case study on sectors of indian economy

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Case Study Questions Chapter 2 Sectors of The Indian Economy

Please refer to the Case Study Questions Chapter 2 Sectors of The Indian Economy with answers provided for Class 10 Social Science. These solved case study based questions are expected to come in the Class 10 Economics exam in the current academic year. We have provided Case study for Class 10 Social Science for all chapters here. You should practise these solved case studies to get more marks in examinations.

Chapter 2 Sectors of The Indian Economy Case Study Questions Class 10 Social Science

1. Read the source given below and answer the following questions:

The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is the next step after primary. The product is not produced by nature but has to be made and therefore some process of manufacturing is essential. This could be in a factory, a workshop or at home. For example, using cotton fibre from the plant, we spin yarn and weave cloth. Using sugarcane as a raw material, we make sugar or gur. We convert earth into bricks and use bricks to make houses and buildings. Since this sector gradually became associated with the different kinds of industries that came up, it is also called as industrial sector. After primary and secondary, there is a third category of activities that falls under tertiary sector and is different from the above two. These are activities that help in the development of the primary and secondary sectors. These activities, by themselves, do not produce a good but they are an aid or a support for the production process. Transport, storage, communication, banking, trade are some examples of tertiary activities. Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

Answer the following MCQs by choosing the most appropriate option.

(i) Which sector includes the units producing services? (a) Primary sector (b) Secondary sector (c) Tertiary sector (d) All the above

(ii) Which one of the following economic activities is not in the tertiary sector? (a) Banking (b) Bee keeping (c) Teaching (d) Working in a call centre

(iii) The service sector includes activities such as (a) agriculture, dairy, fishing and forestry (b) making sugar, gur, and bricks (c) transport, communication and banking (d) none of these

(iv) Which of the following types of activities are covered in the secondary sector? (a) It generates services rather than goods. (b) Natural products are changed through manufacturing. (c) Goods are produced by exploiting natural resources. (d) It includes agriculture, forestry and dairy.

2. Read the source given below and answer the questions that follows:

The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country. It is the value of all final goods and services produced within a country during a particular year. GDP shows how big the economy is. In India, the mammoth task of measuring GDP is undertaken by a central government ministry. This Ministry, with the help of various government departments of all the Indian states and union territories, collects information relating to total volume of goods and services and their prices and then estimates the GDP. After primary and secondary, there is a third category of activities that falls under tertiary sector and is different from the above two. These are activities that help in the development of the primary and secondary sectors. These activities, by themselves, do not produce a good but they are an aid or a support for the production process. For example, goods that are produced in the primary or secondary sector would need to be transported by trucks or trains and then sold in wholesale and retail shops. At times, it may be necessary to store these in godowns. We also may need to talk to others over telephone or send letters (communication) or borrow money from banks (banking) to help production and trade. Transport, storage, communication, banking, trade are some examples of tertiary activities. Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

(i) The money value of all final goods and services produced within a country during a particular year is called: (a) Gross domestic product (b) Net domestic product (c) National product (d) Production of secondary sector

(ii) Life insurance is an activity of the (a) primary sector (b) secondary sector (c) service sector (d) none of the above

(iii) Which sector has emerged as the largest producing sector in India. Select one from the following alternatives: (a) Secondary sector (b) Tertiary sector (c) Primary sector (d) Science and Technology sector

(iv) Information and communication technology is associated with (a) primary sector (b) secondary sector (c) tertiary sector (d) none of the above

3. Read the information given below and select the correct option:

Rahul is an agricultural labourer. There are several months in a year when he has no work and needs credit to meet his daily expenses. He depends upon his employer, the landowner for credit who charges an interest rate of 8 per cent per month. Rahul repays the money by working physically for the landowner on his farmland.

Over the years his debt will – (a) Increase – because of increasing interest and non-payment of monthly amount (b) Remain constant – as he is working for the employer but is repaying less (c) Reduce – as amount equivalent to his salary is being counted as monthly repayment (d) Be totally repaid – as he is repaying the debt in the form of physical labour

Most of the agricultural labourers like Rahul depend upon loans from informal sector. Which of the following statements about this sector is correct? (a) There are government bodies to supervise informal sector. (b) Money lenders ask for a reasonable rate of interest. (c) Cost of informal loans to the borrower is quite high. (d) Money lenders use fair means to get their money back.

4. Read the source given below and answer the following questions:

The organised sector offers jobs that are the most sought-after. But the employment opportunities in the organised sector have been expanding very slowly. It is also common to find many organised sector enterprises in the unorganised sector. They adopt such strategies to evade taxes and refuse to follow laws that protect labourers. As a result, a large number of workers are forced to enter the unorganised sector jobs, which pay a very low salary. They are often exploited and not paid a fair wage. Their earnings are low and not regular. These jobs are not secure and have no other benefits. Since the 1990s, it is also common to see a large number of workers losing their jobs in the organised sector. These workers are forced to take up jobs in the unorganised sector with low earnings. Hence, besides the need for more work, there is also a need for protection and support of the workers in the unorganised sector.

(i) Manufacturing units in unorganised sector are: (a) not subject to government regulations (b) subjects to government regulations (c) subject to central bank’s regulations (d) none of the above

(ii) Which of the following is not applicable for a worker, who works in the organised sector? (a) She gets a regular salary at the end of the month. (b) She is not paid for leave. (c) She gets medical allowance. (d) She got an appointment letter stating the terms and conditions of work when she joins work.

(iii) Choose the correct meaning of organised sector. (a) It covers those enterprises where the terms of employment are regular. (b) It is outside the control of the government. (c) Jobs are not regular. (d) It provides low salaries.

(iv) Which of the following examples does not fall under unorganized sector? (a) A farmer irrigating his field. (b) A daily wage labourer working for a contractor. (c) A doctor in a hospital treating a patient. (d) A handloom weaver working on a loom in her house.

5. Read the source given below and answer the questions that follows:

The product of this activity, cotton, is a natural product. Similarly, in the case of an activity like dairy, we are dependent on the biological process of the animals and availability of fodder etc. The product here, milk, also is a natural product. Similarly, minerals and ores are also natural products. When we produce a good by exploiting natural resources, it is an activity of the primary sector. Why primary? This is because it forms the base for all other products that we subsequently make. Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector. The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is the next step after primary. The product is not produced by nature but has to be made and therefore some process of manufacturing is essential. This could be in a factory, a workshop or at home. After primary and secondary, there is a third category of activities that falls under tertiary sector and is different from the above two. These are activities that help in the development of the primary and secondary sectors. These activities, by themselves, do not produce a good but they are an aid or a support for the production process Service sector also includes some essential services that may not directly help in the production of goods. For example, we require teachers, doctors, and those who provide personal services such as washermen, barbers, cobblers, lawyers, and people to do administrative and accounting works. In recent times, certain new services based on information technology such as internet cafe, ATM booths, call centres, software companies etc have become important.

(i) Which sector converts raw materials into goods? (a) primary sector (b) secondary sector (c) unorganised sector (d) organised sector

(ii) Manufacturing sector is associated with (a) primary sector (b) secondary sector (c) tertiary sector (d) private sector

(iii) Production of a commodity through exploitation of natural resources is an activity in the (a) primary sector (b) secondary sector (c) tertiary sector (d) information technology sector

(iv) Which sector includes the units producing services? (a) primary sector (b) secondary sector (c) tertiary sector (d) all the above

Very Short Answer Type Questions

Question. Suggest any one way to generate employment in urban areas. Ans.  Following are the ways in which employment can be generated in urban areas: (1) Improve local and inter city transportation. (2) Increase vocational education courses.

Question. When was MGNREGA passed? Ans.  2005

Question. How is GDP calculated? Ans.  GDP in India is calculated by the expenditure method. Only final goods and services are counted to get the final value. Therefore, GDP = Value of output – Intermediate consumption.

Question. The table below shows the estimated number of workers in India in the organised and unorganised sectors. Read the table carefully and answer the question given below: What percentage of tertiary sector workers in India are employed in Unorganised Sector according to the table?

Ans.  To calculate percentage of tertiary sector workers employed in unorganised sector: = (Numberof employees in unorganised sector/Total number of employees in tertiary sector) × 100

Total number of workers in tertiary sector: 17 + 76 = 93

Percentage employed in unorganised sector: (76/93) × 100 = 81.7%

Question. Why is the tertiary sector becoming an important sector in India? Explain the main reason. Ans . (1) The tertiary sector helps in the development of primary and secondary sectors by transporting goods, providing loans etc. Thus, helping in the development and growth of both primary and secondary sector. (2) The tertiary sector provides the basic services like public transportation, medical car, electricity, banking, post office etc. under the control of the government. (3) The tertiary sector creates an huge area for employment even for uneducated and unskilled work. (4) The tertiary sector distributes the consumer goods to different suppliers.

Question. Which category of economic sector does the activity of changing natural products into other forms come under? Ans.  Activities related to changing natural resources into other forms come under the primary sector.

Question. Look at the picture given below and identify the sector to which the characters shown in it belong to.

Ans.  The workers shown in the picture are associated with agricultural sector also known as Primary sector.

Question. Suggest any one way to increase the income of the marginalised groups in India. Ans . Marginal farmers need to be supported through adequate facility for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.

Question. What is GDP?  Ans.  GDP is the value of final goods and services produced in each sector during a particular year.

Question. Explain the main advantage of organised sector with respect to employment. Ans.  In the organised sector, terms of employment are regular and people have assured work throughout the year.

Question. Suggest any one way to create employment in semi-rural areas. Ans.  By setting up of small and agro-based industries, employment can be created in semi-rural areas.

Question. How is public sector different from the private sector? Ans.  The public sector is owned, managed and controlled by government whereas the private sector is owned, controlled and managed by individuals or group of individuals.

Question. Study this picture. Answer the question that follows: Identify the sector to which the worker in the picture belongs ?

Ans.  They belong to the Tertiary Sector.

