Which of the following is a major problem in accurately estimating national income in India, due to the structure of its economy?

Introduction / Context:
Measuring national income is more challenging in developing economies than in highly industrialised ones. India has a large rural and informal sector where many goods and services are produced and consumed without passing through formal markets. This question asks which specific feature of the economy creates a major problem for accurately estimating national income. Understanding this helps students appreciate why national income statistics in such countries often involve approximations and adjustments.

Given Data / Assumptions:

• The focus is on difficulties faced while estimating national income in India.
• Options include non monetary consumption, tax evasion, inflation, conspicuous consumption, and high public debt.
• We are asked to identify the factor that directly affects the measurement process.
• We assume standard definitions from national income accounting in developing economies.

Concept / Approach:
Non monetary or non monetised consumption refers to goods and services that are produced and used without money transactions, such as a farmer consuming part of the crop grown on the farm or households exchanging services informally. These activities often go unrecorded because no prices or formal invoices exist. Since national income is calculated in monetary terms, unrecorded non monetary transactions make it difficult to measure the true value of production. While tax evasion, inflation, and other issues complicate economic management, non monetary consumption specifically obstructs the direct measurement of total output and income, which is why it is highlighted in textbooks as a major problem in estimating national income for India.

Step-by-Step Solution:
Step 1: Recall that national income statistics usually rely on market prices and recorded transactions. Step 2: Recognise that in India, a large proportion of agricultural output and informal services is consumed within households or exchanged without money. Step 3: Such non monetised activities are difficult to value in monetary terms because there are no explicit prices or official records. Step 4: This leads to underestimation or approximation of national income, making non monetary consumption a major measurement problem. Step 5: Compare this with other options, which may be serious issues but are less directly tied to the mechanics of measuring total output.

Verification / Alternative check:
Textbooks on Indian economy and national income accounting often list the existence of a large non monetised sector as one of the biggest obstacles to accurate national income estimation. They explain that a significant portion of rural production, home based work, and informal exchange does not pass through the market. Exam oriented notes and previous question solutions also highlight non monetary consumption as the correct choice when similar questions appear, confirming its central role in measurement difficulties.

Why Other Options Are Wrong:
Tax evasion is a serious fiscal problem that reduces government revenue but does not necessarily prevent the estimation of total production when other data sources are available.
Inflation affects the value of money over time and requires using constant prices for comparison, but standard techniques exist for adjusting national income figures for price changes.
Conspicuous consumption refers to lavish spending to display status, which may distort spending patterns but does not by itself make output harder to measure.
High public debt creates macroeconomic management challenges and interest payment burdens, yet it does not directly stop statisticians from calculating the total value of goods and services produced.

Common Pitfalls:
Students often choose tax evasion or inflation because these topics are widely discussed in news and appear serious. However, the question is specifically about problems in finding out or measuring national income, where the lack of monetary records for a large part of production is the most fundamental issue. To avoid confusion, learners should link non monetary consumption with the concept of a non monetised sector and remember that this directly weakens the data on which national income estimates are built.

Final Answer:
A major problem in accurately estimating national income in India is the presence of extensive non monetary consumption in the economy.