GDP & National Income — Set 11

Correct Answer: B. B. Financial year (April-March)

India measures GDP for the financial year running from April 1 to March 31. This is also called the fiscal year or Budget year. NSO releases quarterly estimates for Q1 (April-June), Q2 (July-September), Q3 (October-December), and Q4 (January-March), as well as annual estimates covering the full financial year.

Correct Answer: C. C. 57%

Private Final Consumption Expenditure (PFCE) accounts for approximately 57-60% of India's GDP, making it the dominant component. This high share reflects India's consumption-driven economy. PFCE includes all purchases by households on goods and services. Government Final Consumption Expenditure adds another 10-12% of GDP.

Correct Answer: B. B. Net Factor Income from Abroad (remittances and investment income)

The difference between India's GDP and GNP is primarily due to Net Factor Income from Abroad (NFIA), with remittances being the dominant component. India is the world's largest recipient of remittances (over $100 billion annually), which forms a positive NFIA making GNP > GDP. Investment income flows also contribute to this difference.

Correct Answer: B. B. Domestic = within territory; National = by residents regardless of location

'Domestic' in GDP refers to production within the geographic territory of the country, regardless of who (resident or foreign) produces it. 'National' in GNP refers to production by residents (citizens and resident entities) of the country, regardless of where the production occurs. This territorial vs nationality distinction is fundamental to national income accounting.

Correct Answer: B. B. USA

The United States has the world's largest GDP by nominal value, with approximately $28-29 trillion in 2024. China is the 2nd largest with approximately $18 trillion. The USA has maintained its position as the world's largest nominal economy for over a century, driven by high productivity, technological leadership, and consumer spending.

Correct Answer: B. B. Foreign capital flows (FDI, FPI, external borrowings)

When domestic savings fall short of investment requirements (savings-investment gap), the gap is financed by foreign capital inflows including FDI, FPI, external commercial borrowings, and NRI deposits. This capital account surplus finances India's current account deficit. Sustainable financing of the gap requires stable, long-term capital flows rather than volatile hot money.

Correct Answer: C. C. National Wealth

National Wealth is a stock variable, measured at a specific point in time. It includes all assets (physical capital, natural resources, human capital) accumulated over time. In contrast, National Income and GDP are flow variables measured over a time period. Capital stock (total accumulated capital) is also a stock variable.

Correct Answer: C. C. ₹173 lakh crore

India's real GDP at constant (2011-12) prices for FY 2023-24 was approximately ₹173 lakh crore. This figure is used to calculate the real growth rate of 8.2% for that year. The constant price GDP removes inflation effects and shows actual volume of economic activity.

Correct Answer: C. C. IMF

The International Monetary Fund (IMF) publishes the World Economic Outlook (WEO) twice yearly, containing GDP growth projections for all member countries. The IMF's WEO is a key reference for governments and investors. The World Bank's Global Economic Prospects is another important publication with GDP forecasts.

Correct Answer: C. C. 30-32%

India's Gross Domestic Savings rate is approximately 30-32% of GDP, comprising household savings (~20%), private corporate savings (~11%), and government savings (~2-3%). The savings rate declined from its peak of ~36% in 2007-08. Higher domestic savings reduce dependence on foreign capital and support investment-led growth.