Reviewing AP Inter 2nd Year Economics Study Material Chapter 4 India as Developing Economy Global View Questions and Answers can help students prepare confidently for exams.
AP Inter 2nd Year Economics 4th Lesson India as Developing Economy Global View Questions and Answers
Very Short Answer Questions
Question 1.
State the World Bank classification of the countries.
Answer:
World Bank classification of the countries based on Gross National Income (GNI) per capita.
- Low-income countries
- Lower-middle-income countries
- Upper-middle-income countries
- High-income countries
Question 2.
State the Drain Theory.
Answer:
- The Drain Theory was proposed by Dadabhai Naoroji.
- It states that wealth was continuously transferred from India to Britain during British rule without adequate return. This drain of wealth led to poverty and underdevelopment in India.
Question 3.
What is Demographic dividend?
Answer:
- Demographic dividend refers to the economic growth potential arising from a higher proportion of working-age population (15-64 years) in the total population.
- This leads to increased productivity and economic development.
Question 4.
Explain the term Gross Value Added.
Answer:
- Gross Value Added (GVA) is an economic measure used to assess the sectoral contribution to an economy.
- It is calculated by subtracting net taxes on products from GDP at market prices, which gives GVA at basic prices.
Question 5.
How do you describe India as an exporting economy? Give illustration.
Answer:
- India is a leading exporter globally. It is ranking 9th in merchandise exports and accounting for about 2.61% of the world’s total exports, as per the World Trade Organization.
- India has a strong position in global exports. It is the largest exporter of rice, while IT and software services are major export earners, and it is also a leading exporter in the pharmaceutical sector.
Question 6.
How can you say that poverty declined in India?
Answer:
- Poverty in India has declined significantly. The percentage of people below the poverty line has reduced overtime from 57.1 % in 1951 to 37.2 % in 2004-05.
- Further sharp decline in recent years according to NITI Aayog and World Bank estimates.
Short Answer Questions
Question 1.
Describe Indian economy during British rule.
Answer:
Indian Economy during British Rule: The Indian economy was stagnant, exploitative, and underdeveloped during British rule (1757 – 1947).
- Ruin of Agriculture: Agriculture declined due to exploitative land systems and forced commercialisation, leading to frequent droughts and poverty.
- Ruin of Handicrafts: Handicraft industries were ruined as they could not compete with machine- made British goods, causing unemployment.
- Raw Material Exports: India became a colonial export economy, supplying raw materials and importing finished goods.
- Slow Industrialisation: Industrialisation was slow and weak with little support from the British government.
- Drain Theory: The Drain Theory explained the continuous transfer of wealth to Britain.
- As a result, India faced low growth, high poverty, and economic backwardness at independence.
Question 2.
Explain income and wealth inequalities in India.
Answer:
Income and Wealth Inequalities in India
Despite a significant decline in poverty, income and wealth inequalities prevailed in India.
- Income Inequality: According to NITI Aayog estimates (in 2022-23), the top 10% earn about 57% of national income, while the bottom 50% receive only 13%. It shows a wide income gap.
- Wealth Inequality: Oxfam reported that the richest 1% own over 40% of the country’s wealth, whereas the bottom 50% hold only 3%. It indicates extreme concentration of assets.
- Unequal Growth in Wealth: A large share of newly generated wealth goes to the rich; 73% of new wealth went to the top 1 %, while only 1 % reached the bottom half.
- Consumption Inequality: Although consumption inequality is comparatively lower it does not reflect the true extent of income and wealth disparities, which remain high.
Question 3.
Explain Viksit Bharat 2047 vision.
Answer:
Viksit Bharat 2047 Vision: The Viksit Bharat 2047 vision is a strategic roadmap to transform India into a developed nation by 2047, marking 100 years of independence.
- Economic Goais: The vision aims to achieve a GDP of $ 30 – 40 trillion and raise per capita income to $15,000-18,000.
- Social Goals: Zero poverty, inclusive development, financial empowerment, and quality education and healthcare for all.
- Environmental Goals: Net-zero carbon emissions and sustainable growth.
- GYAN Framework: It focuses on four key sections of society – Garib (poor), Yuva (youth), Annadata (farmers), and Nari Shakti (women) – to ensure inclusive development.
