. However, the employment rate went up just by three times. Similarly, in the tertiary sector, the output produced went up by fourteen times, but the employment rate went up five times. 

As a result, more than half of the workers in India are employed in the primary sector, primarily agriculture. However, they are producing only about one-sixth of India’s GDP. Moreover, the secondary and tertiary sectors employ less than half the people compared to the primary sector. 

This simply brings forth the concept of underemployment or disguised employment. This is because the workers employed in the agriculture sector are more, indicating that the production will remain unaffected even if we remove a few workers. In other words, this scenario is known as underemployment. 

Let’s understand the concept of disguised unemployment with an example: 

A farmer, Laxmi, has unirrigated land solely dependent on rain and growing crops like arhar. All five family members work on the land, meaning no one is sitting idle. However, if you look from another perspective, the labour effect gets divided. Each one is doing some work, but no one is fully employed. Simply put, all five members are not working to their full potential. 

This type of underemployment is hidden in contrast to someone who does not have a job and is visible as unemployed. This is known as disguised unemployment. 

Hence, in the above example, removing two people from Laxmi’s land won’t affect the production of her farm. Suppose those two people can work in a factory, which will increase the family’s overall income. There are lakhs of farmers in India suffering from the problem of disguised unemployment just because they are unaware of what can be done. This simply points to the fact that even if we remove many people from the agricultural sector, production will remain unaffected. We can provide those people with some other work elsewhere, where their potential will be fully utilised, and their income will increase.  

How to create more employment?

A study by the NITI Ayog states that twenty lakh jobs can be created in the education sector alone. On similar lines, if we plan to improve the healthcare infrastructure, we will need more doctors, nurses, and healthcare staff to work in rural areas. 

Moreover, every state of the country has the potential to create more and more employment opportunities and increase the income of the people. It can be any industry ranging from tourism, regional craft, Information technology, etc. Furthermore, a report by the Planning Commission of India states that if tourism as an industry is improved every year, we can give thirty-five lakh people additional employment. 

Another way to create employment opportunities is to identify, promote, and locate industries in semi-rural areas. For example, some farmers decide to grow arhar and pulse crops. Setting up a dal mill to procure and process the crops and sell these crops in the cities is one such example. Moreover, opening cold storage for farmers, wherein they can store potatoes and onions to sell them when the price is right in the market. Also, setting up a honey collection centre near the forest areas where the farmers can come and get an opportunity to sell wild honey. 

It is also possible to establish industries that process vegetables and agricultural products like potatoes, sweet potatoes, rice, wheat, and tomato, which can be sold in outside markets. Again, this will provide employment opportunities in semi-rural areas rather than semi-urban or urban areas. 


Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA) was enacted by the Government of India considering the provision of the Right to Work. It was implemented in 625 districts in India. 

  • Under MGNREGA 2005, all willing to work and can work will get 100 days of work in rural areas to conduct unskilled work or work as per their skill set. 
  • The MGNREGA scheme is open to any rural Indian citizen who is unemployed and above the age of 18 years.
  • The long-term goal of the MGNREGA scheme is to give assets such as roads, wells, and ponds. 
  • If, in any case, the government fails to provide employment, the government is obligated to give unemployment allowances to the people. 

Different sectors in terms of operations: 

There are two sectors in the economy in terms of operations: the organised sector and the unorganised sector. The organised sector covers the enterprises governed by the government’s rules and regulations. People working in the organised sector have fixed working hours with defined payroll. At the same time, the unorganised sector is represented by small and scattered units largely outside the government’s control. This sector has rules and regulations, but these are not followed. Moreover, jobs in the unorganised sector are not regular, with low wages. 

How to protect workers in unorganised sectors? 

The jobs offered by the organised sector are the most sought-after employment opportunities. Unfortunately, most organised sector companies refuse to follow laws, evade taxes, and do not follow labour laws. Moreover, a large chunk of the population is forced to enter the unorganised sector, which offers very low salaries, not even enough to make ends meet. Furthermore, the workers are exploited, with no additional perks or benefits. Even their earnings are not regular and secured. In this sector, overtime work is not compensated in any way, nor are there rules and regulations to provide compensation for the same. 