Question. In a city, 5000 people work in offices and factories registered with the government, 3000 own offices, clinics in market places with formal license, 7000 people work on street, construction workers and domestic help whereas 9000 people work in small workshops usually not registered with the government. On the basis of the information given above calculate the percentage of people working in the Organised sector and choose the correct option. (a) 20% (b) 33% (c) 50% (d) 66% Ans.  (b) 33%

Question. Give one example each of primary and tertiary economic sectors. Ans.  Activities like agriculture, mining, etc. are examples of the primary sector, whereas activities like banking, tourism, etc. are examples of tertiary sector.

Question. Analyse the table given below and answer the question that follows: This source shows a database of Workers employed in different sectors (in millions) Calculate, the percentage of people in organised sector?

(a) 8.4% (b) 9.6% (c) 7.6% (d) 10% Ans.  (c) 7.6%

Question. Identify what sector does these products belong to?

Ans.  These products belong to Secondary Sector.

Short Answer Type Questions

Question. ‘‘Tertiary sector activities help in the development of the primary and secondary sectors.’’ Evaluate the statement. Ans.  ‘‘Tertiary sector activities help in the development of the primary and secondary sectors.’’ This statement can be understood by the following points : (1) The tertiary sector does not produce any goods by itself but it supports the production process of the primary and secondary sectors. (2) The tertiary sector comprises of several essential services such as hospitals, educational institutions, police stations, courts, transports, bank, etc. These basic services boost the primary and secondary sectors simultaneously. (3) Goods produced by the primary and secondary sectors are used by and sustained the tertiary sectors to provide services. For example, buildings created by the secondary sector are used by the tertiary sector, such as hotels, colleges, restaurants, residences etc.

Question. How can move employment be generated in the agriculture sector ? Explain any three methods. Ans . More employment can be generated in the agriculture sector alone in the following ways: (1) Increase in irrigation facilities: Without irrigation, only a single crop can be grown in most agricultural fields, which means less working opportunities, but if irrigation is provided, two or three crops can be grown on the same field. So more people will be employed. (2) Provide Basic facilities: Government should provide basic infrastructure in agriculture related facilities such as transportation (building of roads), irrigation, banking to ease the work of farmers. Subsidies can be provided. Dams and storages’ can be built. (3) Provide them easy loan: If people are provided easy bank loans, then they could start small businesses, which will make them self-dependent. (4) Storage: Storage facilities should be provided to farmers so that they can store their produce and can be able to sell it later.

Question. How does the public sector contribute to the economic development of the nation? Explain. Ans.  The public sector contributes to the economic development of the nation in the following ways: (1) It promotes rapid economic development through creation and expression of infrastructure. (2) It generates financial resources for development. (3) It ensures equality of income, wealth and thus a balanced regional development. (4) It encourages the development of small, medium and cottage industries. (5) It ensures easy availability of goods at moderate rates. (6) It contributes to community development i.e., to the human development index (HDI) via health and educational services.

Question. Mention the employment conditions prevailing in the organised sector. Ans.  The employment conditions prevailing in the organised sectors are as follows: (1) People working in the organised sectors have job security and get regular monthly salary. (2) They get paid leaves, salary during holidays, medical facilities, provident fund, gratuity, pension after retirement etc. (3) People working in this sector have fixed working hours.

Question. Underemployment continues to be rampant in the rural areas. Suggest any three ways through which employment for rural people can be generated. Ans . Employment generation (1) People can be employed in projects like construction of dam/canal/ roads in the village. (2) Government invests and employ people in providing transportation and storage services. (3) People can be employed in services like banking, trade, etc. (4) Government can identify, promote industries and services in semi-rural areas to enhance employment. (5) Government can open centres to give them training and financial assistance to help them become self – employed (6) Any other relevant point (Any three points to be explained)  OR The problem of unemployment can be eradicated in India in the following ways: (1) Loans should be provided to small farmers by the government or banks to have more irrigation facilities. This would help farmers by modernising their agricultural equipments and getting facilities of wells and tubewells. This can also help them to grow a second crop. (2) New dams and canals should be constructed which will create more employment in the agriculture sector. (3) Facilities for transportation and storage can be improved to get productive employment not only for the farmers but also for the people in these services. (4) Some industries, like cold storage and honey collection centres, should be set up in rural areas. These industries will get raw materials from the rural areas easily and could also create employment there. (5) Health service centers should be improved or opened. This will create employment as well as enable people to get a health check up easily. (6) Government schemes like MNREGA should be implemented by the government. health of the economy. The more the unemployment, the less the economic development.

Question. Why is the tertiary sector becoming more important in India ? Explain. Ans.  The tertiary sector is gaining importance because – (1) 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. which are considered as basic services are ensured by the government. (2) The more the development of the primary and secondary sectors, the more would be the demand for such services. (3) New services based on information and communication technology have become important and essential in a global world with technological advancement. (4) Rise in income has led to arise in the living standards of people, which automatically makes them demand services such as restaurants, hotels, gyms, shopping centres, private schools, colleges and hospitals. This boosts the tertiary sector. (Mention any 3 of the 4 points to get full marks).

Question. What are the main features of the Mahatma Gandhi National Rural Employment Guarantee Act-2005 (MNREGA)? Ans.  Main Features of MNREGA-2005: (1) It was implemented by the central government in India as the Right to work in 200 districts of India. (2) Under this Act, all those who are able to and are in need of work are guaranteed 100 days of employment in a year by the government. (3) If government fails in its duty to provide employment, it will give unemployment allowances to the people.

Question. ‘‘The primary sector I the most important sector of economic activity during the initial stages of development.’’ Evaluate the statement. Ans.  ‘‘The primary sector I the most important sector of economic activity during the initial stages of development.’’ This can be asserted using the following points: (1) Before technological advancement, people didn’t have much knowledge about construction, manufacturing or any crafts, they only knew how to produce and use natural products through farming, fishing or animal husbandry. It was the only way to sustain human life. (2) With development, the methods and procedures of farming changed and the agricultural sector prospered even more. (3) The sector produced a lot of products and maximum people were employed in this sector. With time technological advancements, people began to incline towards construction, manufacturing and other crafts. This was achieved after years of development.

Question. Distinguish between public sector and private sector in three points for each with examples.  Ans.

Question. Why is the organised sector preferred by employees? Explain. Ans . The organised sector is preferred by employees because – (1). Assured availability of work – Organised sector ensures year-long availability of work and continuous livelihood support. Employees in the unorganised sector don’t have continuous work available. (2) Job security – Workers in the organised sector enjoy security of employment. They are expected to work only a fixed number of hours. They are paid overtime otherwise. They cannot be removed withot any proper reason. (3) Added benefits and incentives – Employees of the organised sector get paid leave, provident fund and gratuity while employees of the unorganised sector do not have any such guarantee

Question. Suggest any three ways to save workers of unorganised sector from exploitation. Ans.  Measures to save employees of the unorganised sector from exploitation are : (1) Workers of the unorganised sector in rural areas are mostly farmers. They can be supported through adequate facility for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets. (2) Workers involved in small scale industries also need support for procuring more raw material. This shall provide them with regular wages. (3) These workers should be educated, skilled and made aware of their human and labour rights to protect them from social discrimination and exploitation to the hands of their employers.

Long Answer Type Questions

Question. “The declining share of agriculture in the gross domestic product (GDP) is a matter of serious concern in India.” Support the statement. Ans.  The declining share of agriculture in the gross domestic product (GDP) is a matter of serious concern in India because: (1) Indian farmers are facing challenge from international competitors. (2) The government is reducing investment in the agricultural sector, especially the irrigation sector. (3) Subsidy in fertilisers has decreased, leading to a rise in the cost of production. (4) There has been a reduction in import duties on agricultural products. So cheap agricultural products are coming from abroad. (5) Farmers are withdrawing their investment in the agriculture industry, causing a downfall in employments.

Question. Explain how: (A) Public sector contributes to the economic development of a nation (B) Government contributes towards helping private sector grow Ans.  (A) In many ways does the public sector contributes to the economic development of our nation. Let’s go through some of the ways below in detail: (1) Public sector promotes rapid economic development through creation and expression of infrastructure. (2) t generates financial resources for development (3) It creates employment opportunities and ensures equality of income, wealth and thus a balanced regional development. (4) It encourages the development of small, medium and cottage industries, and ensures easy availability of goods at moderate rates. (5) Contributes to community development i.e., to the Human Development Index (HDI) via health and educational services. (Any 4 points will award full marks) (B) There are some activities, which the government has to support for the private sector to continue their production or business. For example, selling electricity at the cost of generation may push up the costs of production of industries. Many units, especially small-scale units, might have to shut down. Government steps in by producing and supplying electricity at rates which these industries can afford. Government has to bear part of the cost. Similarly, the government in India buys wheat and rice from farmers at a ‘fair price’. This it stores in its godowns and sells at a lower price to consumers through ration shops. In this way, the government supports both farmers and consumers.

Question. ‘There are a large number of activities which are the primary responsibility of the government.’ Do you agree to it? Support your view with arguments. Ans.  Yes, I agree. For example, (1) Providing health and education facilities for all is the prime responsibility of the governments at all levels. (2) Running proper schools and providing quality education, particularly elementary education is the duty of the government. India’s size of illiterate population is one of the largest in the world. (3) Similarly, half of India’s children are malnourished and a quarter of them are critically ill. Government also needs to pay attention to aspects of human development such as availability of safe drinking water, housing facilities, for the poor and food and nutrition. (4) It is also the duty of the government to take care of the poorest and most ignored regions of the country through increased spending in such areas.

Question. Describe the employment conditions prevailing in the unorganised sector of the economy. OR “Workers are exploited in the unorganised sector.” Give reasons to support this statement. Ans.  Employment conditions in the unorganized sector: (1) There are rule and regulations but these are not followed. (2) Jobs are not secured. (3) Jobs are low paid. (4) No provisions for over time, holidays, sick leaves etc. (5) People can be asked to leave without any reason. (6) They are largely outside the control of government. (7) Any other relevant point. Any five points to be described. 

