Topic: GDP
Q6. Critically analyze the limitations of using GDP as a measure of national welfare. Provide alternative indices that address these limitations. (10 M)
Difficulty Level: Easy
Reference: InisghtsIAS
Why the question
To evaluate the limitations of GDP as a welfare measure and explore alternative indices that provide a more comprehensive view of national well-being.Key demand of the question
Critically analyze why GDP fails to measure welfare effectively and suggest indices that address these shortcomings comprehensively.Structure of the Answer
Introduction
Briefly explain the role of GDP in economic measurement and its inadequacies in capturing welfare dimensions like inequality and environmental health.Body
- Limitations of GDP: Discuss its failure to address inequality, environmental concerns, social well-being, and unpaid work.
- Alternative indices: Mention indices like HDI, Green GDP, GNH, and MPI as holistic measures addressing these gaps.
Conclusion
Highlight the need for a balanced approach combining GDP with alternative measures to ensure inclusive and sustainable policymaking
