Students must practice these AP Inter 2nd Year Economics Important Questions 6th Lesson Tertiary Sector to boost their exam preparation.
AP Inter 2nd Year Economics Important Questions 6th Lesson Tertiary Sector
Long Answer Questions
Question 1.
Define tertiary sector. Explain the importance of tertiary sector in the Indian Economy.
Answer:
The term ‘Tertiary’ means third in the order. An economy consists of three sectors viz. The primary, secondary and tertiary sectors. The primary sector refers to agricultural sector, the secondary sector as industrial sector and the tertiary sector is called as the service sector.
Tertiary or service sector provides a host of services for the development of both the agriculture and industrial sectors. The services include mainly economic services such as transport, communications, electricity, banking, finance, insurance, storage and sales promotion etc.
Education, Training, Research & Development, Health and environment, etc. constitute social services. These are also called infrastructural facilities. Economic development of any nation directly depends on agriculture and industry, but the development of these two sectors in turn depend on the availability of various economic and social services provided by the tertiary sector. In the process of economic development, importance shifts from agriculture to industry in the beginning but later on service sector becomes more important than the other two development more sustainable.
Importance of service (Tertiary) sector in Indian Economy: The following points explain the importance of service sector in the Indian economy.
1) Share in GDP: The share of service sector in our GDP increased from 51.3 percent in 2001 to 57.0 percent in 2013. Whereas in USA it increased from 77.6 percent in 2001 to 78.6 percent in 2013.
2) Share in Employment: The share of service sector in total employment in India increased from 24.0 percent in 2001 to 28.1 percent in 2013. But in USA, it is 75.0 percent in 2001 and 81.2 percent in 2013.
3) Share in total exports: Nowadays, exports are considered growth engine of every economy. Exports bring foreign exchange which is very important for a developing country like India. If exports grow more than imports, the balance of payments position will be comfortable. The share of service sector in the total exports of India increased significantly from 27.9 percent in 2001 to 32.5 percent in 2013. It is reasonably a good share in the total exports. In case of USA, it is 27.2 percent in 2001 and increased to 29.5 percent in 2013.
In India, the importance of the service sector is growing. It has a major role in the social and economic growth of India. It is the largest growing sector today contributing significantly to foreign investment flows, exports and employment to more people than other sectors. With about 57 percent contribution to the GDP, the service sector of India is emerged as the largest and fastest growing sector in the last few years.
Question 2.
“Infrastructure contributes to the economic development of a country” – Explain.
Answer:
The provision of quality of infrastructure services is a necessary condition for achieving quick and sustained economic development. Recognising the importance, the Government of India is giving priority to the development of infrastructural facilities such as power, transport, irrigation, banking, communication, social overheads such as health, hygiene, education, etc. All these infrastructure facilities are divided into economic infrastructure and social infrastructure.
The important constituents of the tertiary sector are explained below.
1) Energy i.e., power: Coal, electricity, oil and non-conventional sources are energy sources. Power plays an important role in the economic development of a country. Power is an essential input of all productive economic activities. Electricity generation growth during 2013-T4 was 6.0 per cent as against the target of 6.9 percent.
2) Transport: Road ways, Railways, waterways and civil aviation come under the transport sector. They are very important means of transport. The transport services provide a link between production, distribution and consumption activities. The transport facilities directly help in accelerating the development of agricultural and industrial sectors. Expansion of facilities is an important prerequisite for achieving the targets of planned economic development in a developing country like India.
3) Banking and Insurance: A well-developed banking system is also necessary to achieve economic development. Banks play an important role in the mobilization of savings. Banks are the efficient agents of capital formation in the country. They help in utilizing the available resources in a productive way. The presence of a sound banking system creates a decent atmosphere for the promotion of savings and thus capital formation.
The banking system in India is playing a very important role in economic development. The banking system in India is classified into a) commercial banks, b) co-operative banks and c) central bank i.e., Reserve Bank of India.