Question. Highlight any five benefits of the organised sector, with examples. Ans . Benefits of the organised sector are as follows: (1) Workers of the organised sector get regular and assured employment. (2) Companies in the organised sector are registered/ enlisted under the government, and have to follow its rules and regulations which are mentioned in various laws such as Factories Act, Minimum Wages Act and Payment of Gratuity Act. (3) Workers in the organised sectors enjoy privileges of job security and are expected to work only for a fixed number of hours. (4) They also get several other benefits like paid leaves, provident fund, gratuity, etc. (5) They also receive medical benefits, pension, etc. (6) There is a provision for overtime payment, in case the workers do their duties after the fixed working hours.

Question. Show how tertiary sector has emerged as the largest producing sector in India. Ans.  Importance of Tertiary Sector : (1) Basic services like hospitals, educational institutions, defence, and transport are the part of tertiary sector. (2) Development of agriculture and industry leads to the development of services (3) As the income level rises, tourism, shopping, private schools and professional training also expands. People start demanding more services this leads to the expansion of the tertiary sector. (4) Information and communication technology also play an important role in this expansion. (5) Large number of workers are engaged in this sector, as the demand for services grow.

Question. Do you think the classification of economic activities into primary, secondary and tertiary is useful? If yes, give reasons to support your view. Ans.  Yes, it is very useful because (1) This classification gives us the total number of workers engaged in different sectors. (2) This classification gives us the clarity of share of each sector in GDP (3) This classification tells us which sectors is growing well and which one is lagging behind and accordingly measures can be taken to manage them. (4) This classification tells us how these sectors are interdependent on each other.

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CBSE Class 10 Case Study Questions Social Science Economics Sectors of The Indian Economy. Important Case Study Questions for Class 10 Board Exam Students. Here we have arranged some Important Case Base Questions for students who are searching for Paragraph Based Questions Sectors of The Indian Economy.

At Case Study Questions there will given a Paragraph. In where some Important Questions will made on that respective Case Based Study. There will various types of marks will given 1 marks, 2 marks, 3 marks, 4 marks.

Case Study 1:

The topic of whether manufacturing or services should be prioritized as the preferred path for India’s economy is a recurring subject of discussion in public forums. During the early years of this century, when India’s software exports were experiencing significant growth, there was a question as to why India’s services sector couldn’t surpass manufacturing in driving the economy forward. This proposition challenged the conventional model of economic development, as most successful economies had prioritized industrial expansion first. It is understandable that Indian economic policy makers felt frustrated. The economic reforms implemented in 1991 primarily focused on manufacturing. However, despite the substantial reduction in tariffs and the dismantling of the bureaucratic system known as the ‘licence-permit Raj’, the share of manufacturing in the economy did not increase. It is important to note that the significance of India’s manufacturing sector should not be solely measured by its size. There has been a qualitative transformation since 1991, with an impressive improvement in the range and quality of products manufactured in India.

Q1) How different sector agriculture , manufacturing and service are interlink to each other? Mark 2

Answer Agriculture, manufacturing, and services are interconnected sectors in the economy. Agriculture provides raw materials to manufacturing, which transforms them into goods. Services support both by offering transportation, logistics, and financial services. A strong agricultural base can lead to a thriving manufacturing sector, which, in turn, drives demand for services, creating a well-rounded economy.

Q2) How do we count the various goods and services and know the total production in each sector? Mark 2

Answer The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country

Case Study 2:

The growth of India’s Gross Domestic Product (GDP) and Gross Value Added (GVA) in the economy reached a four-quarter high of 7.8% in the first quarter of the current financial year. However, economists predict that the pace of growth may be dampened for the remainder of 2023-24 due to factors such as a weak monsoon, high inflation, and global challenges.

After six months of contraction, the manufacturing GVA experienced growth for the second consecutive quarter, with a slight increase in the pace of growth to 4.7% in the first quarter (Q1) compared to 4.5% in the previous quarter. The agriculture, forestry, and fishing GVA grew by 3.5% between April and June, but it was the services sectors that saw the most significant surge and contributed to the estimates released by the National Statistical Office (NSO) on Thursday.

Q1) What do you understand by the term GDP? Mark 1

Answer The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country.

Q2) In gdp why only final value of good and services is considered? Mark 2

Answer The value of final goods already includes the value of all the intermediate goods that are used in making the final good. Hence, the value of Rs 80 for the biscuits (final good) already includes the value of flour (Rs 25). Similarly, the value of all other intermediate goods would have been included. To count the value of the flour and wheat separately is therefore not correct because then we would be counting the value of the same things a number of times. First as wheat, then as flour and finally as biscuits.

Q3) What is the gdp of India as of march 2023? Mark 1

Answer GDP in India is expected to reach 3598.00 USD Billion by the end of 2023, according to Trading Economics global macro models and analysts expectations.

Case Study 3:

India possesses a notably extensive agricultural sector. Although the sector’s contribution to the country’s GDP has decreased by half over the past three decades, currently standing at approximately 15 percent, it continues to employ around half of India’s workforce and significantly impacts the volatility of the nation’s GDP. India boasts the second largest expanse of cultivable land globally and serves as a prominent producer of various agricultural commodities. In the early 2000s, India surpassed the United States as the leading milk producer worldwide and also plays a significant role in the production of pulses, such as chickpeas and lentils, which serve as vital sources of protein in vegetarian diets.

The advent of high-yielding seeds, including enhanced strains of wheat, from the mid-1960s onwards, coupled with the increased utilization of chemical fertilizers, marked the inception of what is commonly referred to as the ‘green revolution’. Wheat production experienced a nearly 150 percent surge between the mid-1960s and mid-1970s, ultimately enabling the country to achieve self-sufficiency in grain production by the late 1970s. This surge in agricultural output not only bolstered rural incomes but also led to a decline in food prices, consequently alleviating rural poverty (World Bank 2004). Despite the notable advancements in productivity within the Indian agricultural sector in recent decades, yields continue to remain comparatively low on an international scale, with growth in yields only marginally surpassing the global average.

Q1) What do you mean by the term disguised employment often related to agriculture sector? Mark 2

Answer This is the situation of underemployment, where people are apparently working but all of them are made to work less than their potential. This kind of underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment.

Q2) Write about MGNREGA Act 2005 ? Mark 2

Answer Under MGNREGA 2005, all those who are able to, and are in need of, work in rural areas are guaranteed 100 days of employment in a year by the government. If the government fails in its duty to provide employment, it will give unemployment allowances to the people. The types of work that would in future help to increase the production from land will be given preference under the Act

Case Study 4:

The formalization of the economy is purported to be in the best interest of society as a whole, including the unorganized sector. It is contended that the advancements made by the organized sector will eventually benefit the marginalized population. The appropriation of surplus from agriculture, through terms of trade, is claimed to be advantageous for industrialization and the lifestyle of urban elites, despite the fact that it impoverishes the majority of agriculturists and rural areas. The regulations governing economic gains allow the organized sector to monopolize the majority of the benefits derived from development. The marginalized sections are expected to be content with their meager material gains. Often, it is insinuated that the marginalized should be grateful for whatever little they have received. The widening disparities are justified on the basis of merit, while disregarding the adverse effects of imbalanced social development on the marginalized sections.

Q1) What are the benefits working in organized sector? Mark 1

Answer  Working in the organized sector in India offers several benefits, including job security, regulated working hours, social security benefits such as provident fund and gratuity, healthcare, and opportunities for skill development. It often provides higher salaries, better working conditions, and a sense of stability compared to the unorganized sector.

Q2) What are the challenges working in unorganized sector? Mark 1

Answer Working in India’s unorganized sector poses challenges like job insecurity, low wages, lack of social security benefits, poor working conditions, and limited access to healthcare or education. Informal labor often faces exploitation, unsafe environments, and minimal legal protection, making it a vulnerable segment of the workforce.

Q3) what are the ways to protect worker working in unorganised sector. Mark 2

Answer To protect unorganized sector workers in India, measures include: Extending social security benefits like provident fund and health insurance. Implementing labor laws and ensuring fair wages. Promoting skill development and education. Raising awareness of workers’ rights. Creating accessible grievance redressal mechanisms. Encouraging the formalization of informal work.

Case Study 5:

Before India gained independence, there were only a few Public Sector Enterprises in the country, such as the Railways, the Posts and Telegraphs, the Port Trusts, the Ordinance Factories, All India Radio, and a few others that were departmentally managed, such as the Government Salt Factories and Quinine Factories. After gaining independence, India adopted planned economic development policies in a democratic, federal polity. The country faced challenges such as income inequalities, low levels of employment, regional imbalances in economic development, and a lack of trained manpower. India was predominantly an agrarian economy with a weak industrial base, low levels of savings, inadequate investments, and infrastructure facilities. In light of this socio-economic situation, India’s visionary leaders drew up a roadmap for the development of the Public Sector as an instrument for self-reliant economic growth. This guiding factor led to the passage of the Industrial Policy Resolution of 1948, followed by the Industrial Policy Resolution of 1956. The 1948 Resolution envisioned the development of core sectors through public enterprises. The Public Sector was expected to correct regional imbalances and create employment. The Industrial Policy Resolution of 1948 emphasized the expansion of production, both agricultural and industrial, particularly the production of capital equipment and goods that satisfied the basic needs of the people, and commodities whose export would increase foreign exchange earnings.

Q1) What is the importance of public sector? Mark 2

Answer Some of the sectors need spending large sums of money, which is beyond the capacity of the private sector. Also, collecting money from thousands of people who use these facilities is not easy. Even if they do provide these things they would charge a high rate for their use. Examples are construction of roads, bridges, railways, harbours, generating electricity, providing irrigation through dams etc. Thus, governments have to undertake such heavy spending and ensure that these facilities are available for everyone.

Q2) Give examples of public and private sector company? Mark 2

Answer Railways or post office is an example of the public sector whereas companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned.

Also See: Development Case Study Question and Answer

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Indian Economy Overview

About indian economy growth rate & statistics, introduction.

Strong economic growth in the first quarter of FY23 helped India overcome the UK to become the fifth-largest economy after it recovered from the COVID-19 pandemic shock. India's gross domestic product (GDP) at current prices in the second quarter (Q2) of 2023-24 is estimated to be Rs. 71.66 trillion (US$ 861.2 billion), as against Rs. 65.67 trillion (US$ 789.2 billion) in Q2 of 2022-23, showing a growth rate of 9.1%. Strong domestic demand for consumption and investment, along with Government’s continued emphasis on capital expenditure are seen as among the key driver of the GDP in the first half of FY24. In 2023-24 (April-December), India’s service exports stood at US$ 247.92 billion. Furthermore, India’s overall exports (services and merchandise) in 2023-24 (April-December) were estimated at US$ 565.04 billion. Rising employment and substantially increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.

