Economic Growth: UPSC Previous Year Questions (Indian Economy)

Explanation

Option (a) is incorrect: If industrial growth lags behind agriculture, job creation slows, leading to underemployment and lower productivity. However, it doesn’t hinder development un-less stagnation sets in. For instance, the Green Revolution initially saw agriculture outpace industry but still spurred economic development, improving food security and livelihoods.

Option (b) is incorrect: Slower agricultural growth can lead to food shortages and rural distress, especially in agrarian economies. However, in modern economies, a shift from agriculture to industry, like in South Korea, can drive economic development through job creation and higher incomes.

Option (c) is correct: Economic development is a broader concept than economic growth. While an increase in absolute and per capita real Gross National Product (GNP) indicates economic growth, true development includes improvements in living standards, employment opportunities, and poverty reduction. If poverty and unemployment increase despite GNP growth, it suggests that the benefits of growth are not being equitably distributed, leading to an absence of real economic development.

Option (d) is incorrect: A trade imbalance doesn’t always signal poor development. If imports rise for capital goods or technology, it can boost future growth. For example, China’s imports of advanced machinery in the 1990s aided in its economic development. However, a persistent trade deficit without export growth, like in some developing nations, can strain reserves, financial stability and thus stall economic development.