This MCQ module is based on: Sectors in India & Employment
TOPIC 5 OF 17
Sectors in India & Employment
🎓 Class 10
Social Science
CBSE
Theory
Ch 2 — Sectors of the Indian Economy
⏱ ~15 min
🌐 Language: [gtranslate]
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[myaischool_lt_sst_assessment grade_level="class_10" subject="economics" difficulty="intermediate"]
Sectors in India & Employment
Primary, Secondary & Tertiary Sectors in India | Rising Tertiary Sector | Underemployment | MGNREGA 2005
How Have Primary, Secondary and Tertiary Sectors Grown in India?
How has the contribution of the three sectors changed over time in India? Data comparing 1977-78 with 2017-18 reveals a dramatic transformation. While production in all three sectors has increased over the forty years, the tertiary sector has grown the most and has emerged as the largest producing sector, overtaking the primary sector.
GVA by Primary, Secondary and Tertiary Sectors
Comparing total production (in Rs crores) across the three sectors for 1977-78 and 2017-18.
Rising Importance of the Tertiary Sector in Production
Why has the service sector become so dominant in India? There are several reasons:
Basic Services
Hospitals, schools, post offices, police stations, courts, defence, banks, and insurance companies are essential. In a developing country, the government must take responsibility for providing these.
Supporting Growth
As agriculture and industry develop, demand rises for linked services — transport, trade, storage, and warehousing. Greater development means more demand for such services.
Rising Incomes
As income levels rise, people demand more services — eating out, tourism, private hospitals, private schools, and professional training, especially in big cities.
ICT Revolution
New services based on information and communication technology — software companies, BPOs, digital platforms — have grown rapidly in the past decade.
Important
Not all parts of the service sector are thriving equally. At one end are highly skilled, well-paid professionals. At the other end are vast numbers of small shopkeepers, repair workers, and transport persons who barely earn a living — they work in services simply because no better alternatives exist.
Where Are Most People Employed in India — GDP vs Employment Gap
A remarkable fact about India is that while the tertiary sector now contributes the most to GVA, the primary sector continues to be the largest employer. This divergence is the key challenge India faces.
Share of Sectors in Employment (%)
Why did the expected shift away from agriculture not happen in employment? The answer is straightforward: not enough jobs were created in the secondary and tertiary sectors. Although industrial output rose by more than nine times between 1977-78 and 2017-18, employment in industry grew only about three times. Similarly, while service sector production rose fourteen-fold, jobs in services grew only five-fold.
As a result, more than half of India's workers remain in the primary sector (mainly agriculture), producing only about one-sixth of GVA. The secondary and tertiary sectors together produce the remaining five-sixths but employ less than half the workforce. This mismatch signals a serious problem.
Underemployment and Disguised Unemployment
The mismatch between production and employment means there are more people in agriculture than necessary. Even if some workers leave, total farm output would not fall. These workers are underemployed?.
Economics Term
Underemployment (Disguised Unemployment): A situation where people appear to be working but are actually contributing less than their full potential. If some of them were removed from the work, total output would remain unchanged. This is also called disguised unemployment because the unemployment is hidden — everyone seems busy, but the work could be done by fewer people.
Consider a small farmer, Laxmi, who owns two hectares of unirrigated land growing jowar and arhar. All five family members work on the plot year-round — not because all five are needed, but because they have nowhere else to go. Each person does some work, but none is fully employed. If two members leave for other jobs, farm production would remain the same, while the family earns additional income.
Underemployment also affects urban areas. Thousands of casual workers — painters, plumbers, repair persons — search for daily employment. Many do not find work every day. Street vendors may spend all day but earn very little, doing such work only because better opportunities are unavailable.
THINK ABOUT IT — Spotting Underemployment
L4 Analyse
- What groups of people in your area do you think are unemployed or underemployed?
- Underemployment occurs when people: (a) do not want to work, (b) are working lazily, (c) are working less than what they are capable of doing, (d) are not paid for their work. Choose the correct answer.
- Compare the changes in India with the pattern of developed countries. What kind of sectoral shifts were expected but did not happen in India?
- Why should we be worried about underemployment?
Answer
2. Correct answer: (c) — Underemployment means people are working less than their full capacity.3. In developed countries, workers shifted from primary to secondary, then to tertiary. In India, while GVA shifted to tertiary, employment did not move out of agriculture proportionally because insufficient jobs were created in other sectors.
4. Underemployment wastes human potential, keeps incomes low, perpetuates poverty, and means the economy is producing below its capacity.
How Can India Create More Employment — NREGA and Other Solutions
Given the widespread underemployment in agriculture, several strategies can generate productive jobs:
1. Irrigation and Agricultural Investment
If the government or banks provide loans for building wells and canals, farmers like Laxmi can irrigate their land and grow a second crop (such as wheat during rabi season). This directly creates more farm employment and reduces underemployment within agriculture itself.
2. Transport and Storage Infrastructure
Better rural roads, mini-truck networks, and storage facilities (like cold storage for potatoes and onions) allow farmers to sell surplus produce in towns, creating jobs not just in farming but also in transport and trade.
3. Affordable Agricultural Credit
If banks provide credit at reasonable interest rates (instead of expensive moneylender loans), farmers can buy seeds, fertilisers, equipment, and pump-sets in time — boosting production and employment.