Future capital spending of the government in the economy is expected to be supported by factors such as tax buoyancy, the streamlined tax system with low rates, a thorough assessment and rationalisation of the tariff structure, and the digitization of tax filing. In the medium run, increased capital spending on infrastructure and asset-building projects is set to increase growth multipliers. The contact-based services sector has largely demonstrated promise to boost growth by unleashing the pent-up demand. The sector's success is being captured by a number of HFIs (High-Frequency Indicators) that are performing well, indicating the beginnings of a comeback.

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

India's appeal as a destination for investments has grown stronger and more sustainable as a result of the current period of global unpredictability and volatility, and the record amounts of money raised by India-focused funds in 2022 are evidence of investor faith in the "Invest in India" narrative.

Market size

India’s nominal gross domestic product (GDP) at current prices is estimated to be at Rs. 296.58 trillion (US$ 3.56 trillion) in 2023-24. Additionally, the Nominal GDP at current prices in Q2 of 2023-24 was Rs. 71.66 trillion (US$ 861.2 billion), as against Rs. 65.67 trillion (US$ 789.2 billion) in 2022-23, estimating a growth of 9.1%. As of 03rd October 2023, India is home to 111 unicorns with a total valuation of US$ 349.67 Billion. Out of the total number of unicorns, 45 unicorns with a total valuation of US$ 102.30 Billion were born in 2021 and 22 unicorns with a total valuation of $ 29.20 Billion were born in 2022. India presently has the third-largest unicorn base in the world. The government is also focusing on renewable sources by achieving 40% of its energy from non-fossil sources by 2030. India is committed to achieving the country's ambition of Net Zero Emissions by 2070 through a five-pronged strategy, ‘Panchamrit’. Moreover, India ranked 3rd in the renewable energy country attractive index.

According to the McKinsey Global Institute, India needs to boost its rate of employment growth and create 90 million non-farm jobs between 2023 to 2030 in order to increase productivity and economic growth. The net employment rate needs to grow by 1.5% per annum from 2023 to 2030 to achieve 8-8.5% GDP growth between same time period. The current account deficit stood at US$ 8.3 billion, or 1% of GDP, in the second quarter of fiscal 2023-24 as compared to US$ 9.2 billion or 1.1% of GDP in the preceding quarter.

Exports fared remarkably well during the pandemic and aided recovery when all other growth engines were losing steam in terms of their contribution to GDP. Going forward, the contribution of merchandise exports may waver as several of India’s trade partners witness an economic slowdown. According to Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles Mr. Piyush Goyal, Indian exports are expected to reach US$ 1 trillion by 2030.

Recent Developments

India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the Covid-19 pandemic shock, several investments and developments have been made across various sectors of the economy. According to World Bank, India must continue to prioritise lowering inequality while also putting growth-oriented policies into place to boost the economy. In view of this, there have been some developments that have taken place in the recent past. Some of them are mentioned below.

• As of January 19, 2024, India’s foreign exchange reserves stood at US$ 616.14 billion.
• In 2023, India saw a total of US$ 49.8 billion in PE-VC investments.
• Merchandise exports in December 2023 stood at US$ 38.45 billion, with total merchandise exports of US$ 505.15 billion during the period of April-December (2023-24).
• India was also named as the 48th most innovative country among the top 50 countries, securing 40th position out of 132 economies in the Global Innovation Index 2023. India rose from 81st position in 2015 to 40th position in 2023. India ranks 3rd position in the global number of scientific publications.
• At the beginning of January 2024, the PMI Services comfortably remained in the expansionary zone, registering a value of 61.2.
• In December 2023, the gross Goods and Services Tax (GST) revenue collection stood at Rs.1,64,882 crore (US$ 19.80 billion), of which CGST is Rs. 30,443 crore (US$ 3.65 billion), SGST is Rs. 37,935 crore (US$ 4.55 billion).
• Between April 2000–September 2023, cumulative FDI equity inflows to India stood at US$ 953.14 billion.
• In November 2023, the overall IIP (Index of Industrial Production) stood at 141. The Indices of Industrial Production for the mining, manufacturing and electricity sectors stood at 131.1, 139.2 and 176.3, respectively, in November 2023.
• According to data released by the Ministry of Statistics & Programme Implementation (MoSPI), India’s Consumer Price Index (CPI) based retail inflation reached 5.55% in November 2023.
• Foreign Institutional Investors (FII) inflows between April-July (2023-24) were close to Rs. 80,500 crore (US$ 9.67 billion), while Domestic Institutional Investors (DII) sold Rs. 4,500 crore (US$ 540.56 million) in the same period. As per depository data, Foreign Portfolio Investors (FPIs) invested Rs. 261,856 crore (US$ 31.5 billion) in India during Aril-December (2023-24).
• The wheat procurement during RMS 2023-24 (till May) was estimated to be 262 lakh metric tonnes (LMT) and the rice procured in KMS 2023-24 was 385 LMT. The combined stock position of wheat and rice in the Central Pool is over 579 LMT (Wheat 312 LMT and Rice 267 LMT).

Government Initiatives

Over the years, the Indian government has introduced many initiatives to strengthen the nation's economy. The Indian government has been effective in developing policies and programmes that are not only beneficial for citizens to improve their financial stability but also for the overall growth of the economy. Over recent decades, India's rapid economic growth has led to a substantial increase in its demand for exports. Besides this, a number of the government's flagship programmes, including Make in India, Start-up India, Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation, is aimed at creating immense opportunities in India. In this regard, some of the initiatives taken by the government to improve the economic condition of the country are mentioned below:

