(a) Do you think that India experienced a major break in GDP growth and its sectoral composition during the 1980s? Give reasons…

(a) Was there a break in the 1980s? Partly. GDP growth rose from about 3.5 per cent a year in 1950–80 to about 5.6 per cent in the 1980s. DeLong, and Rodrik and Subramanian, argue for a break around 1980 caused by a pro-business tilt of policy; Wallack and Virmani also date a break near 1979–81. Others, such as Nayyar, and Balakrishnan and Parameswaran, see a gradual continuation of the upturn of the 1970s and recovery after droughts. Reasons for the acceleration: (i) a pro-business shift from 1980, with easier industrial licensing, broad-banding, a higher MRTP threshold, tax cuts in 1985 and easier imports of capital goods and technology; (ii) expansionary public investment and fiscal deficits, financed increasingly by borrowing, which later fed the 1991 crisis; (iii) the spread of the Green Revolution to the east and south, lifting agricultural growth to about 4 per cent; (iv) faster services growth. Sectoral composition changed moderately: agriculture's share in GDP fell from about 38 to about 31 per cent and services rose above 40 per cent, while industry stayed at about a quarter; employment remained heavily agricultural. The 1980s thus brought a clear acceleration with modest structural change, but it was debt-financed, so the sharper regime break came after 1991.

(b) Demand-side factors in national income. With spare capacity and sticky prices, aggregate demand determines output: AD = C + I + G + (X − M). In India, private consumption is the largest component, roughly 55 to 60 per cent of GDP, and the most stable; government consumption, about a tenth of GDP, acts as a counter-cyclical floor. Investment, around 30 per cent of GDP, is the most volatile and drives the cycle: GFCF peaked at about 34 per cent in 2007–08 and then slowed with credit stress, low capacity utilisation and policy uncertainty. Net exports are negative in goods, but services exports and remittances cushion demand. Shocks show the role of demand: the 2020–21 contraction of about 6 per cent came from the collapse of consumption and investment, and the recovery depended on public capital expenditure and on private demand. Multipliers work through consumption and investment, with a high marginal propensity to consume among low-income households. Supply constraints matter too, but demand fixes output in the short run, and sustained growth needs investment-led capacity expansion.

(c) Non-income dimensions of poverty. Yes; they should complement income. The income lines, the Tendulkar and Rangarajan poverty lines, measure purchasing power but miss deprivation of capabilities (Sen). Households above the line may lack sanitation, clean fuel, schooling, health or nutrition, and income can poorly reflect access to public services. The Alkire–Foster multidimensional poverty index (MPI) applies a dual cut-off to indicators across health, education and living standards; India's national MPI, published by NITI Aayog, uses 12 indicators (nutrition, child mortality, maternal health, years of schooling, attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets, bank accounts). Its baseline using NFHS-4 (2015–16) put 25.01 per cent of people as multidimensionally poor, falling to 14.96 per cent in NFHS-5 (2019–21). The picture differs across states: Kerala has very low MPI, Bihar the highest. Limits: weights and thresholds are arbitrary, data are infrequent, and the MPI cannot identify households for cash transfers, where income or consumption cut-offs are still needed. Hence income lines remain essential, and the MPI complements them for guiding service delivery.