Hence, apart from the need to work, there is a requirement to offer protection to the unorganised sector workers. In rural areas, the unorganised sector consists of landless agricultural labourers, small and marginal farmers, and sharecroppers and artisans. Moreover, approximately 80 percent of the people in rural India consist of small and marginal farmer categories.   

In urban areas, the unorganised sector comprises workers from small-scale industries, casual workers in construction, trade and transportation, and those who work as street vendors, garment markers, rag pickers, head load workers, etc. Small-scale industries need support from the government for procuring raw materials and marketing output. Moreover, the casual workers in rural and urban areas must be protected from exploitation. 

Furthermore, backward classes, scheduled castes, and tribes usually work in an unorganised sector. Apart from getting low-paid jobs, these workers face social discrimination. Protection of unorganised workers is important for both social development and economic development.  

Let’s point out the ways by which we can protect the workers from being exploited: 

  • Self-employed workers can get low-cost loans from the government or banks. 
  • The government can decide the minimum pay and working hours to prevent the workers from being exploited in the unorganised sector. 
  • Moreover, the government can supply the farmers with low-cost, accessible, fundamental services such as education, food, and healthcare. 
  • Furthermore, the government can pass new legislation enacting paid and sick leaves for the workers. 

Different Sectors in Terms of Ownership: 

Another way of classifying economic activities or doing sectoral categorisation could be based on who owns the asset and is responsible for the delivery of services. 

There are two types of sectors on the basis of assets, the public and private sectors. In the public sector, the government owns most of the assets and bestows all the services. In the private sector, the delivery of assets and services depends on the private entity or the individual operating the organisation. Some examples of public sector entities and private sector entities are railways, and government banks, which are public entities. Whereas, Reliance industries ltd. and Tata Iron are examples of private sectors. 

The purpose and main aim of the private sector are to earn profits. To get the services of the private sector, you need to pay an amount to the entity. However, the purpose of the public sector is not just to earn money. Governments raise money through taxes, penalties, and other ways. That is the most obvious reason most of the population choose railways as the mode of transportation because the fare is lower than what they have to pay for a flight or to book a cab. 

There is an endless list of the things which are needed by society. However, the private sector will not provide them at a reasonable cost. Some major examples would be the construction of railways, roads, dams, bridges, railways, harbours, and generating electricity. Thus governments ensure that these facilities are there for the common man at a reasonable amount of money. 

One such activity is buying wheat and rice from the farmers at a ‘fair cost’ so that farmers get what they deserve for the produce. The government then store this wheat and rice in warehouses and sell them to the consumers through the ration shops at a reasonable price. At this point, the government bears a cost. Moreover, in this way, the government bridges the gap between the farmer and the consumer. 

Furthermore, providing quality education and healthcare facilities at a reasonable cost is the primary duty of the government. Moreover, the Infant mortality rate in Odisha is 40 and in Madhya Pradesh is 48. So the government must take care of the human development aspect as well. It includes providing safe drinking water, housing facilities for the poor and food and nutrition. Additionally, the government must take care of the country’s poorest and most ignored regions. 

Important Questions and Answers: 

  • What is a static and dynamic economy? 

A static economy is one in which there are no discernible changes in the economy. For example, economic characteristics such as population size, capital availability, production method, and organisation type were unchanged.

A dynamic economy is defined as one in which there is a significant or continual change in the economy. Economic factors such as population size, money availability, and production mode.

  • Which sector contributes most to the GDP after 2015? 

The tertiary sector contributes 54.3% to the national economy’s GDP from 2018 to 2019. Moreover, the tertiary sector contributed the maximum to the national economy after 2015. 

  • What are the problems faced in the agricultural sector?  