• On January 22, 2024, Prime Minister Mr. Narendra Modi announced the 'Pradhan Mantri Suryodaya Yojana'. Under this scheme, 1 crore households will receive rooftop solar installations.
• On September 17th, 2023, Prime Minister Mr. Narendra Modi launched the Central Sector Scheme PM-VISHWAKARMA in New Delhi. The new scheme aims to provide recognition and comprehensive support to traditional artisans & craftsmen who work with their hands and basic tools. This initiative is designed to enhance the quality, scale, and reach of their products, as well as to integrate them with MSME value chains.
• On August 6th, 2023, Amrit Bharat Station Scheme was launched to transform and revitalize 1309 railway stations across the nation. This scheme envisages development of stations on a continuous basis with a long-term vision.
• On June 28th, 2023, the Ministry of Environment, Forests, and Climate Change introduced the ‘Draft Carbon Credit Trading Scheme, 2023’.
• From April 1st, 2023, Foreign Trade Policy 2023 was unveiled to create an enabling ecosystem to support the philosophy of ‘AtmaNirbhar Bharat’ and ‘Local goes Global’.
• In order to enhance India’s manufacturing capabilities by increasing investment and production in the sector, the government of India has introduced the Production Linked Incentive Scheme (PLI) for Pharmaceuticals.
• Prime Minister’s Development Initiative for North-East Region (PM-DevINE) was announced in the Union Budget 2022-23 with a financial outlay of Rs. 1,500 crore (US$ 182.35 million).
• Prime Minister Mr Narendra Modi has inaugurated a new food security scheme for providing free food grains to Antodaya Ann Yojna (AAY) & Primary Household (PHH) beneficiaries, called Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) from January 1st, 2023.
• The Amrit Bharat Station scheme for Indian Railways envisages the development of stations on a continuous basis with a long-term vision, formulated on December 29th, 2022, by the Ministry of Railways.
• On October 7th, 2022, the Department for Promotion of Industry and Internal Trade (DPIIT) launched Credit Guarantee Scheme for Start-ups (CGSS) aiming to provide credit guarantees up to a specified limit by start-ups, facilitated by Scheduled Commercial Banks, Non-Banking Financial Companies and Securities and Exchange Board of India (SEBI) registered Alternative Investment Funds (AIFs). 
• Telecom Technology Development Fund (TTDF) Scheme was launched in October 2022 by the Universal Service Obligation Fund (USOF), a body under the Department of Telecommunications. The objective is to fund R&D in rural-specific communication technology applications and form synergies among academia, start-ups, research institutes, and the industry to build and develop the telecom ecosystem.
• Home & Cooperation Minister Mr. Amit Shah laid the foundation stone and performed Bhoomi Pujan of Tanot Mandir Complex Project under Border Tourism Development Programme in Jaisalmer in September 2022.
• In August 2022, Mr. Narendra Singh Tomar, Minister of Agriculture and Farmers Welfare inaugurated four new facilities at the Central Arid Zone Research Institute (CAZRI), which has been rendering excellent services for more than 60 years under the Indian Council of Agricultural Research (ICAR).
• In August 2022, a Special Food Processing Fund of Rs. 2,000 crore (US$ 242.72 million) was set up with National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for investments in setting up Mega Food Parks (MFP) as well as processing units in the MFPs.
• In July 2022, Deendayal Port Authority (DPA) announced plans to develop two Mega Cargo Handling Terminals on a Build-Operate-Transfer (BOT) basis under Public-Private Partnership (PPP) Mode at an estimated cost of Rs. 5,963 crore (US$ 747.64 million).
• In July 2022, the Union Cabinet chaired by Prime Minister Mr. Narendra Modi, approved the signing of the Memorandum of Understanding (MoU) between India & Maldives. This MoU will provide a platform to tap the benefits of information technology for court digitization and can be a potential growth area for IT companies and start-ups in both countries.
• India and Namibia entered a Memorandum of Understanding (MoU) on wildlife conservation and sustainable biodiversity utilization on July 20th, 2022, for establishing the cheetah into the historical range in India.
• In July 2022, the Reserve Bank of India (RBI) approved international trade settlements in Indian rupees (Rs.) in order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community.
• The Agnipath Scheme aims to develop a young and skilled armed force backed by an advanced warfare technology scheme by providing youth with an opportunity to serve Indian Army for a 4-year period. It is introduced by the Government of India on June 14th, 2022.
• In June 2022, Prime Minister Mr. Narendra Modi inaugurated and laid the foundation stone of development projects worth Rs. 21,000 crore (US$ 2.63 billion) at Gujarat Gaurav Abhiyan at Vadodara.
• Mr. Rajnath Singh, Minister of Defence, launched 75 newly developed Artificial Intelligence (AI) products/technologies during the first-ever ‘AI in Defence’ (AIDef) symposium and exhibition organized by the Ministry of Defence in New Delhi on July 11th, 2022.
• In June 2022, Prime Minister Mr. Narendra Modi laid the foundation stone of 1,406 projects worth more than Rs. 80,000 crore (US$ 10.01 billion) at the ground-breaking ceremony of the UP Investors Summit in Lucknow. The Projects encompass diverse sectors like Agriculture and Allied industries, IT and Electronics, MSME, Manufacturing, Renewable Energy, Pharma, Tourism, Defence & Aerospace, and Handloom & Textiles.
• The Indian Institute of Spices Research (IISR) under the Indian Council for Agricultural Research (ICAR) inked a Memorandum of Understanding (MoU) with Lysterra LLC, a Russia-based company for the commercialization of bio capsule, an encapsulation technology for bio-fertilization on June 30th, 2022.
• As of April 2022, India signed 13 Free Trade Agreements (FTAs) with its trading partners including major trade agreements like the India-UAE Comprehensive Partnership Agreement (CEPA) and the India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA).
• 'Mission Shakti' was applicable with effect from April 1st, 2022, aimed at strengthening interventions for women’s safety, security, and empowerment.
• The Union Budget of 2022-23 was presented on February 1st, 2022, by the Minister for Finance & Corporate Affairs, Ms. Nirmala Sitharaman. The budget had four priorities PM GatiShakti, Inclusive Development, Productivity Enhancement and Investment, and Financing of Investments. In the Union Budget 2022-23, effective capital expenditure is expected to increase by 27% at Rs. 10.68 trillion (US$ 142.93 billion) to boost the economy. This will be 4.1% of the total Gross Domestic Production (GDP).
• Strengthening of Pharmaceutical Industry (SPI) was launched in March 2022 by the Ministry of Chemicals & Fertilisers to provide credit linked capital and interest subsidy for Technology Upgradation of MSME units in pharmaceutical sector, as well as support of up to Rs. 20 crore (US$ 2.4 million) each for common facilities including Research centre, testing labs and ETPs (Effluent Treatment Plant) in Pharma Clusters, to enhance the role of MSMEs.
• Under PM GatiShakti Master Plan, the National Highway Network will develop 25,000 km of new highways network, which will be worth Rs. 20,000 crore (US$ 2.67 billion). In 2022-23. Increased government expenditure is expected to attract private investments, with a production-linked incentive scheme providing excellent opportunities. Consistently proactive, graded, and measured policy support is anticipated to boost the Indian economy.
• In February 2022, The Ministry of Social Justice & Empowerment launched the Scheme for Economic Empowerment of Denotified/Nomadic/SemiNomadic tribal communities (DNTs) (SEED) to provide basic facilities like good quality coaching, and health insurance. livelihoods initiative at a community level and financial assistance for the construction of houses.
• In February 2022, Minister for Finance and Corporate Affairs Ms. Nirmala Sitharaman said that productivity linked incentive (PLI) schemes would be extended to 14 sectors to achieve the mission of AtmaNirbhar Bharat and create 60 lakh jobs with an additional production capacity of Rs. 30 trillion (US$ 401.49 billion) in the next five years.
• In the Union Budget of 2022-23, the government announced funding for the production-linked incentive (PLI) scheme for domestic solar cells and module manufacturing of Rs. 24,000 crore (US$ 3.21 billion).
• In the Union Budget of 2022-23, the government announced a production-linked incentive (PLI) scheme for Bulk Drugs which was an investment of Rs. 2,500 crore (US$ 334.60 million).
• In the Union Budget of 2022, Minister for Finance & Corporate Affairs Ms. Nirmala Sitharaman announced that a scheme for design-led manufacturing in 5G would be launched as part of the PLI scheme.
• In September 2021, Union Cabinet approved major reforms in the telecom sector, which are expected to boost employment, growth, competition, and consumer interests. Key reforms include rationalization of adjusted gross revenue, rationalization of bank guarantees (BGs), and encouragement of spectrum sharing.
• In the Union Budget of 2022-23, the government has allocated Rs. 44,720 crore (US$ 5.98 billion) to Bharat Sanchar Nigam Limited (BSNL) for capital investments in the 4G spectrum.
• Minister for Finance & Corporate Affairs Ms. Nirmala Sitharaman allocated Rs. 650 crore (US$ 86.69 million) for the Deep Ocean mission that seeks to explore vast marine living and non-living resources. Department of Space (DoS) has got Rs. 13,700 crore (US$ 1.83 billion) in 2022-23 for several key space missions like Gaganyaan, Chandrayaan-3, and Aditya L-1 (sun).
• In May 2021, the government approved the production-linked incentive (PLI) scheme for manufacturing advanced chemistry cell (ACC) batteries at an estimated outlay of Rs. 18,100 crore (US$ 2.44 billion); this move is expected to attract domestic and foreign investments worth Rs. 45,000 crore (US$ 6.07 billion).
• Minister for Finance & Corporate Affairs Ms. Nirmala Sitharaman announced in the Union Budget of 2022-23 that the Reserve Bank of India (RBI) would issue Digital Rupee using blockchain and other technologies.
• In the Union Budget of 2022-23, Railway got an investment of Rs. 2.38 trillion (US$ 31.88 billion) and over 400 new high-speed trains were announced. The concept of "One Station, One Product" was also introduced.
• To boost competitiveness, Budget 2022-23 has announced reforming the 16-year-old Special Economic Zone (SEZ) act.
• In June 2021, the RBI (Reserve Bank of India) announced that the investment limit for FPI (foreign portfolio investors) in the State Development Loans (SDLs) and government securities (G-secs) would persist unaffected at 2% and 6%, respectively, in FY22.
• In November 2020, the Government of India announced Rs. 2.65 trillion (US$ 36 billion) stimulus package to generate job opportunities and provide liquidity support to various sectors such as tourism, aviation, construction, and housing. Also, India's cabinet approved the production-linked incentives (PLI) scheme to provide ~Rs. 2 trillion (US$ 27 billion) over five years to create jobs and boost production in the country.
• Numerous foreign companies are setting up their facilities in India on account of various Government initiatives like Make in India and Digital India. Prime Minister of India Mr. Narendra Modi launched the Make in India initiative with an aim to boost the country's manufacturing sector and increase the purchasing power of the average Indian consumer, which would further drive demand and spur development, thus benefiting investors. The Government of India, under its Make in India initiative, is trying to boost the contribution made by the manufacturing sector with an aim to take it to 25% of the GDP from the current 17%. Besides, the government has also come up with the Digital India initiative, which focuses on three core components: the creation of digital infrastructure, delivering services digitally, and increasing digital literacy.
• On January 29th, 2022, the National Asset Reconstruction Company Ltd (NARCL) will acquire bad loans worth up to Rs. 50,000 crore (US$ 6.69 billion) about 15 accounts by March 31st, 2022. India Debt Resolution Co. Ltd (IDRCL) will control the resolution process. This will clean up India's financial system and help fuel liquidity and boost the Indian economy.
• National Bank for Financing Infrastructure and Development (NaBFID) is a bank that will provide non-recourse infrastructure financing and is expected to support projects from the first quarter of FY23; it is expected to raise Rs. 4 trillion (US$ 53.58 billion) in the next three years.
• By November 1st, 2021, India, and the United Kingdom hope to begin negotiations on a free trade agreement. The proposed FTA between these two countries is likely to unlock business opportunities and generate jobs. Both sides have renewed their commitment to boost trade in a manner that benefits all.
• In August 2021, Prime Minister Mr. Narendra Modi announced an initiative to start a national mission to reach the US$ 400 billion merchandise export target by FY22.
• In August 2021, Prime Minister Mr. Narendra Modi launched a digital payment solution, e-RUPI, a contactless and cashless instrument for digital payments.
• In April 2021, Dr. Ahmed Abdul Rahman AlBanna, Ambassador of the UAE to India and Founding Patron of IFIICC, stated that trilateral trade between India, the UAE and Israel is expected to reach US$ 110 billion by 2030.
• India is expected to attract investment of around US$ 100 billion in developing the oil and gas infrastructure during 2019-23.
• The Government of India is expected to increase public health spending to 2.5% of the GDP by 2025.

In the second quarter of FY24, the growth momentum of the first quarter was sustained, and high-frequency indicators (HFIs) performed well in July and August of 2023. India's comparatively strong position in the external sector reflects the country's generally positive outlook for economic growth and rising employment rates. India ranked 5th in foreign direct investment inflows among the developed and developing nations listed for the first quarter of 2022.

India's economic story during the first half of the current financial year highlighted the unwavering support the government gave to its capital expenditure, which, in 2023-24, stood 37.4% higher than the same period last year. In the budget of 2023-24, capital expenditure took lead by steeply increasing the capital expenditure outlay by 37.4 % in BE 2023-24 to Rs.10 lakh crore (US$ 120.12 billion) over Rs. 7.28 lakh crore (US$ 87.45 billion) in RE 2022-23. The ratio of revenue expenditure to capital outlay increased by 1.2% in the current year, signalling a clear change in favour of higher-quality spending. Stronger revenue generation because of improved tax compliance, increased profitability of the company, and increasing economic activity also contributed to rising capital spending levels. Further, In the interim budget for FY24, Government increased FY25 Capex outlay to record Rs.11.11 lakh crore (US$ 133.5 billion).

Since India’s resilient growth despite the global pandemic, India's exports climbed at the second-highest rate with a year-over-year (YoY) growth of 8.39% in merchandise exports and a 29.82% growth in service exports till April 2023. With a reduction in port congestion, supply networks are being restored. The CPI-C inflation reduction from June 2022 already reflects the impact. In September 2023 (Provisional), CPI-C inflation was 5.02%, down from 7.01% in June 2022. With a proactive set of administrative actions by the government, flexible monetary policy, and a softening of global commodity prices and supply-chain bottlenecks, inflationary pressures in India look to be on the decline overall.

