UPSC Prelims 2011 Q82: Indian Economy – National Income & Economic Growth
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?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (d) Neither 1 nor 2
Explanation
Checking claims about India's GDP and per capita income growth
This question tests whether economic growth in India has been smooth/steady or fluctuating.
| Statement | Verdict | Reason |
|---|---|---|
| 1. GDP growth rate steadily increased over the last five years | Incorrect | India's GDP growth rate fluctuates year to year due to global and domestic shocks; it does not rise steadily every single year |
| 2. Per capita income growth rate steadily increased over the last five years | Incorrect | Similarly, per capita income growth also fluctuates, tracking the ups and downs of overall GDP growth, not a steady year-on-year rise |
Growth rates vs growth levels:
| Point | Detail |
|---|---|
| Level | GDP/per capita income levels generally rise over time |
| Growth RATE | The rate itself fluctuates year to year — it is not a steadily climbing number |
| Why it matters | Exam traps often confuse rising levels with a steadily rising growth rate |
Answer: (d) Neither 1 nor 2.
Why each option is right or wrong
- (a) Incorrect. The GDP growth rate does not rise steadily every year; it fluctuates with economic cycles.
- (b) Incorrect. The per capita income growth rate also fluctuates rather than climbing steadily.
- (c) Incorrect. Neither claim of a steady year-on-year rise in the growth rate holds true.
- (d) CORRECT. Both GDP growth rate and per capita income growth rate fluctuate rather than steadily increasing each year.
Key point
India's GDP growth rate and per capita income growth rate both FLUCTUATE year to year — neither rises 'steadily' over a five-year span, even though their overall LEVELS tend to trend upward.
Remember
GDP and per capita income growth RATES fluctuate year to year in India — they don't rise 'steadily' for five straight years.
Common mistakes
- Confusing a rising level (GDP, income) with a steadily rising growth rate.
- Assuming economic growth is always smooth and linear rather than cyclical.
- Not questioning absolute words like 'steadily' in economic statements.
Exam tip
Growth RATES fluctuate even when the underlying LEVEL keeps rising. Any 'steadily increased' claim about a growth rate is usually a trap.
Sources
- Central Statistical Office, Ministry of Statistics and Programme Implementation — National Accounts Statistics 2011
- Ministry of Finance, Government of India — Economic Survey 2010–11 (National Income)