Low crop prices, debt, unirrigated land, insufficient water for irrigation, seasonal employment, and lack of knowledge are the common problems the agricultural sector faces. 

Three Sectors of the Economy: 

Primary Sector: 

Primary Sector is the backbone of the economy. In other words, it forms the base for all other products that are made subsequently. Some activities are done mainly by using and exploiting natural resources. For instance, take the example of the cultivation of cotton. The cotton plant’s growth depends on natural factors like rainfall, sunshine, and climate. Similarly, minerals and ores are natural products we get by exploiting natural resources. 

Secondary Sector: 

This sector outlines the process of transforming natural resources into a finished product using industrial activities. This includes the process of manufacturing, be it in a factory, workshop, or at home. For example, we get cotton fibre from plants but use it to spin yarn and weave clothes. Another example is transforming the earth into bricks and then utilising bricks to build houses. Moreover, the secondary sector gradually got associated with various industries, which is why we also name it the industrial sector.  

Tertiary Sector: 

After producing the goods in the primary and secondary sectors, we need a third sector to operate the above two sectors, the tertiary sector. The activities outlined in this sector do not directly help in the production of goods. Rather, they are an aid or support for the production process. 

For example, goods produced in the primary and secondary sectors must be transported from one place to another using trucks, trains, flights, and other road transportation modes. Moreover, they are sold at wholesale and retail shops and sometimes stored in warehouses. Other examples of the tertiary sector would be banking, communication, storage, and any activity which acts as a bridge between the other two sectors. 

Counting of goods and services: 

So many goods and services are produced in the primary, secondary, and tertiary sectors. Hence, counting all the goods and services produced in the economy would be tedious. However, economists have suggested a method that the values of goods and services should be used rather than adding up the actual numbers. For example, if 10,000 kgs of wheat are sold at Rs 20 per kg, the value of wheat will be Rs 2,00,000. The value of 5000 coconuts at Rs 15 per coconut will be Rs 75,000. Similarly, the value of goods and services in the three sectors is calculated and added. 

The growth of the service sector in India: 

Over the forty years of development between 1973-1974 and 2013-2014, production in all three sectors has increased. However, from 2013 to 2014, the tertiary sector emerged as a winner with mass production and contribution to the GDP of the country. 

Organised and Unorganised Sector: 

The organised sector covers those enterprises where the terms and conditions of employment are regular, and therefore, people have assured work. They are registered under the government, such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, etc. Workers in the organised sector have the security of employment. They are expected to work only on the pre-decided number of hours. 

The unorganised sector is represented by small and scattered units or shops which are largely outside the control of the government. There are rules and regulations for the unorganised sector that are not followed.

Public and Private Sector: 

Another method of classifying the economy is using the public and private sectors. The government owns most of the assets and provides all the services in the public sector. In the private sector, ownership of assets and delivery of services is in the hands of private individuals or companies.

Do you know?

The tertiary sector contributed 53.66% to the GDP in the year 2020. This whopping growth in GDP in the tertiary sector is fueled by frequent FDIs and the policy of liberalisation, privatisation, and globalisation.

FAQs (Frequently Asked Questions)

1. Is it true that the tertiary sector does not help in the development of the economy?

Though the creation of jobs in the tertiary sector did not happen overnight, the sector is an intrinsic part of the economy’s development. For instance, the banking sector gives the farmers loans to produce the raw materials needed in the secondary sector.

2. What is disguised unemployment?

Disguised unemployment is also referred to as hidden unemployment. For instance, your family owns the land, and there are ten members in your family. All the ten members are contributing something to grow crops. It may seem that all of them are employed, but the truth is that even if you remove five people from the land, the output will remain the same. These five people can earn a good amount of money by involving themselves in other activities.

3. Why is the scheme MGNREGA useful for India?

India is the second largest country in terms of population. So it becomes crucial to provide employment to the people who can work and are willing to work at a predetermined rate. MGNREGA was introduced in 2005. It offers 100 days of employment to those who are eligible for work.