Note:  Conversion rate used for January 2024 is Rs.1 = US$ 0.012

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• Introduction to the Sectors of Indian Economy

India is one of the largest, if not the largest economy in the world. It is predicted to be the second largest economy in the world by 2050. So, what contributes to the Indian economy? To answer this, we need to divide India’s economy into three parts and study the sectors of Indian economy in detail. We will also discuss the problems faced by each sector and solutions to these sectors respectively.

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Indian economy.

They are three sectors in the Indian economy, they are; primary economy, secondary economy, and tertiary economy. In terms of operations, the Indian economy is divided into organized and unorganized. While for ownership, it is divided into the public sector and the private sector. But today, we are only going to talk about the sectors of Indian economy and what consists of these sectors.

Sectors of Indian Economy

Primary sector.

The primary sector in India is the sector which is largely dependant on the availability of natural resources in order to manufacture the goods and also to execute various processes. The services in this sector are entirely dependant on the availability of the natural resources in order to keep the day-to-day operations running.

As we have the clear idea of this sector is, the best example to discuss in this sector is the agriculture sector. The other examples in this sector include fishing and forestry, but agriculture accounts for the largest in this sector.

One of the major problem that this sector faces is the underemployment and the disguised employment. Underemployment accounts for the workers not working to the best of their capabilities while the latter accounts for the workers not working to their true potential.

As a solution to the problems, the state, as well as the national government, can increase the funds for the irrigation facilities and provide loans for buying high-quality seeds and fertilizers.

Secondary Sector

The economy in the sector is dependent on the natural ingredients which are used to create the services and products offered and which at the end are used for consumption. In terms of value added to the products and services, this sector is the best sector. The major examples that fall under this category are transportation and manufacturing.

Both these sectors end product is the consumption by the people. This sector is responsible for the employment of almost 14 percent of the entire workforce currently working in India. The secondary sector also contributes to almost 28 percent of the share of GDP. This sector is the backbone of Indian economy and there are more development and growth in the near future.

Tertiary Sector

This sector contributes the largest in terms of share in GDP in India. The sector is also the service sector and is important when you consider the development of the other two sectors. Like the previous sector, this sector also adds the value to the products. This sector is responsible for employing 23 percentage of the workforce out of the total workforce currently working in India.

The example of this sector is all service sectors which IT services, consulting, etc. This sector contributes to almost 59 percent of the total share of GDP. The main problem that this sector is that the jobs which involve lower salaries do not attract much employment. And this remains the future dilemma as India is looking for double-digit growth in the near future.

Solved Question for You

Q. Explain why the service sector is growing in India with suitable example.

A. The employment generation part is not growing its importance in the service sector. This sector employs different types of people with different skill sets. While on the other hand there are only a few services which require the involvement of highly educated and skilled workers. On the other hand are the self-employed people, who, due to lack of opportunity to work, are trying to manage their living.

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Sectors of the Indian Economy

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Case Based Questions Test: Sectors of the Indian Economy - Class 10 MCQ

8 questions mcq test - case based questions test: sectors of the indian economy, read the source given below and answer the questions that follows: rajesh works in a bank as a bank manager. he goes regularly to his bank and attends his bank services from 9.00 a.m. to 6:00 p.m. he gets his salary at the end of every month. in addition to the salary, he also gets provident fund as per the rules laid down by the government. he also gets earned leaves, sick leaves and casual leaves. apart from leaves, he receives medical and other allowances. rajesh does not go to bank on saturdays and sundays. this is a paid holiday. when he joined bank, he was given an appointment letter stating all the terms and conditions of work and his job is secure. ram is rajesh’s neighbour. he is a daily wage labourer in a nearby grocery shop. he goes to the shop at 7:00 am in the morning and works till 10:00 p.m. in the evening. he gets no other allowances apart from his wages. he is not paid for the days he does not work. he has therefore no leave or paid holidays. nor was he given any formal appointment letter saying that he has been employed in the shop. he can be asked to leave anytime by his employer if his job is not found satisfactory. his job is not secure. rajesh works in the organized sector whereas ram works in an unorganized sector. q. in the urban areas, unorganised sector comprises mainly of.

• A. Workers in small-scale industry
• B. Casual workers in construction
• C. Both (a) and (b)
• D. None of the above

Read the source given below and answer the questions that follows: Rajesh works in a bank as a bank manager. He goes regularly to his bank and attends his bank services from 9.00 a.m. to 6:00 p.m. He gets his salary at the end of every month. In addition to the salary, he also gets provident fund as per the rules laid down by the government. He also gets earned leaves, sick leaves and casual leaves. Apart from leaves, he receives medical and other allowances. Rajesh does not go to bank on Saturdays and Sundays. This is a paid holiday. When he joined bank, he was given an appointment letter stating all the terms and conditions of work and his job is secure. Ram is Rajesh’s neighbour. He is a daily wage labourer in a nearby grocery shop. He goes to the shop at 7:00 am in the morning and works till 10:00 p.m. in the evening. He gets no other allowances apart from his wages. He is not paid for the days he does not work. He has therefore no leave or paid holidays. Nor was he given any formal appointment letter saying that he has been employed in the shop. He can be asked to leave anytime by his employer if his job is not found satisfactory. His job is not secure. Rajesh works in the organized sector whereas Ram works in an unorganized sector. Q. Which of the following statements is an example of unorganised sector activities?

• A. A teacher taking classes in a school
• B. A daily wage labourer working under a contractor
• C. A doctor in a hospital treating a patient
• D. A factory worker going to work in a big factory

Read the source given below and answer the questions that follows: Rajesh works in a bank as a bank manager. He goes regularly to his bank and attends his bank services from 9.00 a.m. to 6:00 p.m. He gets his salary at the end of every month. In addition to the salary, he also gets provident fund as per the rules laid down by the government. He also gets earned leaves, sick leaves and casual leaves. Apart from leaves, he receives medical and other allowances. Rajesh does not go to bank on Saturdays and Sundays. This is a paid holiday. When he joined bank, he was given an appointment letter stating all the terms and conditions of work and his job is secure. Ram is Rajesh’s neighbour. He is a daily wage labourer in a nearby grocery shop. He goes to the shop at 7:00 am in the morning and works till 10:00 p.m. in the evening. He gets no other allowances apart from his wages. He is not paid for the days he does not work. He has therefore no leave or paid holidays. Nor was he given any formal appointment letter saying that he has been employed in the shop. He can be asked to leave anytime by his employer if his job is not found satisfactory. His job is not secure. Rajesh works in the organized sector whereas Ram works in an unorganized sector. Q. Which of the following statement is not true with respect to organized sector?

• A. Organized sector is registered by the government
• B. In organized sector the workers enjoy the security of employment
• C. In organized sector workers does not get several benefits
• D. All of the above

Read the source given below and answer the questions that follows:

Rajesh works in a bank as a bank manager. He goes regularly to his bank and attends his bank services from 9.00 a.m. to 6:00 p.m. He gets his salary at the end of every month. In addition to the salary, he also gets provident fund as per the rules laid down by the government. He also gets earned leaves, sick leaves and casual leaves. Apart from leaves, he receives medical and other allowances. Rajesh does not go to bank on Saturdays and Sundays. This is a paid holiday. When he joined bank, he was given an appointment letter stating all the terms and conditions of work and his job is secure. Ram is Rajesh’s neighbour. He is a daily wage labourer in a nearby grocery shop. He goes to the shop at 7:00 am in the morning and works till 10:00 p.m. in the evening. He gets no other allowances apart from his wages. He is not paid for the days he does not work. He has therefore no leave or paid holidays. Nor was he given any formal appointment letter saying that he has been employed in the shop. He can be asked to leave anytime by his employer if his job is not found satisfactory. His job is not secure. Rajesh works in the organized sector whereas Ram works in an unorganized sector.

Q. In the rural areas, the unorganized sector mostly comprises of

• A. Landless agricultural labourers
• B. Small and marginal farmers
• C. Sharecroppers and artisans

In the rural areas, the unorganised sector comprises mainly of workers in small scale industry, casual workers in construction, trade and transport etc and those who work as street vendors, head load workers, garment makers, rag pickers etc.

Read the extract given below and answer the questions that follows:

There are many activities that are undertaken by directly using natural resources. When we produce a good by exploiting natural resources, it is an activity of the primary sector. Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector. The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is the next step after primary. The product is not produced by nature but has to be made and therefore some process of manufacturing is essential. After primary and secondary, there is a third category of activities that falls under tertiary sector and is different from the above two. These are activities that help in the development of the primary and secondary sectors. These activities, by themselves, do not produce a good but they are an aid or a support for the production process. The various production activities in the primary, secondary and tertiary sectors produce a very large number of goods and services. Also, the three sectors have a large number of people working in them to produce these goods and services. The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country. It is the value of all final goods and services produced within a country during a particular year. GDP shows how big the economy is.

Q. Which of the following is an example of tertiary activities?

• B. Transport

Q. Match the following list of occupations with their sectors:

• A. 1 – (i), 2 – (iii), 3 – (ii)
• B. 1 – (ii), 2 – (i), 3 – (iii)
• C. 1 – (iii), 2 – (ii), 3 – (i)

2. Dairy: Primary industries are those that harvest or extract raw material from nature, such as agriculture, oil and gas extraction, logging and forestry, mining, fishing, and trapping.

3. Banking: Transport, banking, communication, trade, health, education and administration are important examples of tertiary activities. These tertiary activities help in the development of the primary and secondary sectors. So these are also known as support services.

Q. Production of a commodity, mostly through ways of manufacturing is an activity of which sector?

• A. Primary sector
• B. Secondary sector
• C. Tertiary sector

Q. Which of the following statement is not true?

• A. When we produce a good by exploiting natural resources, it is an activity of the primary sector.
• B. The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing.
• C. Service sector is also called the industrial sector.
• D. None of the above.

