Lesson No. 1 Lesson No.

2
Development Sectors of the Indian Economy
Development Different People, Different Goals. Sector of Economic Activities :
- Different persons can have different development goals. Primary Sector : When we produce a good by exploiting natural resources. It is
- What may be development for one may not be development for the other. It an activity of the primary sector also known as agriculture and related sector.
may be destructive for the other. Secondary Sector : Natural products are changed into others forms through
Income and Other Goals : More income; equal treatment; freedam; Job secu- ways of manufacturing. Also known as Industrial sector.
rity; facilities for family; environment (healthy & secure). Tertiary Sector : These activities , by themselves, do not produce a good but
Concept of National Development : they are an aid or a support for the production process. Also known as service
- World Development Report 2006, “In 2004 countries with per capita in- sector.
come of Rs. 453000 per annum are called rich or developed countries. Gross Domestic Production : the total value of final goods and services pro-
Those with per capita income of Rs.37000 or less are called low income duced in each sector during a particular year provides the total production of the
countries. sector for that year.
- Human Development Report 2006 published by UNDP, “Development is Rising importance of the Tertiary Sector :
based on per capita income, educational levels of the people and their - In any country several services such as hospitals, educational institution,
health status. defence, transport, banks etc. are required.
Sustainability : The regular process without harming the productivity of future - The development of agriculture and industry leads to the development of
generation and satisfy the need of present generation. services such transport, banks are required.
Sustainable Development : Development without damaging surrounding. - The development of agriculture and industry lends to the development of
Average Income : Total income of the country divided by its total population. services such as transport, trade, storage.
Also known as per capita income. - As income levels rise, certain sections of people start demanding many
National Income : Sum of value of final goods produced within the country and more services like tourism, shopping, private hospitals and private schools
income from foreign factors. etc.
Infant Mortality Rate : The number of children that die before the age of one - Over the past decade or so certain new services such as those based on
year as a proportion of 1000 live children born in that particular year. information and communications technology.
Literacy Rate : The proportion of literate population in the 7 and above, age Disguised unemployment : More people engaged in than the people required
group. for work. People do less work than their efficiency.
Net attendance Ratio : the total number of children of age group 6-10 attending National Rural Employment Guarantee Act 2005
school as a percentage of total number of children in the same age group. - 100 days work guarantee in year by the government.
Questions : - If government fails in its duty to provide employment. It will give unem-
1. What is the main criterion used by the World Bank in classifying different ployment allowances.
countries? What are the limitations of this criterion, if any? - Types of work given to improve production of land.
2. In what respects is the criterion used by the UNDP for measuring develop- Organised Sector :
ment different from the one used by the world bank. - Terms of employment are regular
3. Why is the issue of sustainability important for development? - Registered by government
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 - Follows various rules and regulations Lesson No. 3
- It has some formal processes and procedures. Money and Credit
Unorganised Sector : Barter System : Goods are exchanged without use of money.
- Small and scattered units which are largely outside the control of the gov- Double Coincidence of wants : In exchange of goods both parties have to agree
ernment. to sell and buy each others commodities. In a barter system double coincidence
- There are rules and regulations but these are not followed. of wants is an essential feature.
- Employment is not secure. Medium of Exchange : Money act as an intermediate in the exchange process.
Questions : Currency is authorised by the government as medium of exchange.
1. Do you think the classification of economic activities into primary, sec- - People deposit extra cash with the banks by opening the bank account in
ondary and tertiary is useful? Explain . their name.
2. How is the tertiary sector different from other sectors? Illustrate with a - The deposits in the bank accounts can be withdrawn on demand, these
few examples. deposits are called demand deposits.
3. What do you understand by disguised unemployment? Explain with an - A check is a paper instructing the bank to pay a specific amount from the
example each from the urban and rural areas. persons account to the person in whose name the cheque has been made.
4. “Tertiary sector is not playing any significant role in the development of Loan Activities of Banks :
Indian Economy”. Do you agree? Give reason in support of your answer. - Banks in India these days bold about 15% of their deposits as cash.
- Kept as provision to pay the depositors who might come to withdraw
money from the bank on any given day.
- Bank use the major portion of the deposits to extend loans.
- Difference between the interest rates is the main source of income for
banks.
Terms of Credit :
- Interest rate
- Collateral
- documentation requirement.
- the mode of repayment.
the varying terms of credit in different credit arrangements.
Formal Sector Credit in India
Loans from banks and co-operatives Functions of Reserve banks.
- Issues currency notes on behalf of the central government.
- RBI monitors the banks are actually maintaining cash balance.
