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The limitation of GDP in this area prevents it from measuring the economic welfare people get. What are the alternatives to GDP to overcome the limitations it poses?

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

5. The limitation of GDP in this area prevents it from measuring the economic welfare people get. What are the alternatives to GDP to overcome the limitations it poses? (250 words)

Difficulty level: Moderate

Reference: Insights on India

Why the question:

The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2023 Secure timetable.

Key Demand of the question:

To write about the limitations to GDP and alternatives to it.

Structure of the answer:

Introduction: 

Begin by defining GDP

Body:

First, write about the limitations of GDP as macroeconomic indicator – doesn’t capture: welfare, Environmental Abuses, Increases in Product Quality, Non-Market Production and Underground Economy.

Next, write about the alternatives to GDP to overcome the above limitations – Gross National Income (GNI), Green Gross Domestic Product (GGDP) etc.

Conclusion:

Conclude by summarising.