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• Chapter 2 Sectors Of The Indian Economy

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

An economy is best understood when you study its components or sectors. So, in CBSE Notes Class 10 Economics Chapter 2 – Sectors of the Indian Economy, you will learn 3 types of classifications of economy, i.e., primary/secondary/tertiary, organised/unorganised and public/private. To understand this chapter in a better way, try to relate the topics to your daily life. In these notes, you will also get familiarised with a few fundamental concepts such as Gross Domestic Product, Employment, etc.

Go through these notes and get an overview of all the topics taught in the chapter. You can also download CBSE Notes Class 10 Economics Chapter 2 – Sectors of the Indian Economy for revising during exams.

• Chapter 1 Development
• Chapter 3 Money and Credit
• Chapter 4 Globalisation and the Indian Economy
• Chapter 5 Consumer Rights

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

Sectors of economic activities.

Sector defines a large segment of the economy in which businesses share the same or a related product or service.

• When we produce goods by extraction and collection of natural resources, it is known as the primary sector . E.g., Farming, forestry, hunting, fishing and mining.
• The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing. It is the next step after the primary. Some manufacturing processes are required here. It is also called the industrial sector. For example, using cotton fibre from the plant, we spin yarn and weave cloth. Using sugarcane as raw material, we make sugar or gur.
• The tertiary sector includes activities that help in the development of the primary and secondary sectors. These activities, by themselves, do not produce a good, but they are an aid or support for the production process. It is also called the service sector. Example: Teachers, doctors, washermen, barbers, cobblers, lawyers, call centres, software companies, etc.

Comparing the 3 Sectors

The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. The sum of production in the three sectors gives the Gross Domestic Product (GDP) of a country. GDP is the value of all final goods and services produced within a country during a particular year. It shows how big the economy is. In India, the task of measuring GDP is undertaken by a central government ministry.

The graph below shows the production of goods and services in the three sectors.

In the year 2013-14, the tertiary sector emerged as the largest producing sector in India, replacing the primary sector. The tertiary sector has become important in India because of the following reasons:

• 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 considered basic services and are necessary for all people.
• The development of agriculture and industry leads to the development of services such as transport, trade, storage, etc.
• With the rise in the income of people, they start demanding more services like eating out, tourism, shopping, private hospitals, private schools, professional training, etc.
• Over the past decade, certain new services based on information and communication technology have become important and essential.

Where are Most People Employed?

How to create more employment.

Employment can be given to people by identifying, promoting and locating industries and services in semi-rural areas. Every state or region has the potential for increasing the income and employment for people in that area. It can be done by tourism, or regional craft industry, or new services like IT. A study conducted by the Planning Commission (known as NITI Aayog) estimates that nearly 20 lakh jobs can be created in the education sector alone.

The central government in India made a law implementing the Right to Work in about 625 districts of India, which is called the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005 . Under MGNREGA 2005, all those who are able to and are in need of work in rural areas are guaranteed 100 days of employment in a year by the government. If the government fails in its duty to provide employment, it will give unemployment allowances to the people.

Division of Sectors as Organised and Unorganised

How to protect workers in unorganised sector.

There is a need for protection and support of the workers in the unorganised sector. Here are a few points which will help in doing so.

• The government can fix the minimum wage rate and working hours.
• The government can provide cheap loans to self-employed people.
• Government can provide cheap and affordable basic services like education, health, food to these workers.
• The government can frame new laws which can provide provisions for overtime, paid leave, leave due to sickness, etc.

Sectors in Term of Ownership: Public and Private Sectors

Responsibilities of government.

There are a large number of activities which are the primary responsibility of the government. Here, we have listed a few of them:

• Government raises money through taxes and other ways to meet expenses on the services rendered by it.
• Governments have to undertake heavy spending such as the construction of roads, bridges, railways, harbours, generating electricity, providing irrigation through dams, etc. Also, it has to ensure that these facilities are available for everyone.
• There are some activities which the government has to support to encourage the private sector to continue their production or business.
• The government in India buys wheat and rice from farmers at a ‘fair price’ and sells them at a lower price to consumers through ration shops. In this way, it supports both farmers and consumers.
• Running proper schools and providing quality education, health and education facilities for all are some of the duties of the government.
• The government also needs to pay attention to aspects of human development such as the availability of safe drinking water, housing facilities for the poor, food and nutrition, and taking care of the poorest and most ignored regions of the country.

We hope this CBSE Notes Class 10 Social Science helped you in your studies. Keep learning and stay tuned for more updates on CBSE and NCERT. Download BYJU’S App and subscribe to the YouTube channel to access interactive maths and science videos.

Frequently Asked Questions on CBSE Class 10 Economics Notes Chapter 2 Sectors of the Indian Economy

What are the uses of foreign trade.

1. Increased revenue 2. Decreased competition 3. Longer product lifespan 4. Better risk management 5. Promotes efficiency in production

What is the role of industrial development?

Industrial development helps in the rapid growth of national and per capita income.

What is ‘GDP’?

Gross domestic product (GDP) is a measurement that seeks to capture a country’s economic output.

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The Philippine economy in 2024: Stronger for longer?

The Philippines ended 2023 on a high note, being the fastest growing economy across Southeast Asia with a growth rate of 5.6 percent—just shy of the government's target of 6.0 to 7.0 percent. 1 “National accounts,” Philippine Statistics Authority, January 31, 2024; "Philippine economic updates,” Bangko Sentral ng Pilipinas, November 16, 2023. Should projections hold, the Philippines is expected to, once again, show significant growth in 2024, demonstrating its resilience despite various global economic pressures (Exhibit 1). 2 “Economic forecast 2024,” International Monetary Fund, November 1, 2023; McKinsey analysis.

The growth in the Philippine economy in 2023 was driven by a resumption in commercial activities, public infrastructure spending, and growth in digital financial services. Most sectors grew, with transportation and storage (13 percent), construction (9 percent), and financial services (9 percent), performing the best (Exhibit 2). 3 “National accounts,” Philippine Statistics Authority, January 31, 2024. While the country's trade deficit narrowed in 2023, it remains elevated at $52 billion due to slowing global demand and geopolitical uncertainties. 4 “Highlights of the Philippine export and import statistics,” Philippine Statistics Authority, January 28, 2024. Looking ahead to 2024, the current economic forecast for the Philippines projects a GDP growth of between 5 and 6 percent.

Inflation rates are expected to temper between 3.2 and 3.6 percent in 2024 after ending 2023 at 6.0 percent, above the 2.0 to 4.0 percent target range set by the government. 5 “Nomura downgrades Philippine 2024 growth forecast,” Nomura, September 11, 2023; “IMF raises Philippine growth rate forecast,” International Monetary Fund, July 16, 2023.

For the purposes of this article, most of the statistics used for our analysis have come from a common thread of sources. These include the Central Bank of the Philippines (Bangko Sentral ng Pilipinas); the Department of Energy Philippines; the IT and Business Process Association of the Philippines (IBPAP); and the Philippines Statistics Authority.

The state of the Philippine economy across seven major sectors and themes

In the article, we explore the 2024 outlook for seven key sectors and themes, what may affect each of them in the coming year, and what could potentially unlock continued growth.

Financial services

The recovery of the financial services sector appears on track as year-on-year growth rates stabilize. 6 Philippines Statistics Authority, November 2023; McKinsey in partnership with Oxford Economics, November 2023. In 2024, this sector will likely continue to grow, though at a slower pace of about 5 percent.

Financial inclusion and digitalization are contributing to growth in this sector in 2024, even if new challenges emerge. Various factors are expected to impact this sector:

• Inclusive finance: Bangko Sentral ng Pilipinas continues to invest in financial inclusion initiatives. For example, basic deposit accounts (BDAs) reached $22 million in 2023 and banking penetration improved, with the proportion of adults with formal bank accounts increasing from 29 percent in 2019 to 56 percent in 2021. 7 “Financial inclusion dashboard: First quarter 2023,” Bangko Sentral ng Pilipinas, February 6, 2024.
• Digital adoption: Digital channels are expected to continue to grow, with data showing that 60 percent of adults who have a mobile phone and internet access have done a digital financial transaction. 8 “Financial inclusion dashboard: First quarter 2023,” Bangko Sentral ng Pilipinas, February 6, 2024. Businesses in this sector, however, will need to remain vigilant in navigating cybersecurity and fraud risks.
• Unsecured lending growth: Growth in unsecured lending is expected to continue, but at a slower pace than the past two to three years. For example, unsecured retail lending for the banking system alone grew by 27 percent annually from 2020 to 2022. 9 “Loan accounts: As of first quarter 2023,” Bangko Sentral ng Pilipinas, February 6, 2024; "Global banking pools,” McKinsey, November 2023. Businesses in this field are, however, expected to recalibrate their risk profiling models as segments with high nonperforming loans emerge.
• High interest rates: Key interest rates are expected to decline in the second half of 2024, creating more accommodating borrowing conditions that could boost wholesale and corporate loans.

Supportive frameworks have a pivotal role to play in unlocking growth in this sector to meet the ever-increasing demand from the financially underserved. For example, financial literacy programs and easier-to-access accounts—such as BDAs—are some measures that can help widen market access to financial services. Continued efforts are being made to build an open finance framework that could serve the needs of the unbanked population, as well as a unified credit scoring mechanism to increase the ability of historically under-financed segments, such as small and medium-sized enterprises (SMEs), to access formal credit. 10 “BSP launches credit scoring model,” Bangko Sentral ng Pilipinas, April 26, 2023.

Energy and Power

The outlook for the energy sector seems positive, with the potential to grow by 7 percent in 2024 as the country focuses on renewable energy generation. 11 McKinsey analysis based on input from industry experts. Currently, stakeholders are focused on increasing energy security, particularly on importing liquefied natural gas (LNG) to meet power plants’ requirements as production in one of the country’s main sources of natural gas, the Malampaya gas field, declines. 12 Myrna M. Velasco, “Malampaya gas field prod’n declines steeply in 2021,” Manila Bulletin , July 9, 2022. High global inflation and the fact that the Philippines is a net fuel importer are impacting electricity prices and the build-out of planned renewable energy projects. Recent regulatory moves to remove foreign ownership limits on exploration, development, and utilization of renewable energy resources could possibly accelerate growth in the country’s energy and power sector. 13 “RA 11659,” Department of Energy Philippines, June 8, 2023.