- RBI collect information from banks, how much they are lending to whom,
at what interest rate etc.
Informal Sector Loans
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 The informal lenders, traders, employers, relatives and friends etc. Lesson No. 4
- There is no organisation which supervise the credit activities of lenders. Globalisation and the Indian Economy
- They can lend at what ever interest rate they choose. VArious ways By which MNCs set up or control production in other countries
- Their is no one to stop then from using unfair means to get their money :
back. - Set up production jointly with some of the local companies. Joint production
Questions : provides money for additional investment and latest technology for produc-
1. How does money solve the problem of double coincidence of wants? Explain tion.
with an example. - To buy up local companies and then expand production.
2. What is check? How payments made with cheques? Explain with example. - Place orders for production with small producers.
- By setting up partnerships with local companies, by using the local companies
3. How does RBI control the functioning of other banks? Why it is important
for supplies, by closely competing with the local companies or buying them
4. Why people take more loan from Informal Sector.
up, MNCs are exerting a strong influence on production at these distant loca-
5. Compare the employment conditions prevailing in the organised and tions. As a result, production in these widely dispersed locations is getting
unorganised sectors. interlinked.
6. Explain the objective of implementing the NREGA 2005. Foreign Trade and Integration of Markets :
- Exchange of goods - purchase and sale - across geographical boundaries of
the countries.
- Goods travel from one market to another.
- Choice of goods in the market rises.
- Prices of similar goods in the two markets tend to become equal.
- Producers in the two countries closely compete against each other even though
they are separated by thousand of miles. Thus foreign trade results in connect-
ing the markets or integration of markets in different countries.
Trade Barriers and its importance :
- Various restrictions which are used by the government to increase or decrease
Foreign Trade.
- Government uses trade barriers to increase or decrease Foreign Trade and to
decide what kinds of goods and how much of each, should come into the
country.
Special Economic Zones :
- Setting up of industrial zones by the central and state governments to attract
Foreign Companies to invest in India which have world class facilities, electric-
ity, water, roads, transport, storage, recreational and educational facilities.
Impact of Globalisation in India :

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 - Greater competition among producers - both local and foreign producers has Lesson No. 5
Consumer Rights
been of advantage to consumers.
Rights of Consumers :
- There is greater choice before these consumers who now enjoy improved Rights which are provided by law : - Right to safety
quality and lower prices for several products. - Right to be informed - Right to choose
- Foreign investment has increased. - Right to be heard - Right to seek redressal
- Right to consumer education.
- Increased competition has encouraged top Indian Companies to invest in newer Factors causing exploitation of Consumers :
technology and production methods and raise their production standards. - Limited information
- Globalisation has enabled some large Indian Companies to emerge as Multina- - Limited supplies
tional. - Limited competition
- Low literacy
- Created new opportunities for companies providing services particularly those Duties of Consumers :
involving Information Technology. - To purchase quality marked products such as ISI, AGMARK etc.
Questions : - To ask for cash memo for the items purchased whenever possible.
- To make complaint for genuine grievances consumers must know their rights and must
1. What are the various ways in which multinational companies set up, or control, exercise them.
production in other countries? Demerits of Consumer Redressal Process :
2. What is Foreign Trade? How does Foreign Trade lead to integration of markets - The Consumer Redressal Process is becoming cumbersome expensive and time con-
suming.
across countries?
- Many a time, consumers are required to engage lawyers. These cases require time for
3. What are trade barriers? Why does Government uses Trade Barriers? filling and attending the court proceedings etc.
4. What are special economic zones? Why is the government setting up special - In most purchases cash memos are not issued hence evidence is not easy together.
- Most purchases in the market are small retail sales.
economic zones?
- The enforcement of laws that protect workers, especially in the unorganised sectors is
5. What is the impact of Globalisation in India? weak.
- Rules and regulations for working of markets are often not followed.
Consumer Protection Act - 1986 (COPRA)
- To protect and promote the interest of consumers.
- Under COPRA a three-tier quasi-judicial machinery at the district, state and national
levels is set up for redressal of consumer disputes.
- The district level court deals with the cases involving claims upto Rs. 20 lakhs; The
State level courts between Rs. 20 lakhs and Rs. 1 crore and the national level court
deals with cases involving claims exceeding Rs. 1 crore.
Questions :
1. Mention the Rights to consumers and write two sentences on each.
2. Explain the factors which cause exploitation of consumers.
3. Describe some of your duties as consumers if you visit a shopping complex in your locality.
4. Mention the demerits of consumer redressal process.
5. Explain Consumer Protection Act - 1986.
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