Economics · National Income Accounting
If India's real GDP growth in a specific year is reported at 6.8%, but per capita NNP at factor cost grows only by 4.2%, what could be the most plausible economic reason for this divergence?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A systematic reduction in public investment increased the fiscal surplus and automatically lowered factor cost calculations.
- 2The divergence is statistically flawed and mathematically impossible under standard national income accounting.
- 3An increase in exports and foreign direct investment (FDI) inflows artificially suppressed the Gross National Product.
- 4Rapid depreciation of physical capital and population growth reduced per capita net income despite healthy GDP growth.✓
Correct answer
Rapid depreciation of physical capital and population growth reduced per capita net income despite healthy GDP growth.
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