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Q48 (IAS/2018) Economy › Growth, Development, Poverty & Employment › Income and development levels Official Key

Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

Result
Your answer: —  ·  Correct: C
Explanation

The correct answer is option C because economic growth takes into account only quantitative changes (like increase in per capita income), while economic development takes into account both quantitative and qualitative aspects of improvement in well-being[1]. Economic development is a broader concept where Development = Growth + improvements in different socio-economic parameters[1]. If GNP increases but poverty and unemployment also increase, it indicates that the benefits of growth are not translating into broader well-being improvements. Even countries having high economic growth experienced speedy rise in poverty because of its unequal distribution[2]. This scenario represents "growth without development" where quantitative gains fail to reflect qualitative improvements in people's lives. The other options—relating to sectoral output imbalances or trade patterns—do not directly negate development in the same fundamental way that rising poverty and unemployment do, as these latter conditions directly contradict the core objective of improving human welfare.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
  2. [2] INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 6: Planning and Sustainable Development in Indian Context > Sustainable Development > p. 70
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Q. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if [A] industrial output fails to ke…
At a glance
Origin: From standard books Fairness: High fairness Books / CA: 10/10 · 0/10

This is a classic 'Concept 101' question found in the first chapter of any standard Economy book (NCERT or Singhania). It tests the fundamental philosophical difference between 'Growth' (numbers) and 'Development' (people). If you missed this, you are skipping the definitions to memorize data, which is a fatal error.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Does an increase in absolute and per capita real GNP fail to connote a higher level of economic development if industrial output fails to keep pace with agricultural output?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
Presence: 5/5
“It is not possible to quantify economic development. • Economic Growth: It takes into account quantitative changes only (say, increase in per capita income). Economic Development: It takes into account both quantitative and qualitative aspects of improvement in well-being. • Economic Growth: The scope of economic growth is narrow. Economic Development: Economic Development is a broader concept. Development = Growth + improvements in different socio-economic parameters. • Economic Growth: To measure the economic growth, GDP, GNP, etc.”
Why this source?
  • Explicitly distinguishes economic growth (quantitative increase such as per capita income/GNP) from economic development (requires qualitative improvements in well-being).
  • Implied conclusion: higher GNP alone may not indicate development because development includes broader socio-economic parameters beyond income.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 20: Investment Models > Lewis Model of Economic Development > p. 593
Presence: 4/5
“Agricultural sector of India has huge amount of surplus labourers, and if these surplus labourers are taken away, then the net output of agricultural sector will not be affected. These surplus labourers are attracted at a bit higher wages for industrial development and growth of the country.”
Why this source?
  • Lewis model emphasizes shifting surplus labour from agriculture to industry as key to development; industrial expansion is thus necessary for structural transformation.
  • If industrial output fails to expand, the necessary labour absorption and productivity gains tied to development do not occur.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > UNDERDEVELOPMENT > p. 23
Presence: 4/5
“Underdevelopment or low-level development is characterised by the low level of per capita income of a country. In underdeveloped countries, the primary sector provides employment to a large extent. There are several common features of underdeveloped countries, like low GNP per capita, relatively low capital formation, high levels of unemployment and underemployment, low levels of productivity of labor, high level of poverty and income inequality, low human capital, etc. Composite Development Index - The Raghuram Rajan Committee submitted its report on a new underdevelopment index called Composite Development Index, in 2013. The Committee suggested this index to determine (under)development of States.”
Why this source?
  • Defines underdevelopment features: large primary-sector employment and low per capita income, linking an agriculture-dominated structure to low development.
  • Suggests that without a relative rise in industrial activity, high GNP figures may coexist with underdevelopment characteristics.
Statement 2
Does an increase in absolute and per capita real GNP fail to connote a higher level of economic development if agricultural output fails to keep pace with industrial output?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
Presence: 5/5
