MPPSC 2024 Prelims Paper-I · Question 37 of 100

Correct — B. On the 2022-23 advance estimates at constant (2011-12) prices, Madhya Pradesh's per capita income was lower than the all-India per capita income. Both figures are computed on a comparable, inflation-adjusted (constant-price) basis, so the comparison is direct and MP trails the national average.

• (a)Per capita income of Madhya Pradesh is higher than that of India — Reverses the actual direction — MP's per capita income is below, not above, the national figure.
• (c)Per capita income of Madhya Pradesh is equal to that of India — The two figures are not equal; MP's per capita income sits below the national average.
• (d)Comparison is not possible — Wrong — both figures are published on the same constant-price (2011-12 base) methodology, which is exactly what makes them comparable.

Per capita income is a region's total income divided by its population. To compare a state against the nation on a like-for-like basis, both figures are computed at 'constant prices' — using a fixed base year (2011-12) to strip out the effect of inflation — rather than at 'current prices', which would exaggerate growth in high-inflation years. Advance estimates are the first, provisional figures released for a year, ahead of the final revised estimates.

MPPSC's economic-survey-based questions often ask how MP's key indicators (per capita income, growth rate) compare with the national figure for the latest available year — students sometimes assume a geographically and demographically large state must also be a high-income one, which is the trap here.

• Per capita income compares a state's Net State Domestic Product (NSDP) per person against India's Net National Income (NNI) per person.
• Constant (2011-12) prices strip out inflation, making the state-vs-national comparison meaningful across years.
• Advance estimates are the first, provisional numbers for a year, issued before the final revised estimates.
• Madhya Pradesh's per capita income has historically trailed the national average, reflecting its relatively larger population and agriculture-heavy economy compared with more industrialised/service-heavy states.

• Assuming a large, populous, resource-rich state automatically has a higher per capita income than the national average
• Confusing per capita income (an average, divided by population) with total state income/GSDP (an aggregate)

MPPSC Economic Survey questions frequently ask 'MP vs India' direction-only comparisons (per capita income, growth rate) for the latest available year — the safe approach is to know the direction the survey states, not to guess from a state's size.

• practice — not a real PYQ

  Per capita income at constant prices, rather than current prices, is used for year-on-year and state-to-state comparison mainly because it:

  • (a)removes the effect of inflation, allowing a real comparison
  • (b)reflects only the informal sector
  • (c)is simpler to calculate from tax data
  • (d)always shows a higher growth rate

  Answer(a) It removes the effect of inflation, enabling a genuine (real) comparison across years and regions.

• practice — not a real PYQ

  A state's 'per capita income' is computed as:

  • (a)Net State Domestic Product divided by the state's mid-year population
  • (b)Gross State Domestic Product divided by the state's area
  • (c)Net National Income divided by the number of districts
  • (d)The state government's total expenditure divided by its population

  Answer(a) Net State Domestic Product (NSDP) divided by the state's mid-year population.