Economy : National Income Accounting

Q 3 / 10

UPSC CSE Prelims 2011

In the context of Indian economy, consider the following statements :

  1. The growth rate of GDP has steadily increased in the last five years.
  2. The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct ?

EXPLANATION

Correct Option

Option (d):

Statement 1 is incorrect. An analysis of India's GDP growth rate during the five-year period preceding 2011 (e.g., 2005-06 to 2010-11) reveals fluctuations rather than a steady increase. For instance, the growth rate experienced a decline, notably during the global financial crisis of 2008-09, before recovering in subsequent years. Therefore, the assertion of a "steadily increased" growth rate is factually inaccurate.

Statement 2 is incorrect. Similarly, the growth rate in per capita income did not exhibit a steady increase over the same period. While per capita income generally trended upwards, its annual growth rate was subject to variations, particularly impacted by economic downturns such as the 2008-09 global financial crisis. This indicates an absence of a consistent, upward trend in the growth rate.

Incorrect Options

Options (a), (b), and (c) are incorrect because both statements 1 and 2 are factually inaccurate. Neither the GDP growth rate nor the per capita income growth rate demonstrated a steady increase in the five years preceding 2011, as evidenced by economic data for the period.

SOURCEEconomic Survey 2010-11, Chapter 1: State of the Economy