4. Semi-Rural Industries and Services
Setting up agro-processing units in semi-rural areas — dal mills, honey collection centres, food processing plants for potato, rice, tomato, and fruit — provides employment close to where people live, without requiring migration to large cities.
5. Education and Health Sectors
About 60% of India's population is aged 5-29, but only about 51% attend educational institutions. Expanding schools requires more buildings, teachers, and staff. A study by the Planning Commission (now NITI Aayog) estimated that nearly 20 lakh jobs could be created in education alone. Similarly, more doctors, nurses, and health workers are needed in rural areas.
6. Tourism, Crafts, and IT
Every region has potential for income growth through tourism, regional craft industries, or new IT services. The same Planning Commission study noted that improving tourism could provide additional employment to over 35 lakh people annually.
MGNREGA 2005 — The Right to Work
Economics Term
MGNREGA 2005: The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 — a law that guarantees 100 days of employment per year to every rural household willing to do unskilled manual work. If the government fails to provide work, it must pay unemployment allowances. The types of work chosen aim to improve future productivity of land. It is implemented across approximately 625 districts of India.
LET'S DISCUSS — MGNREGA and Employment
L5 Evaluate
- Why is MGNREGA 2005 referred to as a 'Right to Work' law?
- Imagine you are the village head. What activities would you suggest under MGNREGA to increase people's income?
- How would providing irrigation and marketing facilities increase both income and employment for farmers?
- In what ways can employment be increased in urban areas?
Guidance
1. Because it legally guarantees 100 days of employment, and the government must compensate if it fails to provide work — making employment a justiciable right.2. Activities: constructing check dams, digging canals, building rural roads, deepening ponds, afforestation, building school and anganwadi buildings.
3. Irrigation enables a second or third crop, directly employing more workers. Marketing facilities let farmers sell at better prices, raising income and encouraging expanded production.
4. Urban employment can grow through expansion of small-scale industries, public investment in infrastructure, skill development programs, and promoting services like tourism and IT.
📚 Competency-Based Questions — Sectors in India & Employment
Scenario: In the village of Rampur, 80% of families depend on farming, but farm work is available for only about 6 months in a year. The nearest town has a few factories, but they employ very few workers. Young people from the village often move to cities to work as daily-wage labourers in construction.
Q1. The situation in Rampur best illustrates which economic concept?
L3 Apply
Q2. Why has the tertiary sector's share in GVA risen to become the largest, while the primary sector still employs the most workers?
L4 Analyse
Q3. Evaluate whether MGNREGA 2005 alone is sufficient to solve rural unemployment in India.
L5 Evaluate
Q4 (HOT). Design a plan for Rampur village that would create employment in all three sectors. Include at least one strategy for each sector.
L6 Create
⚖ Assertion–Reason Questions
Assertion (A): More than half of India's workers are employed in the primary sector, yet this sector contributes only about one-sixth of total GVA.
Reason (R): There is widespread disguised unemployment in agriculture — more workers are engaged than actually needed for production.
Reason (R): There is widespread disguised unemployment in agriculture — more workers are engaged than actually needed for production.
Assertion (A): MGNREGA 2005 guarantees 100 days of employment per year to every citizen of India.
Reason (R): The Act aims to address rural underemployment by providing a legal right to work.
Reason (R): The Act aims to address rural underemployment by providing a legal right to work.
Assertion (A): Setting up agro-processing industries in semi-rural areas can help reduce disguised unemployment.
Reason (R): Such industries absorb surplus agricultural labour and create productive employment closer to rural communities.
Reason (R): Such industries absorb surplus agricultural labour and create productive employment closer to rural communities.
Reference: NCERT Official Textbook — Economics Class 10 | CBSE Curriculum 2025
Frequently Asked Questions — Sectors in India and Employment
What is disguised unemployment with an example?
Disguised unemployment occurs when more workers are engaged than required, so removing some would not affect output. For example, if a family of five works on a small farm that needs only three workers, the remaining two are disguisedly unemployed. Their contribution to output is zero even though they appear employed. This is very common in India's agricultural sector where small landholdings sustain large families.
Why is there a mismatch between GDP and employment in India?
The GDP-employment mismatch exists because the tertiary sector contributes over 50 percent of GDP but employs fewer people than the primary sector. The primary sector still employs about 42 percent of workers but contributes only around 17 percent to GDP. This means worker productivity in agriculture is much lower than in services or industry.
What is NREGA and how does it create employment?
The National Rural Employment Guarantee Act (NREGA) 2005, also known as MGNREGA, guarantees 100 days of employment per year to every rural household whose adult members volunteer for unskilled manual work. The government pays a minimum wage for work on public infrastructure like roads, canals, and ponds. If employment is not provided within 15 days, an unemployment allowance must be paid.
How has employment changed across sectors in India?
At independence, the primary sector employed the largest share of workers and this remains true today, although the share has declined. The secondary and tertiary sectors have seen gradual increases in employment, but not enough to absorb all workers moving from agriculture. Many workers in agriculture are underemployed, and the tertiary sector's employment growth has not kept pace with GDP contribution.
What are the solutions to create more employment in India?
NCERT suggests government investment in irrigation, transport and storage for agricultural produce; promoting industries in semi-rural areas; investing in education and healthcare to create service jobs; implementing NREGA; and supporting tourism, IT, and small-scale manufacturing. A combination of government spending and private investment is needed to generate sufficient employment.
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