Insurance: A healthy and developing insurance sector is of vital importance to every modern economy. It encourages the habit of thrift, and provides a safety net to rural and urban people and enterprises. It generates long-term funds for infrastructure development. Therefore, insurance is necessary to support continued economic growth. Social security and personal reforms also, benefit from a mature insurance industry. In the insurance industry in India, there are two major constituents. They are:
A) Life insurance: The LIC offers schemes, policies and plans to investors. The main objectives of LIC is giving protection against the risk of death and channelizing the funds for the benefit of the economy in the socially oriented sectors.
B) Non-life insurance: General Insurance companies deal with non-life insurance such as fire, accident, theft, loss of property due to floods, cyclones, marine insurance, crop insurance etc.
4) Communications: The communication system is an integral part of the development. process. Communication means the transmission of information. By providing the necessary information about the markets and supply of goods, the communication system helps to bring buyers and sellers together and thus helps to accelerate the process of development of the country.
The communication system consists of posts and telegraphs, telecommunications, broadcasting, television, information services and internet/ Broad Band services. A series of reform measures by the government, innovations in wireless technology and active participation by the private sector phyed an important role in the growth of the telecom sector in India.
5) Science and Technology: Science and Technology has a vital role in improving the quality of human life.
The Department of Science and Technology plays a very important role in the promotion of Science and Technology in India. The Government of India announced ts Science and Technology policy- 2003 to give a direction to the future programs.
Technology vision – 2020, covering 17 important sectors of the economy was formulated.
The department of Science and Technology also devoted to evolve and implement programmes to promote application of Science and Technology to improve the quality of life especially for the disadvantageous sectors of society.
Thus, infrastructure contributes to the economic development of country very significantly.
Short Answer Questions
Question 1.
Explain the contribution of GDP in service sector.
Answer:
The share of service sector in GDP is high in many countries. The following table shows the particulars of some selected countries.
| S.No. | Name of the Country | Share in GDP (%) | |
| 2001 | 2013 | ||
| 1. | USA | 77.6 | 78.6 |
| 2. | China | 40.5 | 46.1 |
| 3. | Japan | 69.0 | 72.4 |
| 4. | Germany | 68.8 | 68.4 |
| 5. | France | 74.7 | 78.5 |
| 6. | U.K. | 73.6 | 79.2 |
| 7. | Brazil | 67.1 | 69.4 |
| 8. | Italy | 70.5 | 74.4 |
| 9. | Russia | 55.6 | 59.8 |
| 10. | India | 51.3 | 57.0 |
The details in the above table shows the contribution of the service sector to the overall GDP of those countries is very high. UK has the highest share of the service sector in r-DP in 2013 followed by USA and France. The share of India is more (57.0%) them the share of China (46.1%). It can also be noted from the table, the share of service sector is increasing between 2001 and 2013 in every country shown in the table. This highlights the fact that the service sector is playing a crucial role in the economic growth/development of these countries.
Question 2.
What are the activities considered under India’s service sector?
Answer:
Services in India are emerging as a prominent sector in terms of contribution to National and state incomes, trade flows, Foreign Direct Investments (FDI) flows and employment. The following broad grouping of activities can be considered to form the part of the service sector. They are:
- Trade
- Hotels and Restaurants,
- Transport including Railways and other transport means
- Storage
- Communication
- Banking and Insurance
- Real Estate and Business services
- Public Administration and defence
- Construction
- Other services including education, medical and health, religious and other community services, legal services, recreation services, etc.
Question 3.
What are the advantages of Roadways? [Mar ’19 (AP); Mar ’18, ’17; May ’17]
Answer:
The principle mode of connectivity between places is roadways. In addition to carrying the traffic independently, the roadways are the main feeders to the railways, Airports, harbours and which form an important part of an integrated transport network.
India has one of the largest road network in the world over 48.65 lakh kms. It comprises National Highways (92,851 kms), State Highways (1,42,687 kms) and other roads (46,29,462 kms). Other roads i.e., district and village roads constitute 95.2 per cent of the total road network in India. National and state Highway constitute only 4.8 per cent.
Advantages of Roadways:
- Road transport connects all the villages and regions and finally it connects railways, airports and seaports.
