Economy : National Income Accounting

Q 10 / 10

UPSC CSE Prelims 1996

Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R):

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?

EXPLANATION

Correct Option

Assertion (A) states that despite a manifold increase in India's national income since 1947, there has been no marked improvement in the per capita income level. This statement is true. While the Gross National Income (GNI) has grown substantially due to economic development, the rapid growth in population, particularly in the initial decades post-independence, has significantly diluted the per capita gains. Per capita income is calculated by dividing national income by the total population.

Reason (R) states that a sizeable proportion of India's population still lives below the poverty line. This statement is also true. Despite economic progress, a significant portion of the population continues to face poverty, reflecting persistent income inequalities, unemployment, and challenges in accessing essential services and opportunities.

However, Reason (R) is not the correct explanation for Assertion (A). While poverty (R) and low per capita income (A) are interconnected socioeconomic issues, the primary factor limiting the marked improvement in per capita income despite national income growth is the high rate of population increase. The existence of a large population below the poverty line contributes to overall lower average income but does not directly explain the *disparity* between national income growth and per capita income improvement, which is more directly attributable to population dynamics.

Incorrect Options

Option 1 is incorrect because although both Assertion (A) and Reason (R) are factually true, Reason (R) does not provide the correct explanation for Assertion (A). The main reason for the limited improvement in per capita income despite national income growth is rapid population expansion.

Option 3 is incorrect because Reason (R) is a factually accurate statement regarding the prevalence of poverty in India.

Option 4 is incorrect because Assertion (A) is a factually accurate statement concerning the observed trend in India's national income versus per capita income since 1947.

SOURCEIndian Economy by Ramesh Singh, Chapter 2: National Income Accounting