With reference to the Indian economy, consider the following statements: 1) The rate of growth of real Gross Domestic Product has steadily increased in the last decade. 2) The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.   Which of the statements given above is/are correct?

The correct answer is B, because only statement 2 is correct.

• Statement 1 is wrong. Real GDP growth did not rise steadily. It peaked at around 9 to 10 per cent in 2010-11 and then slowed sharply, falling to roughly 5 to 6 per cent by 2012-13 and 2013-14 on the 2004-05 base series. Growth is cyclical, shaped by policy paralysis, the global slowdown and inflation, so a steady rise cannot be claimed.
• Statement 2 is correct. GDP at market prices is measured in current rupee terms, which includes inflation. Because prices generally rise and the economy keeps expanding, nominal GDP rose every year over the decade.

The core concept here is the difference between nominal and real GDP. Nominal GDP is a rupee value that can rise even when real output slows, and real GDP is adjusted for price changes. This matters for Mains questions on growth versus inflation and on the 2015 shift to the 2011-12 base year, which revised the old growth figures.

Trap: aspirants see a long run of rising numbers in the GDP table and assume the growth rate rose too. Always separate the level of a series from its rate of change.