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

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Which one of the following mechanisms represents the government's indirect generation of employment?

Official previous-year question

Verified 1 Aug 2026.

Options

AExpansion of public sector output inducing employment in the private sector
BDirect operation of government-owned industries and enterprises
CProvision of unemployment allowances by the government
DDirect recruitment into government administrative services

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Solution

Correct Option

The correct option is Expansion of public sector output inducing employment in the private sector.

Explanation

Government employment generation can be classified into two categories: direct and indirect. Direct generation involves the government hiring individuals for its own departments or state-owned enterprises. Indirect generation occurs when government economic activities create a multiplier effect, stimulating demand and production in the private sector, which in turn leads to hiring by private entities.

Option Analysis

Direct recruitment into government administrative services is Incorrect. Hiring people in administrative departments constitutes direct employment generation. In this scenario, the government is the direct employer, paying salaries and managing the workforce.
Direct operation of government-owned industries and enterprises is Incorrect. When the government runs industries and hotels (Public Sector Undertakings), it directly employs workers to operate these establishments. This is another form of direct employment generation.
Expansion of public sector output inducing employment in the private sector is Correct. This represents indirect employment generation. When a government enterprise increases its output (e.g., a steel plant), it requires more raw materials from private suppliers and provides more intermediate goods to downstream industries. This increase in economic activity compels private enterprises to expand their production and hire more labor to meet the new demand.
Provision of unemployment allowances by the government is Incorrect. Providing unemployment allowances is a form of transfer payment or social security. While it provides financial relief to the unemployed, it does not create new jobs or generate employment.

Key Takeaway

Indirect employment generation relies on the economic linkages between the public and private sectors. An increase in government production stimulates the economy through backward and forward linkages, causing private firms to increase their workforce.

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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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?

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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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Correct Option

The correct option is Expansion of public sector output inducing employment in the private sector.

Explanation

Option Analysis

Direct recruitment into government administrative services is Incorrect. Hiring people in administrative departments constitutes direct employment generation. In this scenario, the government is the direct employer, paying salaries and managing the workforce.
Direct operation of government-owned industries and enterprises is Incorrect. When the government runs industries and hotels (Public Sector Undertakings), it directly employs workers to operate these establishments. This is another form of direct employment generation.
Expansion of public sector output inducing employment in the private sector is Correct. This represents indirect employment generation. When a government enterprise increases its output (e.g., a steel plant), it requires more raw materials from private suppliers and provides more intermediate goods to downstream industries. This increase in economic activity compels private enterprises to expand their production and hire more labor to meet the new demand.
Provision of unemployment allowances by the government is Incorrect. Providing unemployment allowances is a form of transfer payment or social security. While it provides financial relief to the unemployed, it does not create new jobs or generate employment.