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Is GDP a true index of economic welfare of the people? Give two reasons in support of your answer.

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 (i) Composition of goods:- GDP includes all the final goods & services produced in a domestic territory of a country without considering the fact that it is harmful or useful for human beings. Economy produces all sorts of goods like cigarette, tobacco, liquor, harmful chemicals etc. Production of these goods are included in GDP, however its production does not ensure welfare 

(ii)Increasing Pollution:- GDP does not measure the adverse effects of production on environment. Industries create a lot of pollution, price of which is paid by all the living beings. 

Example: GDP is increased but it leads to environmental degradation, global warming etc. cost of which is paid in the form of increasing medical bills, laundry bills, expenditure on cooling system, water purifiers etc. 

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