- Six Strategic Pillars: The plan emphasizes manufacturing, knowledge systems, global trade, green energy, tourism, and global development as key drivers of growth.
- Overall Aim: The vision seeks to create a prosperous, inclusive, and environmentally sustainable India with strong global presence.
Question 4.
Describe the four phases of India’s economic growth between 1951 and 2020.
Answer:
Four Phases of India’s Economic Growth (1951-2020) India’s economic growth since 1951 can be divided into four phases based on national income and per capita income growth:
1. Phase 1 (1951 to 1980) – Hindu Rate of Growth: Economic growth was slow, with national income growing at 3.6% and per capita income at 1.4%, leading to only modest improvements in living standards.
2. Phase 2 (1980 to 2000) – Acceleration and Reform: Growth accelerated, with national income rising at 5.7% and per capita income at 3.5%, supported by policy changes and economic reforms after 1991.
3. Phase 3 (2000 to 2017)- Rapid Growth Path: The economy achieved high growth (around 7%), with faster increases in per capita income (5.4%) and strong development in infrastructure, industry, and services, making India one of the fastest-growing economies.
4. Phase 4 (2017 to 2020) – Slight Slowdown and Structural Focus: Growth slowed slightly but remained positive, with national income growth at 5.9% and per capita income at 4.5%, with emphasis on structural reforms, digital economy, and sustainable development.
Question 5.
Mention the important features of Climate change performance index.
Answer:
- Climate Change Performance Index (CCPI): It is used to evaluate and compare the climate protection performance of countries.
- CCPI evaluates climate performance based on Global Greenhouse Gas (GHGs) emissions, renewable energy use, and climate policy, which are the core areas of assessment.
- Broad Coverage: The index covers 63 countries and the European Union, making it a comprehensive global assessment of climate efforts.
- Unique Ranking Structure: A distinctive feature is that the first three ranks are not awarded, as no country is considered to be performing adequately in all categories to prevent dangerous climate change.
- Top Performers and India’s Position: In the latest rankings, Denmark is placed 4th, while India ranks 10th with a score of 67.99, reflecting its performance in climate action.
- Responsible Organizations: The index is published jointly by Germanwatch, New Climate Institute, and Climate Action Network International.
Question 6.
Describe India’s current global economic position.
Answer:
India’s Current Global Economic Position India’s current global economic position shows its emergence as a major economic power, though it still faces developmental challenges.
1) Major Global Economy: India is the fourth-largest economy in the world with a nominal GDP of about $4.19 trillion (2025), reflecting strong economic growth.
2) Income and Demographic Strength: It is classified as a lower-middle-income country by the World Bank, with a GNI per capita of about $2650, and is the most populous country, providing a large market and demographic dividend.
3) Strong Global Trade and Sectoral Position: India ranks 9th in merchandise exports (2.61% of world exports) and has become a hub for IT services, pharmaceuticals, and skilled professionals, along with being a leading agricultural producer.
4) Global Integration and Rankings: Since 1991 reforms, India is highly integrated into the global economy, with trade forming about 45% of GDP, and holds positions such as 10th in CCPI, 39th in Global Innovation Index, and 41st in World Competitiveness Index.
5) Despite these strengths, India faces challenges like income inequality, unemployment, and low HDI ranking, and aims to improve further through the Viksit Bharat 2047vision.
Long Answer Questions
Question 1.
Justify India being called a developing economy with reference to the progress achieved.
Answer:
India as a Developing Economy with Reference to Progress:
India is categorized as a developing economy because it has transformed from a stagnant and underdeveloped economy after British rule into a rapidly growing major economy, though it is still classified as a lower-middle income country by the World Bank.
1) Robust Economic Growth: India has achieved remarkable growth, with GNP increasing 59 times since 1950-51 and per capita income rising about 9 times. This indicates improvement in income levels and living standards, supported by a rise in domestic savings (from 9.4% to 30.2% of GDP), which provides capital for investment and development.
2) Structural Transformation: There has been a major shift in the structure of the economy. The share of agriculture declined from 53.1 % to about 14.4%, while the services sector increased to around 54.9%, becoming the main driver of growth. Industries have also diversified into sectors like automobiles, chemicals, and pharmaceuticals, showing modernization.
