Consider the following statements regarding the growth of the Service Sector in India: 1. The service sector has seen a sharp decline in its share of employment. 2. Many new jobs in the service sector are being created in the informal sector. 3. The expansion of the service sector has been accompanied by a shift towards informal employment. Which of the statements given above is/are correct?

The correct option is 2 and 3 only. Explanation The structural transformation of the Indian economy is characterized by a service-led growth trajectory. However, the relationship between value-added growth and employment generation in this sector reveals distinct trends regarding formal and informal labor markets. Statement-wise Analysis: - Statement 1 is Incorrect: The service sector has not seen a decline in its share of employment; rather, its share has been increasing over the decades. As the workforce gradually moves away from agriculture, the service sector (along with construction) has been a primary absorber of labor, although the pace of employment growth lags significantly behind the sector's contribution to GDP. - Statement 2 is Correct: The nature of employment generation in India's service sector is dualistic. While high-end services (like IT, telecommunications, and finance) contribute significantly to GDP, they are not labor-intensive. The majority of new jobs are created in low-productivity, unorganized activities such as petty trade, repair services, transport, and personal services, which fall under the informal sector. - Statement 3 is Correct: The expansion of the service sector has coincided with the informalization of the workforce. A significant portion of the labor force entering the service sector lacks social security and job stability. Furthermore, even within the organized sector, there is a rising trend of employing contract labor, reinforcing the shift towards informal employment structures. Key Takeaway: While the service sector is the primary driver of India's GDP, its employment generation is heavily skewed towards the informal sector, characterized by low wages, low productivity, and a lack of social security benefits.

NCERT Class 11 Economics — Chapter 7: Employment: Growth, Informalisation and Other Issues

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Consider the following statements regarding the growth of the Service Sector in India:

The service sector has seen a sharp decline in its share of employment.
Many new jobs in the service sector are being created in the informal sector.
The expansion of the service sector has been accompanied by a shift towards informal employment.

Which of the statements given above is/are correct?

Official previous-year question

Verified 1 Aug 2026.

Options

A1, 2 and 3
B2 and 3 only
C1 and 2 only
D2 only

Did you get this right?

Solution

The correct option is 2 and 3 only.

Explanation

The structural transformation of the Indian economy is characterized by a service-led growth trajectory. However, the relationship between value-added growth and employment generation in this sector reveals distinct trends regarding formal and informal labor markets.

Statement-wise Analysis:

Statement 1 is Incorrect: The service sector has not seen a decline in its share of employment; rather, its share has been increasing over the decades. As the workforce gradually moves away from agriculture, the service sector (along with construction) has been a primary absorber of labor, although the pace of employment growth lags significantly behind the sector's contribution to GDP.
Statement 2 is Correct: The nature of employment generation in India's service sector is dualistic. While high-end services (like IT, telecommunications, and finance) contribute significantly to GDP, they are not labor-intensive. The majority of new jobs are created in low-productivity, unorganized activities such as petty trade, repair services, transport, and personal services, which fall under the informal sector.
Statement 3 is Correct: The expansion of the service sector has coincided with the informalization of the workforce. A significant portion of the labor force entering the service sector lacks social security and job stability. Furthermore, even within the organized sector, there is a rising trend of employing contract labor, reinforcing the shift towards informal employment structures.

Key Takeaway: While the service sector is the primary driver of India's GDP, its employment generation is heavily skewed towards the informal sector, characterized by low wages, low productivity, and a lack of social security benefits.

Your note

More from Chapter 7: Employment: Growth, Informalisation and Other Issues

With reference to the definition of ‘workers’ in the Indian economy, consider the following statements: 1. Self-employed individuals are considered workers in the Indian economy. 2. A person temporarily abstaining from work due to illness is excluded from the worker category. 3. Those who help main workers in economic activities without receiving direct payment are included in the category of workers. Which of the statements given above is/are correct?

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Consider the following statements regarding the ‘Worker-Population Ratio’ in India: 1. It is defined as the total population divided by the number of workers. 2. The worker-population ratio is generally higher in rural areas compared to urban areas. 3. A higher ratio indicates that a greater proportion of the population is actively contributing to the production of goods and services. Which of the statements given above is/are correct?

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With reference to the concepts of Gross Domestic Product (GDP) and Gross National Product (GNP), consider the following statements: 1. GNP is calculated by deducting the value of exports from the GDP. 2. GDP is the total money value of all final goods and services produced in a country in a year. 3. The net earning from foreign transactions is always positive for a developing country like India. Which of the statements given above is/are correct?

easy

Consider the following statements regarding the participation of women in the workforce in India: 1. Women constitute the majority of the workforce in rural India. 2. The worker-population ratio for women is significantly higher in urban areas than in rural areas. 3. Many household activities performed by women are not recognised as productive work, leading to an underestimation of women workers. Which of the statements given above is/are correct?

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The term "Squatters" in the context of the informal sector refers to:

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Keep practising Chapter 7: Employment: Growth, Informalisation and Other Issues

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The correct option is 2 and 3 only.

Explanation

Statement-wise Analysis:

Statement 1 is Incorrect: The service sector has not seen a decline in its share of employment; rather, its share has been increasing over the decades. As the workforce gradually moves away from agriculture, the service sector (along with construction) has been a primary absorber of labor, although the pace of employment growth lags significantly behind the sector's contribution to GDP.
Statement 2 is Correct: The nature of employment generation in India's service sector is dualistic. While high-end services (like IT, telecommunications, and finance) contribute significantly to GDP, they are not labor-intensive. The majority of new jobs are created in low-productivity, unorganized activities such as petty trade, repair services, transport, and personal services, which fall under the informal sector.
Statement 3 is Correct: The expansion of the service sector has coincided with the informalization of the workforce. A significant portion of the labor force entering the service sector lacks social security and job stability. Furthermore, even within the organized sector, there is a rising trend of employing contract labor, reinforcing the shift towards informal employment structures.