- Road transport provides transport of goods to the railway stations.
- Road transport helps the farmers particularly the perishable products easily and quickly to Mandis and towns.
- The chances of delay, damages are less in road transport.
- Road transport does not require heavy capital expenditure.
- Road transport is more flexible. It can provide door to door service.
- Road transport helps the defence. It is the best way to reach destinations in border areas and hill tracks.
But, the road transport in India is facing some problems from high prices of inputs, high maintenance costs etc., For the better performance of the road transport, all these problems should be solved.
Question 4.
Explain the importance of Railways. [May 2018]
Answer:
Railways play a very important role in the economic development, as it provides the principle mode of transportation for passengers and freight. The broad objective of Indian Railways is to develop a strategy to be a part of an effective multi-model transport system and to ensure an environment-friendly and economically efficient transport movement.
In the following table, the progress of Indian railways from 1950-’51 to 2012-13 is shown.
| S.No. | Particulars | 1950-51 | 2012-13 |
| 1. | Route length (000’s kms) | 53.6 | 65.4 |
| 2. | Revenue earning from goods carried (Rs. crores) | 139.3 | 83,478.8 |
| 3. | Earning from passengers (Rs. crores) | 98.2 | 31,322.8 |
The particulars given in the above table shows the progress of Indian Railways during 1950-51 to 2012-13. The Indian railways launched a number of schemes to ‘ attract private participation. The railway department incorporated the Indian Railway catering and Tourism corporation (IRCTC) to improve rail catering and hospitality. The average rate per passenger-kilometer increased from 1.5 paise in 1950-51 to 28.5 paise in 2012-13.
Question 5.
What is Tourism ? Explain its importance in the Indian Economy.
Answer:
Tourism is a subsector of tertiary sector in general and services industry in particular.
By international dimensions, tourism may be called invisible trade and smokeless industry. It has many economic and non-econornic benefits both for developed and developing countries.
World Trade Organisation (WTO) defined tourism as, “The activities of persons (tourists) travelling and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes.”
Tourism may be Domestic Tourism and International Tourism. International tourism needs passport and visa etc. Tourism has the following advantages.
- Tourism provides revenue to the government.
- Tourism creates employment facilities to women.
- Regional development is possible.
- It is a source of foreign exchange earnings.
- Indirectly helps to sell the environmental resources.
- It is ameans of reducing poverty.
- It helps to develop partnership with private sector.
Tourism in India: According to world travel and tourism council estimates the tourism sector in India contributed around 6.6 percent of India’s GDP in 2012 and supported 39.5 million jobs which is 7.7 percent of its total employment. India’s share in the world tourist arrivals increased from 0.4 percent in 1997 to 0.63 per cent in 2013. A world Economic Forum 2013, study of tourism competitiveness, rated in India at low of 65 among 140 countries. India was ranked 21 on tourism natural resources, 67 in case of business environment. As a result of the steps taken to develop the tourism sector, the inflow of foreign tourists and foreign exchange earnings increased significantly in India.
Question 6.
Explain Banking System in India.
Answer:
Banking and Insurance: A well-developed banking system is also necessary to achieve economic development. Banks play an important role in the mobilization of savings. Banks are the efficient agents of capital formation in the country. They help in utilizing the available resources in a productive way. The presence of a sound banking system creates a decent atmosphere for the promotion of savings and thus capital formation.
The banking system in India is playing a very important role in economic development. The banking system in India is classified into a) commercial banks, b) cooperative banks and c) central bank i.e., Reserve Bank of India.
Insurance: A healthy and developing insurance sector is of vital importance to every modern economy. It encourages the habit of thrift, provides a safety net to rural and urban people and enterprises. It generates long term funds for infrastructure development. Therefore, insurance is necessary to support continued economic growth. Social security and person reforms also benefit from a mature insurance industry. In the insurance industry in India, there are two major constituents. They are:
A) Life insurance: The LIC offers schemes policies and plans to investors. The main objectives of LIC is giving protection against the risk of death and channelising the funds for the benefit of the economy in the socially oriented sectors.