3) Significant Poverty Reduction: India has made substantial progress in reducing poverty. The multidimensional poverty rate declined from 55.34% to 14.96%, and people living below the international poverty line also reduced significantly. This reflects better access to income, education, and basic services.
4) Improved Demographic and Social Indicators: Indicators of human development have improved considerably. Life expectancy increased from 37 years to over 72 years, while fertility and infant mortality rates declined sharply. Literacy levels have risen, and infrastructure such as roads and foreign exchange reserves have expanded, improving overall quality of life.
5) Global Integration and Trade: India has become more integrated with the global economy, shifting from exporting raw materials to becoming a global hub for IT services and pharmaceuticals. Its trade-to-GDP ratio has increased, and it ranks among the top exporters in the world.
6) Although India has achieved significant progress in economic growth, social development, and global integration, challenges like income inequality, unemployment, and lower per capita income persist. Hence, it is still considered a developing economy progressing towards developed status.
Question 2.
Describe the trends in the growth rates of India’s national income.
Answer:
Trends in the Growth Rates of India’s National Income
1) Pre-Independence Stagnation (1860-1947): During British rule, the economy was characterized by long-term stagnation. The average per capita income growth was only 0.5%, while between 1900-01 and 1946-47, GDP grew at just 0.9% and per capita income at 0.1%, indicating negligible improvement in living standards.
2) Phase 1 (1951 to 1980) – “Hindu Rate of Growth”: In the early post-independence period, growth remained slow, with national income increasing at 3.6% and per capita income at 1.4%, resulting in modest improvement in living conditions.
3) Phase 2 (1980 to 2000) – Acceleration and Reform:
Growth accelerated to 5.7%, and per capita income rose to 3.5%, supported by policy changes and especially the economic reforms of 1991, which boosted efficiency and openness.
4) Phase 3 (2000 to 2017) – Rapid Growth Path:
The economy entered a high growth phase (7.1 %), with per capita income rising at 5.4%. India emerged as one of the fastest-growing economies, driven by expansion in infrastructure, industry, and services.
5) Phase 4 (2017 to 2020) – Slight Slowdown:
Growth slowed to 5.9%, with a decline from 6.9% to 4.2%, reflecting structural challenges and global factors, though growth remained positive.
6) COVID-19 Impact (2020-21):
The pandemic caused a sharp contraction, with GNI falling by -6.2% and per capita income by -8.9%, indicating a severe but temporary economic shock.
7) Recovery and Stabilisation (2021-2025):
The economy showed strong resilience with a V-shaped recovery, with growth rising to 9.9% in 2021-22, followed by stable growth of around 7%-7.6%, and 6.5% (2024-25 estimate).
8) Overall Trend: These trends indicate a shift from slow and stagnant growth to faster, more stable, and globally integrated growth, making India a resilient and emerging major economy.
Question 3.
Discuss the trends in sectoral distribution of India’s national income.
Answer:
The trends in the sectoral distribution of India’s national income, primarily measured through Gross Value Added (GVA) at basic prices, reflect a significant structural transformation from an agrarian economy to a service-led one.
To understand these trends, the economy of India is divided into three primary sectors:
- Agriculture and Allied Sector: Includes crops, livestock, forestry, logging, fishing, and aquaculture.
- Industrial Sector: Covers manufacturing, mining, quarrying, electricity, gas, water, other utilities, and construction.
- Services Sector: Encompasses trade, hotels, transport, communication, financial services, real estate, professional services, public administration, and defense.
Historical Sectoral shift (1950-51 to 2024-25):
The following table highlights the changes in the share of each sector in the total GVA at constant prices:
| Year | Agriculture (%) | Industry (%) | Services (%) |
| 1950-51 | 53.1 | 16.6 | 30.3 |
| 1990-91 | 29.6 | 27.7 | 42.7 |
| 2019-20 | 14.8 | 29.6 | 55.6 |
| 2024-25(PE) | 14.4 | 30.7 | 54.9 |
1) Declining Predominance of Agriculture: At independence, agriculture was the dominant sector, contributing over 53% of GVA, but its share has steadily declined to about 14.4% by 2024-25 as the economy developed. However, nearly 45% of the workforce still depends on agriculture, indicating a dualistic economic structure with low productivity in the sector.
