The correct answer is equality between growth rate of income, growth rate of output and growth rate of natural resources. Explanation & Key Takeaways: Balanced Growth Rate • Balanced growth is a dynamic process and as such the meaning of balanced growth continues changing. • The concept of balanced growth is subject to various interpretations by various authors. It was Fredrick List who for the first time put forward the theory of balanced growth. • According to Fredrick List the theory of balanced growth is of great significance by which a balance could be established between agriculture, industry and trade. • R.F. Harrod, “Balanced Growth aims at equality between growth rate of income, growth rates of output and growth rate of natural resources i.e. • Gy = Gw = Gn • Here Gy stands for growth rate of income, Gw stands for growth rate of output and Gn stands for growth rate of natural resources. Basis of the Theory: • Supply Side: Supply or production in an underdeveloped country is low. The reason behind it is that saving in these countries is low because of low income. • Demand Side: In the underdeveloped countries, people have low purchasing power because of their low income. So, their demand is also low. Low demand results in less expansion of market. Small market inspires low. • Low Income → Low Purchasing Power → Low Investment → Low Productivity • Sectoral Balance: Sectoral balance means economic development of all the sectors in an economy. As agriculture and industry are complementary to each other. Thus, expansion of industry will require expansion of agriculture and vice-versa.