Economy Basics: National Income, Growth, Planning and Employment

National income concepts

• GDP is the value of all final goods and services produced within the country in a year.
• GNP / GNI = GDP + net factor income from abroad.
• NDP = GDP − depreciation.
• GVA at basic prices = output − intermediate consumption. GDP = GVA + product taxes − product subsidies.
• Nominal vs real: real GDP is at constant prices. The GDP deflator = nominal ÷ real × 100.
• Methods: production (value added), income and expenditure (C + I + G + X − M).
• Base year:
  • The CSO (now the NSO under MoSPI) moved to 2011–12 in 2015.
  • A new series with base year 2022–23 was released in 2026.
• Per capita income = national income ÷ population. Bihar has the lowest per capita income among states, about one-third of the national average.

Growth and development

• Growth is a rise in output (GDP). Development includes health, education, equity and freedom (Amartya Sen's capability approach, Development as Freedom).
• HDI (UNDP, since 1990) combines:
  • life expectancy;
  • education (mean and expected years of schooling);
  • GNI per capita (PPP).
  • India is in the "medium human development" group, ranked around 130 of 193 (HDR 2025).
• Other indices:
  • the Gender Inequality Index;
  • the Multidimensional Poverty Index (OPHI and UNDP, and NITI's national MPI);
  • the Global Hunger Index;
  • the Happiness Report;
  • NITI Aayog's SDG India Index.
• Inclusive growth was the theme of the 11th Plan (2007–12): growth that reduces poverty and inequality and reaches lagging regions, social groups and women. The 12th Plan (2012–17) aimed for "faster, more inclusive and sustainable growth".

Sectors and structure

• Primary sector: agriculture and allied activities, mining. About 16–18% of GVA, but about 45% of jobs (PLFS).
• Secondary sector: manufacturing, construction and utilities. About 25–28% of GVA. Manufacturing is about 14–17%, so the "Make in India" target of 25% has not been met.
• Tertiary sector: services, about 55% of GVA.
• India's development pattern has been called a "service-led" path that skipped a manufacturing phase. That is why job creation is weak.
• Informal sector: about 90% of workers are informal. The e-Shram portal registers unorganised workers.

Planning in India

Plan	Years	Focus / model
First	1951–56	Agriculture, irrigation; Harrod–Domar
Second	1956–61	Heavy industry; Mahalanobis
Third	1961–66	Self-reliance; failed (wars, drought) → Plan holiday 1966–69
Fourth	1969–74	Growth with stability; Garibi Hatao
Fifth	1974–79	Poverty removal; ended early → Rolling Plans 1978–80
Sixth	1980–85	Poverty, IRDP
Seventh	1985–90	Food, work, productivity
Annual plans	1990–92
Eighth	1992–97	First plan after liberalisation; indicative planning
Ninth	1997–2002	Growth with social justice
Tenth	2002–07	Monitorable targets
Eleventh	2007–12	Faster and more inclusive growth
Twelfth	2012–17	Faster, more inclusive, sustainable growth; the last plan

• The Planning Commission (1950) was set up by an executive resolution. The National Development Council (1952) approved plans.
• NITI Aayog (1 January 2015) replaced the Planning Commission:
  • it is a think tank, with no power to allocate funds;
  • it promotes cooperative and competitive federalism;
  • the Aspirational Districts Programme (2018) and the Aspirational Blocks Programme (2023). Many of the 112 aspirational districts are in Bihar and Jharkhand;
  • a 15-year vision and Viksit Bharat @2047.

Employment and unemployment

• Types of unemployment:
  • disguised (agriculture);
  • seasonal;
  • structural (a skills mismatch);
  • frictional (between jobs);
  • cyclical (recession);
  • educated unemployment.
• How it is measured (PLFS):
  • Usual Status (principal + subsidiary), using a 365-day reference period;
  • Current Weekly Status (CWS), using a 7-day reference period;
  • Current Daily Status.
• Key terms:
  • LFPR = the share of people working or seeking work;
  • WPR = the share of people working;
  • unemployment rate = unemployed ÷ labour force.
• Recent data: the PLFS unemployment rate (usual status, 15+ years) is about 3.2% (2023–24). Youth unemployment and underemployment are much higher.
• Programmes:
  • MGNREGA (2005) gave 100 days of wage work per rural household. In December 2025 Parliament passed the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act (VB-G RAM G) to replace it with a 125-day guarantee. Check how far it has been rolled out before your exam.
  • PMEGP, Skill India, PMKVY, Mudra loans, Start-up India.
  • The Employment Linked Incentive scheme (Budget 2024–25).
• Labour codes: four codes replace 29 laws: wages, industrial relations, social security and occupational safety. They came into force on 21 November 2025.

Exam tip: Prelims mixes up "GDP vs GVA", "nominal vs real" and "CWS vs usual status". Mains wants the link from growth to jobs to inclusion. Use PLFS and MPI data and state examples: Bihar's low per capita income and migration, and Jharkhand's mineral wealth alongside poverty.