GDP & National Income — Set 7

Correct Answer: D. D. $30+ trillion

India's Vision 2047 (Viksit Bharat/Developed India) aims for a GDP of $30 trillion or more by 2047, the centenary of independence. This would require India to sustain high growth rates over the next 25 years. At current trajectory projections, India's GDP could reach $20-30 trillion by 2047, making it a developed nation.

Correct Answer: C. C. 55-60%

Household Final Consumption Expenditure (HFCE) constitutes approximately 55-60% of India's GDP, making private consumption the largest driver of economic growth. This high share reflects India's consumption-driven growth model. Food, clothing, and transportation are major components of HFCE in India.

Correct Answer: B. B. Total value of new fixed assets acquired by producers

Gross Fixed Capital Formation (GFCF) represents investment in new fixed assets like machinery, buildings, equipment, and infrastructure by producers. It is the 'I' (Investment) component in GDP = C + I + G + NX. Higher GFCF indicates more productive capacity being built and supports future GDP growth.

Correct Answer: C. C. Gross capital formation (investment)

Changes in inventories (stocks) are included in Gross Capital Formation (Investment) component of GDP in the expenditure method. A rise in inventories is positive investment; a fall is negative. This ensures that goods produced but not yet sold are captured in GDP of the period they were produced.

Correct Answer: C. C. 2022

India overtook the United Kingdom in 2022 to become the world's 5th largest economy by nominal GDP. This was a historic milestone, as India had been the 6th largest for several years. The surpassing was helped by India's faster post-COVID recovery and the UK's relatively sluggish growth.

Correct Answer: B. B. National Income - Corporate Taxes - Undistributed Profits - Social Security Contributions + Transfer Payments

Personal Income = National Income - Corporate Taxes - Undistributed Corporate Profits - Social Security Contributions + Transfer Payments to individuals. It represents income actually received by individuals before personal taxes. Personal Disposable Income = Personal Income - Personal Taxes, representing what individuals can actually spend or save.

Correct Answer: B. B. 6.4%

The First Advance Estimate by NSO placed India's real GDP growth for FY 2024-25 at approximately 6.4%, down from 8.2% in FY 2023-24. The moderation was attributed to slower industrial growth and global headwinds. India was still among the fastest-growing major economies despite the moderation.

Correct Answer: C. C. Quality of life improvements not reflected in market prices

GDP does not capture improvements in quality of life that are not reflected in market transactions, such as increases in leisure time, improvements in air quality, better social relationships, or voluntary work. GDP measures market output, not overall welfare or happiness. This is why indicators like HDI, Human Happiness Index, and GNH (Gross National Happiness) were developed.

Correct Answer: C. C. -7.3%

India's GDP contracted by 7.3% in FY 2020-21 due to the severe impact of COVID-19 lockdowns and global economic disruption. This was India's worst GDP performance since independence. However, India rebounded sharply with 8.7% growth in FY 2021-22 as economic activity normalised.

Correct Answer: C. C. 35-40%

India's Gross Savings Rate is approximately 30-35% of GDP, having declined from peak levels of over 36-38% in the mid-2000s. Household savings form the largest component, followed by private corporate savings and public sector savings. A high savings rate supports investment and future GDP growth.