2) Steady Expansion of the Industrial Sector: The industrial sector grew from 16.6% in 1950- SI to 24% by 1970-71 due to emphasis on heavy industries in early Five-Year Plans. Though growth was slower later, its share increased to about 30.7% by 2024-25, with diversification from simple handicrafts to modern industries like automobiles, pharmaceuticals, and chemicals.
3) Rapid Growth of the Services Sector: The services sector has shown the most significant growth, overtaking agriculture and industry to become the dominant contributor to national income. Its share increased from 30.3% in 1950-51 to about 54.9% in 2024-25, making it as important today as agriculture was at the time of independence.
Conclusion: The data shows a clear shift where the non-agricultural sectors (industry and services) contribute about 85.2% of total GVA, indicating strong structural change. India has emerged as a global leader in IT and software services, which are major export earners and key drivers of growth. This transition from an agrarian to a service-led economy highlights India’s progress as a rapidly developing nation.
Multiple Choice Questions
Question 1.
India is categorised as
1) Undeveloped economy
2) Developed economy
3) Developing economy
4) Developing high income economy
Answer:
3) Developing economy
Question 2.
Period of the rule by East India company in India
1) 1557 – 1658
2) 1658 – 1757
3) 1757 – 1858
4) 1858 – 1947
Answer:
3) 1757 – 1858
Question 3.
Drain theory was propounded by
1) B.G. Tilak
2) Dadabhai Naoroji
3) Palme Dutt
4) Daniel Thorner
Answer:
2) Dadabhai Naoroji
Question 4.
Percentage of poor rural people in 1951
1) 59.3 %
2) 46.5 %
3) 57.1 %
4) 52.5 %
Answer:
1) 59.3 %
Question 5.
Total fertility rate as per UNFPA 2025
1) 1.7
2) 1.8
3) 2.0
4) 1.9
Answer:
4) 1.9
Question 6.
Who emphasized the importance of capital formation to break vicious circles of poverty?
1) Samuelson
2) RagnarNurkes
3) Simon Kuznets
4) AmartyaSen
Answer:
2) RagnarNurkes
Question 7.
GER target for higher education to be achieved by 2035 as per NEP 2020
1) 30 %
2) 40 %
3) 50 %
4) 55 %
Answer:
3) 50 %
Question 8.
The letter ‘A’ in GYAN refers to
1) Agriculture
2) Allied Sectors
3) Animal Husbandry
4) Annadata
Answer:
4) Annadata
Question 9.
According to international poverty line of $3 per day, India’s poverty ratio 2022-23
1) 2.3 %
2) 5.3 %
3) 6.7 %
4) 8.2 %
Answer:
2) 5.3 %
Question 10.
India’s HDI value in the HDI2023 as per HDR, 2025
1) 0.685
2) 0.665
3) 0.865
4) 0.586
Answer:
1) 0.685
Fill in the Blanks
Question 1.
The World Bank classifies the countries based on Gross National Income _____________.
Answer:
Per capita
Question 2.
The Indian industry that was first hurt by industrialization in England was _____________.
Answer:
Textiles
Question 3.
India is the _____________ largest economy in the world in 2025.
Answer:
4th
Question 4.
India’s real GDP grew at _____________ percent per year from 1900-01 to 1946-47.
Answer:
0.9
Question 5.
The services sector accounted for _____________ percent of the GVA in 2023-24 as per the advance estimates.
Answer:
54.9
One Word Answers
Question 1.
How do you describe coexistence of modern and traditional agriculture in economy?
Answer:
Dualistic economy
Question 2.
Which state has the second-highest GDP growth rate in 2024-25 at 2011-12 constant prices?
Answer:
Andhra Pradesh
Question 3.
Which Mission digitises India’s manuscript heritage?
Answer:
Gyan Bharatam Mission
Question 4.
What was the average growth rate of the Indian economy from 1951 -52 to 1979-802
Answer:
3.6 %
Question 5.
What is the economic goal of Viksit Bharat 2047 Vision in terms of GDP?
Answer:
$ 30 – 40 trillion