“It is not possible to quantify economic development. • Economic Growth: It takes into account quantitative changes only (say, increase in per capita income). Economic Development: It takes into account both quantitative and qualitative aspects of improvement in well-being. • Economic Growth: The scope of economic growth is narrow. Economic Development: Economic Development is a broader concept. Development = Growth + improvements in different socio-economic parameters. • Economic Growth: To measure the economic growth, GDP, GNP, etc.”
Why this source?
  • Explicitly distinguishes economic growth (quantitative measures like GNP/GDP) from economic development (qualitative improvements in well‑being), implying GNP rise alone may not mean development.
  • Frames development as growth plus socio‑economic improvements — so sectoral imbalance (industry up, agriculture lagging) can prevent broader development despite higher GNP.
Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 9: Agriculture > Agriculture > p. 1
Presence: 5/5
“India (Statistics Times Feb 8, 2019). Besides, agriculture is an important source of raw material for industrial production, and serves as a huge market for the industrial products. As per the theory of Gunnar Myrdal in 1956" It is in the agriculture sector that the battle for long term economic development will be won or lost." If agriculture goes wrong, nothing else will have a chance to go right in India (M.S. Swaminathan). The agricultural output, however, depends on monsoon as nearly 55% of area sown is dependent on rainfall. It not only provides food to its teeming millions; the agro-based industries for their raw material are dependent on agriculture.”
Why this source?
  • Stresses agriculture as central to long‑term economic development and links agro‑sector performance to the overall success of development.
  • Implied that if agriculture 'goes wrong' development is jeopardised — supporting the idea that lagging agricultural output can negate GNP gains.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.15 Doubling Farmers' Income > p. 324
Presence: 4/5
“If the inflation in the economy is higher than the farm produce prices then actually it reduces the real income of farmers. And when prices received by farmers for agricultural produce rise faster than the inflation, it adds to the real income, even without an increase in the volume of output. The sources outside agriculture include: 7. Shifting cultivators from farm to non-farm occupations: Approximately 43% of the labour force is involved in agricultural activities contributing just 17% of the GDP. This shows over-dependence of workforce on agriculture with significant underemployment. This also reveals large difference in per worker productivity between agriculture and non-agriculture sectors.”
Why this source?
  • Shows large share of labour employed in agriculture but contributing disproportionately less to GDP, indicating a productivity/employment mismatch.
  • Implying that industrial growth raising GNP while agriculture lags may not improve real incomes or welfare for the large rural workforce.
Statement 3
Does an increase in absolute and per capita real GNP fail to connote a higher level of economic development if poverty and unemployment increase?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 6: Planning and Sustainable Development in Indian Context > Sustainable Development > p. 70
Presence: 5/5
“The concept of development is dynamic and has evolved during the second half of twentieth century. In the post World War II era, the concept of development was synonymous to economic growth which is measured in terms of temporal increase in gross national product (GNP) and per capita income/per capita consumption. But, even the countries having high economic growth, experienced speedy rise in poverty because of its unequal distribution. So, in 1970s, the phrases such as redistribution with growth and growth and equity were incorporated in the definition of development. While dealing with the questions related to redistribution and equity, it was realised that the concept of development cannot be restricted to the economic sphere alone.”
Why this source?
  • Explicitly notes that post‑WWII reliance on GNP/per‑capita as development measures failed because high growth sometimes coincided with rising poverty due to unequal distribution.
  • Uses this historical lesson to argue development must include redistribution, equity and non‑economic dimensions beyond aggregate GNP.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
Presence: 5/5
“It is not possible to quantify economic development. • Economic Growth: It takes into account quantitative changes only (say, increase in per capita income). Economic Development: It takes into account both quantitative and qualitative aspects of improvement in well-being. • Economic Growth: The scope of economic growth is narrow. Economic Development: Economic Development is a broader concept. Development = Growth + improvements in different socio-economic parameters. • Economic Growth: To measure the economic growth, GDP, GNP, etc.”
Why this source?
  • Distinguishes economic growth (quantitative increase in per‑capita income/GNP) from economic development (growth plus qualitative socio‑economic improvements).
  • Implies that rising GNP alone does not equal development unless well‑being and other socio‑economic parameters improve.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > JOBLESS GROWTH > p. 55
