Mains Previous Year Questions
Q.Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (UPSC 2021)
| Introduction | Gross Domestic Product (GDP) is the most widely used indicator of economic growth. Over time, India has revised its methodology to align with global standards and to better reflect structural changes in the economy. A major revision was undertaken in 2015. |
| Body | A) Before 2015:
B) After 2015:
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| Conclusion | The 2015 revision marked a paradigm shift from GDP at factor cost to GDP at market prices, with better data sources and methodology. This has made India’s growth estimates more comprehensive, realistic, and globally standardized, though it has also sparked debates due to higher growth figures compared to the earlier series. |
Q. Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP?
| Introduction | Potential GDP (also called potential output) is the maximum level of economic output that an economy can sustain over the long term without creating inflationary pressures. It represents the level of production when all resources—labour, capital, and technology—are fully and efficiently utilized. Actual GDP often falls short of potential GDP due to structural and cyclical constraints. |
| Body | A. Determinants of Potential GDP:
B. Factors inhibiting India from realizing potential GDP:
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| Conclusion | India’s potential GDP is high due to its demographic dividend and vast resource base. However, structural bottlenecks in labour, capital, technology, and governance have created an output gap. Addressing these through skill development, infrastructure push, financial reforms, and innovation-led growth is essential for India to realize its full productive potential and sustain high long-term growth. |
