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CA Foundation · Business Economics · Indian Economy

In India's national income accounting, the share of the services sector in Gross Value Added has risen over time. Which of the following is the most appropriate inference from this trend?

The right inference is that services now contribute more to GVA than agriculture or industry individually, while agriculture still employs a relatively large share of workers. Output share and employment share diverge. The other options exaggerate by claiming agriculture or industry has vanished, or wrongly tie growth to falling prices.

  1. AThe economy has moved towards a structure where services contribute more than agriculture and industry individually, while employment share of agriculture remains relatively highCorrect
  2. BAgriculture has ceased to employ any significant section of the workforce
  3. CIndustry has completely disappeared from the Indian economy
  4. DServices growth has been caused only by a fall in the price level

Explanation

India's GVA is dominated by services, which exceed agriculture and industry individually, yet agriculture still employs a large share of the workforce, so output share and employment share diverge. Options B and C overstate the position, and D confuses real growth with price changes.

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