Presence: 5/5
“It is a phenomenon where the level of GDP increases in the economy without a perceptible rise in the level of employment; i.e. GDP growth happens to be faster than employment growth. Jobless growth leads to chronic unemployment even when there is a rise in the GDP growth rate. It occurs due to the greater use of efficient technology rather than greater use of manpower in achieving the desired level of GDP growth. In India between 1951 and 2000, while annual GDP growth rate had risen from 3.6 per cent to around 8 per cent, the growing rate of employment has tended to slide down from 1.5 per cent to just about 1 per cent, thereby resulting in jobless growth.”
Why this source?
  • Defines 'jobless growth' where GDP rises without a perceptible increase in employment, producing chronic unemployment despite higher GDP.
  • Directly supports the possibility that higher GNP can coexist with rising unemployment, undermining its claim as evidence of development.
Statement 4
Does an increase in absolute and per capita real GNP fail to connote a higher level of economic development if imports grow faster than exports?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
Presence: 5/5
“It is not possible to quantify economic development. • Economic Growth: It takes into account quantitative changes only (say, increase in per capita income). Economic Development: It takes into account both quantitative and qualitative aspects of improvement in well-being. • Economic Growth: The scope of economic growth is narrow. Economic Development: Economic Development is a broader concept. Development = Growth + improvements in different socio-economic parameters. • Economic Growth: To measure the economic growth, GDP, GNP, etc.”
Why this source?
  • Explicitly distinguishes economic growth (quantitative GNP/per capita increases) from economic development (qualitative, broader measures).
  • Implies that higher GNP/per capita alone is insufficient to claim development, so GNP rises may not connote development by themselves.
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > Income and the Exchange Rate > p. 93
Presence: 5/5
“When income increases, consumer spending increases. Spending on imported goods is also likely to increase. When imports increase, the demand curve for foreign exchange shifts to the right. There is a depreciation of the domestic currency. If there is an increase in income abroad as well, domestic exports will rise and the supply curve of foreign exchange shifts outward. On balance, the domestic currency may or may not depreciate. What happens will depend on whether exports are growing faster than imports. In general, other things remaining equal, a country whose aggregate demand grows faster than the rest of the world's normally finds its currency depreciating because its imports grow faster than its exports.”
Why this source?
  • Explains that income increases tend to raise spending on imports and that imports can grow faster than exports as income rises.
  • Identifies a macro effect (currency depreciation) when imports outpace exports, signaling adverse external sector consequences despite higher income.
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > National Income Identity for an Open Economy > p. 99
Presence: 4/5
“The second term in equation (6.10) shows that, in addition to the elements for a closed economy, autonomous expenditure for an open economy includes the level of exports and the autonomous component of imports. Thus, the changes in their levels are additional shocks that will change equilibrium income. From equation (6.10) we can compute the multiplier effects of changes in X and M . 99 Macroeconomics Open Economy An increase in demand for our exports is an increase in aggregate demand for domestically produced output and will increase demand just as would an increase in government spending or an autonomous increase in investment.”
Why this source?
  • Shows in the open-economy national income identity that exports increase aggregate demand while imports are an autonomous leakage.
  • Implicates that faster import growth relative to exports reduces net demand and can offset the beneficial impact of higher GNP on domestic output.
Pattern takeaway: UPSC consistently tests the 'Human Conscience' of Economics. They prioritize concepts that link macro-data to social reality (Poverty, Unemployment, Inclusion) over technical trade balances or sectoral ratios.
How you should have studied
  1. [THE VERDICT]: Sitter. Directly solvable from NCERT Class XII (India People & Economy, Ch 6) or Chapter 2 of Nitin Singhania.
  2. [THE CONCEPTUAL TRIGGER]: The distinction between 'Economic Growth' (Quantitative: GDP/GNP) and 'Economic Development' (Qualitative: HDI, Poverty, Inequality).
  3. [THE HORIZONTAL EXPANSION]: Memorize the critiques of GDP: 1) Jobless Growth (Growth without employment), 2) Kuznets Curve (Inequality initially rises with growth), 3) Amartya Sen’s Capability Approach, 4) Components of PQLI vs HDI, 5) Green GNP (Environmental cost deduction).
  4. [THE STRATEGIC METACOGNITION]: Don't just memorize formulas for GDP/GNP. Always prepare the 'Limitations' of every major indicator. UPSC loves asking 'What does this metric hide?' (e.g., GDP hides unpaid care work, pollution, and inequality).
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Economic growth vs economic development
💡 The insight

