GEO/ECO WS-3

1. Explain the different sectors of the economy with

examples.
The sectors of economy are:
● Primary Sector
-When we produce goods by exploiting the natural
resources like mineral, ore, milk etc. is an activity of
the primary sector.
-It is so because it forms the base for all other products
that we subsequently make.
-Eg: Agriculture, dairy, fishing etc.
● Secondary Sector
-This sector covers activities in which natural products
are changed into other forms by ways of
manufacturing.
-This process is usually carried out in factories, a
workshop or at home.
-Eg: Conversion of cotton into cloth
● Tertiary Sector
-These are activities that help in the development of
the primary and the secondary sector.
-They do not produce any goods by themselves but
they are an aid or a support for the production process.
-Eg: Transport, communication, banking, trade etc.

2. Which sector is gaining more importance nowadays

and why?
The Tertiary Sector is gaining more importance nowadays
because of the following reasons:
 ● Concept of welfare state and basic services - In a
modern welfare state such as India, the basic services
such as hospitals, educational institutions, post and
te;egraph services, police stations, courts, transport,
banks and insurance companies are required. These
have become a necessity. It is the responsibility of the
state to provide these services. All these services
come in the category of service sector.
● Development of agriculture and industry - The
development of agriculture and industry leads to the
development of transport, storage and other services.
As these sectors make more development, the service
sector also expands and its importance increases
accordingly.
● Rise in income - In the recent years, there has been a
rise in income of certain sections of people. Because
of it, the demand for tourism, shopping and private
colleges and hospitals etc. has increased. This has led
to the importance of the tertiary sector.
● Development of information technology - The
development of information and communication
technology has increased the importance of tertiary
sector because now most of the people want to avail
these services such as mobile phones, internet etc.
The production of these services has been rising
rapidly all over the world.

3. What measures can be taken to increase more

employment in the villages?
The following steps can be taken to increase employment in
rural areas:
● Diversification of Agriculture - More than 605 of the
workers are employed in agriculture. However, our
farmers are producing only limited crops. There is a
dire need to diversify agriculture. Farmers should be
encouraged to adopt pisciculture, horticulture, animal
rearing etc. along with cultivation of crops.
● Cheap credit - Most of the farmers depend on informal
sources of credit who charge a very high rate of
interest. Government should encourage the
commercial banks to provide loans to the farmers at
cheaper rates. Loans should be provided to small
farmers by the government or banks to have more
irrigation facilities like wells and tube-wells in order to
enable them to grow a second crop. Banks should
provide agricultural credit to the farmers to improve
farming.
● Provision of basic facilities - Our rural areas lack the
basic facilities like roads, transportation, banking,
warehouses, markets, storage etc. The government
should invest some money in this sector so that the
Indian villages can be linked to other markets.This
activity can provide employment not just to farmers but
also to others such as those in services like transport
or trade. New dams and canals should be constructed.
● Promotion of local industries and other activities -
Another way to tackle the problem of unemployment is
to identify, locate and promote industries, especially
the cottage and small-scale industries in semi-rural
 areas, where a large number of people are employed.
Eg: Cold storage and setting up small-scale industries.
● Investment in the Education sector - Schools should be
set up in rural areas. This will provide jobs to about 20
lakh people in the education sector.
● Health - Health services should be improved in rural
areas by opening dispensaries and hospitals. This will
create jobs for doctors, nurses and other staff.
● Tourism, regional craft industry or Information
Technology should be encouraged by the government
to create more employment opportunities in the rural
areas.

4 State the difference between organised and

unorganised sector.

5 What are the differences between private and public

sectors?
6 What do you mean by the double coincidence of
wants?
● The ‘Double Coincidence of Wants’ means both the
parties; the buyer and the seller have to agree to sell
and buy each other’s commodities.
● It implies what a person desires to sell is exactly what
the other wishes to buy. No money is used in such an
agreement.
● For eg: Take the case of a shoe manufacturer. He
wants to sell shoes in the market, and buy wheat. The
shoe manufacturer will first exchange the shoes that
he has produced for money, and then exchange the
money for wheat. He would have to look for a wheat
growing farmer who not only wants to sell wheat but
also wants to buy the shoes in exchange. That is, both
the parties have to agree to sell and buy each other’s
commodities.
7. What are the terms of credit? Explain it.
● Interest rate - The borrower has to pay a sum of
money as interest along with the principal amount.
● Collateral - It is an asset that the borrower owns and
uses this as a guarantee to the lender until the loan is
repaid.
● Documentation - Proper documents of borrowing with
all the terms and conditions must be submitted.
● Mode of repayment - The mode through which the
borrower will repay the loan must be clearly
mentioned. Long term loans can be repaid in annual,
half yearly or monthly instalments.

8. How can cheap credit help in the economy of the

country?
● More lending would lead to higher incomes and
encourage people to invest in agriculture, engage in
business and set up small industries.
● Cheap credit means more income would be left with
the borrower to reinvest than repaying as return. This
leads to an acceleration of the economy.
● Cheap credit would also allow weaker sections of
society to access the formal sector of lending and get
off from informal moneylenders which would end the
cycle of debt trap.
● Cheap and easy terms of credit would inspire better
investment in technology and thus increase
competition.
9. What is SHG?
● A typical SHGs can have 15-20 members usually
belonging to the same village. The main motive of the
SHG is to pool the savings of the poor people.
● The SHGs provide loans to their members at a
reasonable rate.
● After a year or two, if the group is regular in savings, it
becomes eligible for bank loans. Loan is sanctioned in
the name of the group with the main motive to create
self-employment opportunities for the members.
● In recent years, many commercial and cooperative
banks have provided loans to these SHGs for
releasing mortgaged land, for meeting working capital
needs, for housing materials, for acquiring assets like
sewing machines, handlooms, cattle etc.
● Decisions on loans and savings are taken by the group
members. All matters relating to the purpose, amount,
interest rate, repayment schedule is decided by the
group members.
● The group is responsible for the repayment of the loan.
Non-repayment of loan by any member is followed up
seriously by other members of the group.

10. What are the functions of RBI?

● Reserve Bank of India supervises the functioning of
formal sources of loans in India.
● It issues currency on behalf of the central government.
● It issues guidelines for fixing rate of interest on
deposits and lending by banks.
 ● It ensures that banks should maintain a minimum cash
balance out of the deposits they receive.
● It ensures that the banks should give loans not only to
the profit-making businesses but also to poor people
and small traders.
● Periodically, the banks have to submit a report to RBI
on how much they are lending, to whom, and at what
interest rate.

11. Name the two sources of credit given .Explain both

with examples .
12. How is SHG helping women to get rid of domestic
violence?
● The SHGs play a significant role in the improvement of
the condition of the poor, particularly women. It has
helped women in the rural areas to become financially
self-reliant.
● In SHGs, it becomes easier for the women to get loans
from the banks for their business and other needs as
banks do not take collaterals from SHGs.
● SHGs provide a platform to discuss and act on a
variety of social issues related to women like health,
nutrition and domestic violence.
● This is how SHGs have helped women to get rid of
domestic violence.

14. Write the full form of NABARD and explain its

objectives.
National Bank for Agriculture and Rural Development
(NABARD) National Bank for Agriculture and Rural
Development is an apex development financial
institution in India that focuses on providing financial and
technical assistance to the agricultural and rural sectors.

15. Which scheme helped to resolve the problems of

debt trap of the farmers in Bangladesh ?
● The Grameen Bank in Bangladesh has helped to solve
the problems of debt trap of the farmers in
Bangladesh.