UPSC Prelims 2018 Q48: Indian Economy – National Income & Economic Growth
- (a) industrial output fails to keep pace with agricultural output.
- (b) agricultural output fails to keep pace with industrial output.
- (c) poverty and unemployment increase.
- (d) imports grow faster than exports.
Answer: (c) poverty and unemployment increase.
Explanation
Growth vs Development - When Rising GNP Fails to Denote Development
Economic growth = increase in aggregate output (GDP/GNP). Economic development = growth PLUS structural change, improved living standards, better distribution, human development indicators.
| Option | Explains growth-without-development? | Detail |
|---|---|---|
| (a) Industry lags agriculture | PARTIAL | structural mismatch, but not sufficient. |
| (b) Agriculture lags industry | PARTIAL | similar sectoral concern, not decisive. |
| (c) Poverty and unemployment increase | YES | This is the defining case of jobless / immiserating growth. If GNP rises but poverty and unemployment worsen, growth has failed to translate into development. Classic case: growth accruing to a narrow elite (rentier or capital-intensive sectors) while masses stagnate. |
| (d) Imports exceed exports | NO | This is a balance-of-payments concern, not a development-vs-growth distinction. Trade deficits can coexist with genuine development if the imports finance productive investment. |
Answer: (c) Poverty and unemployment increase.
Why each option is right or wrong
- (a) Incorrect. Sectoral imbalances matter but do not by themselves invalidate growth as development.
- (b) Incorrect. Same as above - sectoral pace differences are structural concerns, not the defining sign of failed development.
- (c) CORRECT. Rising poverty and unemployment despite higher GNP is the textbook signature of growth-without-development ('jobless' or immiserating growth).
- (d) Incorrect. Trade deficit is a BoP concern; development can still occur with a trade deficit.
Key point
Development = Growth + Distribution + Employment + Human Development. If GNP rises but poverty/unemployment worsen, it is jobless / immiserating growth (Amartya Sen's capability approach; Mahbub ul Haq's HDI framework).
Remember
An increase in absolute and per capita real GNP does not necessarily indicate higher economic development if poverty and unemployment simultaneously rise. This is because economic development requires growth to translate into improved welfare, employment and reduced deprivation - not merely an aggregate output increase. When growth accrues narrowly to elites without lifting the poor, it is 'jobless' or 'immiserating' growth.
Common mistakes
- Equating growth (higher output) with development (broader welfare) - they can and do diverge.
- Assuming rising GNP automatically means poverty reduction - it depends on distribution and employment intensity of growth.
- Missing the concept of jobless growth - India's post-2000 experience shows GDP rising while employment intensity fell.
Exam tip
Growth vs Development: Growth = quantitative (GDP up). Development = qualitative (poverty down, employment up, HDI up, inequality down). If growth fails to reduce poverty/unemployment, it fails as development.
Sources
- NCERT Class 11 - Indian Economic Development (Chapter 1)
- Amartya Sen - Development as Freedom