“The conceptual difficulties in National Income comparisons between underdeveloped and industrialised countries are particularly serious because a part of the national output in various underdeveloped countries is produced without passing through the commercial channels.”

In the above statement, the author implies that:

Correct Answer: The existence of a non-commercialized sector in different underdeveloped countries renders the national income comparisons over countries difficult.

Explanation:

The provided statement highlights that national income comparisons between underdeveloped and industrialized countries face severe conceptual difficulties. The reason given is that a portion of the national output in underdeveloped countries is produced and consumed without entering commercial channels (i.e., it is part of a non-commercialized or subsistence sector).

When output does not pass through commercial channels (market transactions), it is not recorded in monetary terms. This makes it extremely challenging to accurately measure, value, and compare the total economic output or national income of underdeveloped countries against industrialized countries, where most output is commercialized and systematically recorded. Therefore, the author is implying that the presence of this non-commercialized sector is the key factor that makes cross-country national income comparisons difficult.