B) Non-life insurance: General Insurance companies deal with non-life insurance such as fire, accident, theft, loss of property due to floods, cyclones, marine insurance, crop insurance, etc.
Question 7.
What are the major constituents of insurance industry in India?
Answer:
There are two major constituents of insurance industry in India. They are 1) Life Insurance, and 2) Non-life insurance.
1) Life Insurance: LIC offers schemes, policies and plans to investors. The main objective of LIC is giving protection against risks of death and channelizing the funds for the benefits of the economy in the socially oriented sectors. During 2013-T4 Life insurers underwrote first year premium of Rs. 1,19,641 crores.
2) Non-Life Insurance: The GIC (General Insurance Companies) deal with non-life insurance. The GIC was approved as the Indian Reinsurer on 3rd November 2000. It offers fire, marine, motor, health and other insurance. During 2013-T4, non-life insurers including stand alone health insurers and specialised insurers (Export credit Guarantee Scheme) and Agriculture Insurance Company (A1C) underwrote premium worth Rs. 77,583 crores as against Rs. 69,089 crores during 2012-13.
Very Short Answer Questions
Question 1.
Service sector [Mar ’19 (AP); Mar ’18, ’17; May ’17]
Answer:
Service sector or tertiary sector mainly includes economic services such as transport, communications, electricity, banking, finance, insurance, storage, trading and sales promotion and social services such education and training, research & development, health and environment etc. They are also called infrastructural facilities.
Question 2.
Infrastructure
Answer:
To begin and continue the process of economic development, the country requires certain facilities such as electricity, transport, communication, irrigation, trade and commerce, banking and insurance, health, education, medical, hygiene, Research & Development etc. These are called infrastructure facilities.
Question 3.
Transport [May 2018]
Answer:
Conveyance of people and goods and services from one place to another is called transport. The transport provides a link between production, distribution and consumption activities. Roadways, railways, water ways and airways are the important means of transport.
Question 4.
Water transport
Answer:
Transportation of passengers and goods throw water ways by means of boats, ships etc. is called water transport. It is the cheapest transport. The water transport is divided into (a) Inland water transport, and (b) International water transport (shipping).
Question 5.
Civil Aviation
Answer:
Air transport is the transport of civil aviation. It is the modern and quickest means of transport. In India the real progress in civil aviation begem in 1920.
Question 6.
Tourism [Mar. 19 (AP); May, Mar. ’17]
Answer:
Tourism is the sub sector of tertiary sector, in general and services industry in particular. WTO defined tourism as, “The activities of persons (tourists) travelling and staying in places outside their usual environment for not more than one year for leisure, business and other purposes.
Question 7.
LIC [Mar. 19 (AP); May, Mar. ’18]
Answer:
Life insurance business in India is mainly done by Life Insurance Corporation. After nationalising the private insurance companies the Government of India established Life Insurance Corporation (LIC). The main objective of LIC is giving protection against risks of death.
Question 8.
GIC
Answer:
GIC means General Insurance Corporation and it deals with non-life insurance i.e., fire, marine, motor, health, crop insurance, etc.
Question 9.
Micro Insurance [March 2018]
Answer:
Micro insurance is a recent concept in the field of micro finance. Micro finance is being offered along with credit and savings. Microinsurance services can be availed with low premium. The members of self-help groups (SHGs), small farmers, small business people of village and small towns, SCs, STs, etc. are the target groups for this micro insurance.
Question 10.
Communication
Answer:
Communication means the transmission of information. It consists of posts and telegraph, telecommunications, broadcasting, television, information services and internet.
Question 11.
Science and Technology
Answer:
Science and technology has a vital role in improving the quality of human life. Science means “Accumulation of knowledge” and technology means ‘refinement in tools’ to achieve rapid economic development.
Question 12.
Performance of Software Industry
Answer:
Software industry is the main component of the information technology in India. It started in the early 1960s. It is a big employment generator with direct employment in the IT services. In 2013-T4 it provided 3.1 million direct jobs. The earnings of software industry are expected to reach $ 200 billion by 2020.