National Income, Sectors & Growth: previous-year questions

Answer: (C) Depreciation

Net Domestic Product is Gross Domestic Product minus depreciation, i.e. the consumption of fixed capital (wear and tear of machinery and buildings): $NDP = GDP - \text{Depreciation}$. The same gap separates GNP and NNP. The other adjustments in national income accounting are different: net factor income from abroad converts 'domestic' to 'national' ($GNP = GDP + NFIA$), and net indirect taxes (indirect taxes minus subsidies, option B) convert market price to factor cost. NNP at factor cost is what is called National Income. Government revenue and foreign aid do not enter these identities.

Answer: (D) Construction

In national income accounting the secondary sector turns raw materials into finished goods and structures: manufacturing, construction, and electricity, gas and water supply. Construction is therefore the answer. Trade, transport and communication are services and belong to the tertiary sector, together with banking, insurance, real estate, hotels and public administration. The primary sector covers agriculture, forestry, fishing and mining. In India the tertiary sector contributes more than half of gross value added, while agriculture, with under a fifth of output, still employs the largest share of the workforce.

Answer: (B) Textile

A 'sunrise sector' is a new or fast-growing industry with high future potential, usually technology-driven. In India the term is applied to food processing, artificial intelligence and IT, space technology, semiconductors, electric vehicles, green hydrogen, renewable energy, drones and biotechnology. Textiles is one of India's oldest, mature industries, with the first cotton mills dating from the 1850s, so it is not classed as a sunrise sector (only its 'technical textiles' segment is sometimes described that way). The opposite term, 'sunset industry', refers to an old industry in decline. Many sunrise sectors are supported by Production Linked Incentive (PLI) schemes.

Answer: (B) there is co-existence of public sector and private sector.

A mixed economy is one in which the public sector (state-owned enterprises and planning) and the private sector (privately owned firms working through the market) exist side by side. India adopted this model after Independence through the Industrial Policy Resolutions of 1948 and 1956, which reserved the 'commanding heights' for the public sector, and has moved towards a larger role for the private sector since the reforms of 1991. It stands between capitalism (private ownership, market decisions) and socialism (state ownership, central planning). Options A, C and D describe sectoral balance, foreign investment and a form of government, none of which defines a mixed economy.

Answer: (C) Ratio of Non-working Age Population to Working Age Population.

The dependency ratio is the number of dependants, children aged 0-14 and the elderly aged 65 and above, per 100 persons of working age (15-64): $\frac{\text{population aged 0-14} + \text{population aged 65+}}{\text{population aged 15-64}} \times 100$. It can be split into the young (child) and old-age dependency ratios. A falling ratio means a growing share of workers, the 'demographic dividend' that India is currently experiencing, while ageing societies such as Japan have a rising old-age ratio. Options A, B and D describe import intensity, the share of FDI in investment and the size of government spending, which are unrelated economic ratios.

Answer: (C) The Tertiary sector

Answer as of 2023 — this may have changed since.

The tertiary (services) sector contributes more than half of India's gross value added. Agriculture contributes under a fifth and manufacturing and mining together much less than services.

Answer: (C) Manufacturing, construction, electricity, gas and water supply

Answer as of 2023 — this may have changed since.

The National Statistical Office reports Gross Value Added under broad industry groups. Over the last decade the industry group — manufacturing (about 17–18%), construction (about 8%) and electricity, gas and water supply (about 2–3%) — together contributed roughly 27–28% of real GVA at basic prices, more than any other single group listed. Financial, real estate and professional services came next (about 21–22%), followed by trade, hotels, transport and communication (about 18–19%) and public administration, defence and other services (about 12–13%). Agriculture accounts for about 15%. GVA at basic prices plus net taxes on products equals GDP; the base year of the series was 2011–12.

Answer: (A) poverty

The Head Count Ratio is the proportion of a population living below the poverty line, a standard poverty measure.

Answer: (A) 62%

Answer as of 2020 — this may have changed since.

The services sector has been the largest contributor to India's GDP for years; commonly cited estimates place its share (including trade, finance, real estate etc.) around the 55-62% range depending on the year and exact measure used.

Answer: (B) Single digit

For most of the recent years leading up to this paper, India's retail (CPI) inflation stayed in single digits, generally in the 3-7% range — a figure that moves over time and should be checked against the latest data when teaching current economics.

Answer: (C) indirect taxes

GDP at market price equals GDP at factor cost plus indirect taxes minus subsidies; indirect taxes are the main item bridging the two measures, per the standard textbook simplification.

Answer: (B) UNDP

The Human Development Index is published annually by the United Nations Development Programme (UNDP).

Answer: (C) Per capita income of citizens

By the expenditure method, GNP = private consumption + private investment + government purchases of goods and services + net exports + net factor income from abroad, so options (A), (B) and (D) are components. Per capita income is not a component: it is obtained afterwards by dividing national income by population. Remember: GNP = GDP + net factor income from abroad, and NNP = GNP - depreciation.

Answer: (A) the household sector

The household sector has traditionally been the largest single contributor to India's gross domestic savings.

Answer: (D) 50% of GDP

Answer as of 2017 — this may have changed since.

The services sector has for years been the largest contributor to India's GDP, generating more than half of it — though the precise figure moves from year to year and should be checked against current data when used for teaching.

Answer: (B) 1990

The UNDP published its first Human Development Report, introducing the Human Development Index, in 1990.

Answer: (B) Dadabhai Naoroji

The concept of the 'Drain of Wealth' from India was most famously articulated by Dadabhai Naoroji in his book 'Poverty and Un-British Rule in India' (1901) and earlier lectures. He argued that India's poverty was caused by the systematic drainage of its wealth to Britain through colonial exploitation.

Answer: (C) Primary, secondary and Tertiary Sectors

Economies are analytically classified into three broad sectors: Primary (agriculture, mining, fishing), Secondary (manufacturing and construction), and Tertiary (services including trade, transport, finance). This sectoral classification is the standard framework in economics for understanding structural transformation.