The statement contrasts higher GNP (growth) with the broader concept of development; reference [6] explicitly makes this distinction.

High-yield for UPSC: many questions probe the limits of GDP/GNP as welfare indicators. Mastering this helps answer questions on measurement, policy priorities, and development indicators; it links to topics on human development, poverty, and inclusive growth.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
📌 Adjacent topic to master
S1
👉 Structural transformation: agriculture → industry (Lewis model)
💡 The insight

The statement hinges on industry failing to keep pace with agriculture; reference [7] (Lewis model) explains why industrial expansion is central to development.

Crucial for understanding development processes and employment dynamics. Helps in answering questions on sectoral composition, labour absorption, and policy measures for industrialisation and rural development. Connects to economic history and policy debates on industrial policy.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 20: Investment Models > Lewis Model of Economic Development > p. 593
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > UNDERDEVELOPMENT > p. 23
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
📌 Adjacent topic to master
S1
👉 Agricultural output, productivity and real welfare of farmers
💡 The insight

Rising agricultural output does not automatically translate into better welfare or development; references [3]–[4] note output-price/income disconnect and low per-worker productivity in agriculture.

Important for questions on rural distress, farm incomes, and why GDP gains may not reflect improved living standards. It links to agrarian policy, price-support mechanisms, and rural employment strategies.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.15 Doubling Farmers' Income > p. 324
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.15 Doubling Farmers' Income > p. 323
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
📌 Adjacent topic to master
S2
👉 Economic growth vs economic development
💡 The insight

The core question hinges on the difference between higher GNP (growth) and wider improvements in well‑being (development), directly discussed in the references.

High‑yield for UPSC: many questions test whether GDP/GNP growth equates to development. Mastering this helps answer policy evaluation questions and link macro indicators to social outcomes; connects to topics on human development, poverty, and sectoral policies.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
📌 Adjacent topic to master
S2
👉 Role of agriculture in national development
💡 The insight

References emphasise that agriculture is foundational to development and that its failure can undermine overall progress despite industrial gains.

High relevance for economy and GS papers: questions on balanced growth, rural distress, and agricultural policy rely on this concept. Understanding agriculture–industry linkages aids analysis of structural transformation and policy tradeoffs.

📚 Reading List :
  • Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 9: Agriculture > Agriculture > p. 1
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
📌 Adjacent topic to master
S2
👉 Sectoral productivity and employment mismatch (agriculture over‑employment)
💡 The insight

Evidence shows large agricultural employment with low per‑worker productivity; industrial‑led GNP growth may not raise rural incomes if this mismatch persists.

Important for answering questions on inclusive growth, labour migration, and structural change. Helps frame why aggregate indicators can mask welfare deficits and guides discussion of labour reallocation and rural development measures.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.15 Doubling Farmers' Income > p. 324
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
📌 Adjacent topic to master
S3
👉 Economic growth vs economic development
💡 The insight

Reference [7] explicitly differentiates growth (quantitative GNP/per‑capita rise) from development (growth plus qualitative socio‑economic improvements).

High‑yield for UPSC: many questions test the difference between growth and development, indicators used, and policy implications. Mastering this helps answer questions on measurement, human development indices, and policy priorities across economy and social sectors.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 2: Economic Growth versus Economic Development > ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT > p. 22
🔗 Anchor: "Does an increase in absolute and per capita real GNP fail to connote a higher le..."
🌑 The Hidden Trap

The 'Gini Coefficient' and 'Lorenz Curve'. Since this question tested the disconnect between Income and Welfare, the next logical step is the mathematical measurement of that disconnect (Inequality). Also, watch out for the 'Misery Index' (Inflation + Unemployment rate).

⚡ Elimination Cheat Code

Use the 'People vs. Accountants' heuristic. Options A, B, and D describe structural or trade imbalances (Accountant problems). Option C describes human suffering (Poverty/Unemployment). 'Development' is a human-centric term. Therefore, the option that directly hurts humans negates development most strongly.

🔗 Mains Connection

Links to GS-3 (Internal Security): The disconnect between High GDP and Low Development is the root cause of Left-Wing Extremism (Naxalism) in resource-rich states like Chhattisgarh (High GSDP growth from mining, but low HDI).

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SIMILAR QUESTIONS

IAS · 2000 · Q49 Relevance score: -2.90

The growth rate of per capita income at current prices is higher than that of per capita income at constant prices, because the latter takes into account the rate of

CDS-I · 2007 · Q2 Relevance score: -3.21

Assertion (A) : Per capita income of India does not give a complete picture of the economic growth of the country. Reason (R) : Per capita income of a country is not independent of the size of its population.

CDS-I · 2021 · Q68 Relevance score: -4.14

Which one of the following statements is not correct ?

IAS · 1996 · Q70 Relevance score: -4.42

Assertion (A) : Though India’s national income has gone up several fold since 1947, there has been no marked improvement in the per capita income level. Reason (R) : Sizeable proportion of the population of India is still living below the poverty line. In the context of the above two statements which one of the following is correct ?