Gas, renewables, and transmission are potential growth drivers for the sector. Upgrading power grids so that they become more flexible and better able to cope with the intermittent electricity supply that comes with renewables will be critical as the sector pivots toward renewable energy. A recent coal moratorium may position natural gas as a transition fuel—this could stimulate exploration and production investments for new, indigenous natural gas fields, gas pipeline infrastructure, and LNG import terminal projects. 14 Philippine energy plan 2020–2040, Department of Energy Philippines, June 10, 2022; Power development plan 2020–2040 , Department of Energy Philippines, 2021. The increasing momentum of green energy auctions could facilitate the development of renewables at scale, as the country targets 35 percent share of renewables by 2030. 15 Power development plan 2020–2040 , 2022.

Growth in the healthcare industry may slow to 2.8 percent in 2024, while pharmaceuticals manufacturing is expected to rebound with 5.2 percent growth in 2024. 16 McKinsey analysis in partnership with Oxford Economics.

Healthcare demand could grow, although the quality of care may be strained as the health worker shortage is projected to increase over the next five years. 17 McKinsey analysis. The supply-and-demand gap in nursing alone is forecast to reach a shortage of approximately 90,000 nurses by 2028. 18 McKinsey analysis. Another compounding factor straining healthcare is the higher than anticipated benefit utilization and rising healthcare costs, which, while helping to meet people's healthcare budgets, may continue to drive down profitability for health insurers.

Meanwhile, pharmaceutical companies are feeling varying effects of people becoming increasingly health conscious. Consumers are using more over the counter (OTC) medication and placing more beneficial value on organic health products, such as vitamins and supplements made from natural ingredients, which could impact demand for prescription drugs. 19 “Consumer health in the Philippines 2023,” Euromonitor, October 2023.

Businesses operating in this field may end up benefiting from universal healthcare policies. If initiatives are implemented that integrate healthcare systems, rationalize copayments, attract and retain talent, and incentivize investments, they could potentially help to strengthen healthcare provision and quality.

Businesses may also need to navigate an increasingly complex landscape of diverse health needs, digitization, and price controls. Digital and data transformations are being seen to facilitate improvements in healthcare delivery and access, with leading digital health apps getting more than one million downloads. 20 Google Play Store, September 27, 2023. Digitization may create an opportunity to develop healthcare ecosystems that unify touchpoints along the patient journey and provide offline-to-online care, as well as potentially realizing cost efficiencies.

Consumer and retail

Growth in the retail and wholesale trade and consumer goods sectors is projected to remain stable in 2024, at 4 percent and 5 percent, respectively.

Inflation, however, continues to put consumers under pressure. While inflation rates may fall—predicted to reach 4 percent in 2024—commodity prices may still remain elevated in the near term, a top concern for Filipinos. 21 “IMF raises Philippine growth forecast,” July 26, 2023; “Nomura downgrades Philippines 2024 growth forecast,” September 11, 2023. In response to challenging economic conditions, 92 percent of consumers have changed their shopping behaviors, and approximately 50 percent indicate that they are switching brands or retail providers in seek of promotions and better prices. 22 “Philippines consumer pulse survey, 2023,” McKinsey, November 2023.

Online shopping has become entrenched in Filipino consumers, as they find that they get access to a wider range of products, can compare prices more easily, and can shop with more convenience. For example, a McKinsey Philippines consumer sentiment survey in 2023 found that 80 percent of respondents, on average, use online and omnichannel to purchase footwear, toys, baby supplies, apparel, and accessories. To capture the opportunity that this shift in Filipino consumer preferences brings and to unlock growth in this sector, retail organizations could turn to omnichannel strategies to seamlessly integrate online and offline channels. Businesses may need to explore investments that increase resilience across the supply chain, alongside researching and developing new products that serve emerging consumer preferences, such as that for natural ingredients and sustainable sources.

Manufacturing

Manufacturing is a key contributor to the Philippine economy, contributing approximately 19 percent of GDP in 2022, employing about 7 percent of the country’s labor force, and growing in line with GDP at approximately 6 percent between 2023 and 2024. 23 McKinsey analysis based on input from industry experts.

Some changes could be seen in 2024 that might affect the sector moving forward. The focus toward building resilient supply chains and increasing self-sufficiency is growing. The Philippines also is likely to benefit from increasing regional trade, as well as the emerging trend of nearshoring or onshoring as countries seek to make their supply chains more resilient. With semiconductors driving approximately 45 percent of Philippine exports, the transfer of knowledge and technology, as well as the development of STEM capabilities, could help attract investments into the sector and increase the relevance of the country as a manufacturing hub. 24 McKinsey analysis based on input from industry experts.

To secure growth, public and private sector support could bolster investments in R&D and upskill the labor force. In addition, strategies to attract investment may be integral to the further development of supply chain infrastructure and manufacturing bases. Government programs to enable digital transformation and R&D, along with a strategic approach to upskilling the labor force, could help boost industry innovation in line with Industry 4.0 demand. 25 Industry 4.0 is also referred to as the Fourth Industrial Revolution. Priority products to which manufacturing industries could pivot include more complex, higher value chain electronic components in the semiconductor segment; generic OTC drugs and nature-based pharmaceuticals in the pharmaceutical sector; and, for green industries, products such as EVs, batteries, solar panels, and biomass production.

Information technology business process outsourcing

The information technology business process outsourcing (IT-BPO) sector is on track to reach its long-term targets, with $38 billion in forecast revenues in 2024. 26 Khriscielle Yalao, “WHF flexibility key to achieving growth targets—IBPAP,” Manila Bulletin , January 23, 2024. Emerging innovations in service delivery and work models are being observed, which could drive further growth in the sector.

The industry continues to outperform headcount and revenue targets, shaping its position as a country leader for employment and services. 27 McKinsey analysis based in input from industry experts. Demand from global companies for offshoring is expected to increase, due to cost containment strategies and preference for Philippine IT-BPO providers. New work setups continue to emerge, ranging from remote-first to office-first, which could translate to potential net benefits. These include a 10 to 30 percent increase in employee retention; a three- to four-hour reduction in commute times; an increase in enabled talent of 350,000; and a potential reduction in greenhouse gas emissions of 1.4 to 1.5 million tons of CO 2 per year. 28 McKinsey analysis based in input from industry experts. It is becoming increasingly more important that the IT-BPO sector adapts to new technologies as businesses begin to harness automation and generative AI (gen AI) to unlock productivity.

Talent and technology are clear areas where growth in this sector can be unlocked. The growing complexity of offshoring requirements necessitates building a proper talent hub to help bridge employee gaps and better match local talent to employers’ needs. Businesses in the industry could explore developing facilities and digital infrastructure to enable industry expansion outside the metros, especially in future “digital cities” nationwide. Introducing new service areas could capture latent demand from existing clients with evolving needs as well as unserved clients. BPO centers could explore the potential of offering higher-value services by cultivating technology-focused capabilities, such as using gen AI to unlock revenue, deliver sales excellence, and reduce general administrative costs.

Sustainability

The Philippines is considered to be the fourth most vulnerable country to climate change in the world as, due to its geographic location, the country has a higher risk of exposure to natural disasters, such as rising sea levels. 29 “The Philippines has been ranked the fourth most vulnerable country to climate change,” Global Climate Risk Index, January 2021. Approximately $3.2 billion, on average, in economic loss could occur annually because of natural disasters over the next five decades, translating to up to 7 to 8 percent of the country’s nominal GDP. 30 “The Philippines has been ranked the fourth most vulnerable country to climate change,” Global Climate Risk Index, January 2021.

The Philippines could capitalize on five green growth opportunities to operate in global value chains and catalyze growth for the nation:

• Renewable energy: The country could aim to generate 50 percent of its energy from renewables by 2040, building on its high renewable energy potential and the declining cost of producing renewable energy.
• Solar photovoltaic (PV) manufacturing: More than a twofold increase in annual output from 2023 to 2030 could be achieved, enabled by lower production costs.
• Battery production: The Philippines could aim for a $1.5 billion domestic market by 2030, capitalizing on its vast nickel reserves (the second largest globally). 31 “MineSpans,” McKinsey, November 2023.
• Electric mobility: Electric vehicles could account for 15 percent of the country’s vehicle sales by 2030 (from less than 1 percent currently), driven by incentives, local distribution, and charging infrastructure. 32 McKinsey analysis based on input from industry experts.
• Nature-based solutions: The country’s largely untapped total abatement potential could reach up to 200 to 300 metric tons of CO 2 , enabled by its biodiversity and strong demand.

The Philippine economy: Three scenarios for growth

Having grown faster than other economies in Southeast Asia in 2023 to end the year with 5.6 percent growth, the Philippines can expect a similarly healthy growth outlook for 2024. Based on our analysis, there are three potential scenarios for the country’s growth. 33 McKinsey analysis in partnership with Oxford Economics.

Slower growth: The first scenario projects GDP growth of 4.8 percent if there are challenging conditions—such as declining trade and accelerated inflation—which could keep key policy rates high at about 6.5 percent and dampen private consumption, leading to slower long-term growth.

Soft landing: The second scenario projects GDP growth of 5.2 percent if inflation moderates and global conditions turn out to be largely favorable due to a stable investment environment and regional trade demand.

Accelerated growth: In the third scenario, GDP growth is projected to reach 6.1 percent if inflation slows and public policies accommodate aspects such as loosening key policy rates and offering incentive programs to boost productivity.

Focusing on factors that could unlock growth in its seven critical sectors and themes, while adapting to the macro-economic scenario that plays out, would allow the Philippines to materialize its growth potential in 2024 and take steps towards achieving longer-term, sustainable economic growth.

Jon Canto is a partner in McKinsey’s Manila office, where Frauke Renz is an associate partner, and Vicah Villanueva is a consultant.

The authors wish to thank Charlene Chua, Charlie del Rosario, Ryan delos Reyes, Debadrita Dhara, Evelyn C. Fong, Krzysztof Kwiatkowski, Frances Lee, Aaron Ong, and Liane Tan for their contributions to this article.

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