Which of the following statement related to automobile sector is not correct ?

Correct — option (1), It generated direct and indirect employment of 5.3 crore at the end of 2021.

The stem asks for the statement that is NOT correct. All four statements can be checked against paragraph 9.39 of the Union Economic Survey 2022-23, in its chapter "Industry: Steady Recovery".

Option (1) is the incorrect one. The Survey describes the sector as "generating direct and indirect employment of 3.7 crore at the end of 2021". The employment figure it gives is 3.7 crore, not 5.3 crore.

Option (2) is correct. The Survey says the sector "contributes 7.1 per cent to the overall GDP and 49 per cent to the manufacturing GDP".

Option (3) is correct. In 2021, the Survey says, India was the "world’s fourth-largest manufacturer of passenger cars".

Option (4) is correct. In 2021 India "was the largest manufacturer of two-wheeler and three-wheeler vehicles".

The idea to remember: 3.7 crore jobs (direct and indirect), 7.1 per cent of GDP and 49 per cent of manufacturing GDP, as the Survey gives them for the automobile sector.

Why the others are wrong

• (2)
  It contributes 7.1 percent to India’s GDP. — This statement is true, so it cannot be the NOT-correct one. The Economic Survey 2022-23 says the automobile sector "contributes 7.1 per cent to the overall GDP".

  The same sentence gives a second share: 49 per cent of manufacturing GDP. The 7.1 per cent figure is measured against the whole economy, the 49 per cent against manufacturing alone.

• (3)
  In 2021, India was World’s fourth largest manufacturer of passenger cars. — This statement is true. The Survey says that in 2021 India was the world’s fourth-largest manufacturer of passenger cars.

  That is a production ranking. The Survey separately reports a sales ranking: in December 2022 India became the third-largest automobile market, surpassing Japan and Germany in terms of sales.

• (4)
  In 2021, India was the largest manufacturer of two wheeler and three wheeler vehicles in the World. — This statement is true. According to the Survey, in 2021 India was the largest manufacturer of two-wheeler and three-wheeler vehicles.

  The first place applies to two- and three-wheelers. For passenger cars the Survey gives fourth place, so a statement that moves "largest" onto cars would be wrong.

An industry's weight in the economy can be measured in more than one way. Its share of GDP compares it with the whole economy; its share of manufacturing GDP compares it only with manufacturing, so for the same industry the second figure is the larger one.

An employment figure for a sector can add direct jobs (in the factories) to indirect jobs (in suppliers, dealers and services that depend on it).

Rankings also differ by what is counted. A country's rank as a manufacturer counts production; its rank as a market counts sales. The Survey reports both kinds for India's automobile sector.

Key facts

• Economic Survey 2022-23: the automobile sector generated direct and indirect employment of 3.7 crore at the end of 2021.
• The sector contributes 7.1 per cent to India's overall GDP and 49 per cent to manufacturing GDP, per the Survey.
• In 2021 India was the largest manufacturer of two-wheelers and three-wheelers and the world's fourth-largest manufacturer of passenger cars.
• In December 2022 India became the third-largest automobile market by sales, surpassing Japan and Germany, according to the Survey.
• The PLI scheme for auto and auto components has a tenure of FY23-FY27 and an outlay of ₹26,000 crore, as the Survey reports.

Common traps

• Manufacturer rank and market rank are different counts. India was the fourth-largest manufacturer of passenger cars in 2021 (production) but became the third-largest automobile market in December 2022 (sales).
• The two shares have different bases: 7.1 per cent is of overall GDP, 49 per cent is of manufacturing GDP. Putting either number against the other base makes the statement false.
• A forecast is not a current figure. The Survey says the EV industry "will create 5 crore direct and indirect jobs by 2030"; the automobile sector's employment at the end of 2021 was 3.7 crore.

UnlockIAS compared this question with questions from other RAS Prelims papers and found none similar enough to link.

• practice — not a real PYQ

  According to the Economic Survey 2022-23, the automobile sector's contribution to India's manufacturing GDP is

  • (a)7.1 per cent
  • (b)26 per cent
  • (c)49 per cent
  • (d)3.7 per cent
  Answer(3) — The Survey says the sector contributes 49 per cent to the manufacturing GDP. Option (1), 7.1 per cent, is its share of overall GDP. Option (4) borrows the employment figure, 3.7 crore, which is not a percentage. Option (2) is not the Survey's figure for this share.
• practice — not a real PYQ

  As per the Economic Survey 2022-23, in 2021 India's world rank as a manufacturer of passenger cars was

  • (a)First
  • (b)Third
  • (c)Fourth
  • (d)Sixth
  Answer(3) — The Survey calls India the world's fourth-largest manufacturer of passenger cars in 2021. Option (1) is India's rank for two- and three-wheelers. Option (2) is its rank as an automobile market by sales, reached in December 2022. Option (4) is not the Survey's rank.