GDP & National Income — Set 10

Correct Answer: C. C. Heavy industry and capital goods sector

The Mahalanobis model underpinning India's Second Five Year Plan (1956-61) emphasised investment in heavy industry and capital goods. It proposed allocating a larger share of investment to the capital goods sector to build long-term productive capacity. This model justified India's focus on public sector steel plants, machine tools, and heavy engineering.

Correct Answer: C. C. ₹265

India's first systematic National Income estimate by the P.C. Mahalanobis committee (1951) placed per capita income at approximately ₹265 per year. This reflected the extremely low base at the time of independence. Today, India's per capita income is approximately ₹1.8-2.0 lakh per year (nominal), representing enormous growth over seven decades.

Correct Answer: C. C. National Accounts Statistics (NAS)

India's National Income estimates are published in the National Accounts Statistics (NAS) report released by NSO/MOSPI. NAS provides detailed accounts of GDP, national income, capital formation, savings, and other macroeconomic aggregates. It is the primary source document for researchers and policymakers studying India's economic growth.

Correct Answer: C. C. 2007

India's GDP first crossed the $1 trillion mark in approximately 2007, when India joined the trillion-dollar club. India then crossed $2 trillion around 2014 and $3 trillion around 2019-2022. The journey from $1 trillion to the current ~$3.7 trillion has taken approximately 17 years, reflecting India's accelerating economic growth.

Correct Answer: B. B. An initial injection of spending leads to a larger increase in total GDP

The Multiplier effect describes how an initial injection of spending (e.g., government investment) leads to a larger total increase in GDP. This happens because income earned by recipients of initial spending is re-spent, creating rounds of additional income and spending. The size of the multiplier depends on the Marginal Propensity to Consume (MPC) in the economy.

Correct Answer: B. B. 36% in 2007-08

India's investment-to-GDP ratio (GFCF as % of GDP) peaked at approximately 35-36% during 2007-08, driven by the pre-global financial crisis boom. It has since moderated to around 30-32%. Reviving the investment rate is a key policy priority, as higher investment supports future productive capacity and GDP growth.

Correct Answer: C. C. ₹325 lakh crore

India's nominal GDP (at current prices) for FY 2024-25 is estimated at approximately ₹324-325 lakh crore (about $3.9-4.0 trillion). This reflects both real economic growth and inflation. The nominal GDP figure is important for calculating the fiscal deficit as a percentage of GDP.

Correct Answer: B. B. Units of additional capital needed to produce one additional unit of output

ICOR (Incremental Capital Output Ratio) measures the additional units of capital investment required to produce one additional unit of output. A lower ICOR indicates more efficient use of capital. India's ICOR has typically been around 4-5, meaning ₹4-5 of investment is needed to generate ₹1 of additional GDP output.

Correct Answer: B. B. All non-agricultural establishments and enterprises

The Economic Census covers all establishments and enterprises engaged in non-agricultural economic activities across India. It provides data on enterprises, employment, and economic activities for planning purposes. The 7th Economic Census was conducted in 2019 and provides baseline data for GDP estimation of the informal sector.

Correct Answer: C. C. ₹1,85,000

India's per capita net national income (nominal) for FY 2023-24 is approximately ₹1,85,000 (about $2,200-2,300). While this represents significant growth from the ₹265 at independence, it is still well below the $13,000+ threshold for high-income status. India's challenge is to grow per capita income rapidly while ensuring equitable distribution.