Q. With reference to Indian economy, consider the following statements:

  1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
  2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.

Which of the statements given above is/are correct?

  • 1 only
  • 2 only
  • Both 1 and 2
  • Neither1 nor 2

Answer: (b) 2 only

Notes:
  • Gross Domestic Product (GDP) is the monetary value of all the final goods and services produced within a country’s borders in a specific time period, generally 1 year. It is a broad measurement of a nation’s overall economic activity.
  • Real Gross Domestic Product is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices.
  • The rate of growth of Real Gross Domestic Product had declined due to the recession in 2008 and other reasons for the next few years from 8-9% to 5-6%.
    • A surge in capital inflows, an inflationary explosion in global commodity prices, the global financial meltdown, and the collapse of international trade are the major challenges of India for the decline of the rate of growth of Real Gross Domestic Product.
  • The GDP at market prices of India has steadily increased in the last decade from around 900 billion USD in 2005 to 2.1 trillion USD in 2015. As of 2020 India’s GDP is 2.63 trillion USD.