True, same Gotra means people belong to blood relation. And this type of marriages are not allowed in our society.

There is a famous theory behind the Gotra system.

Humans have 23 pairs of Chromosomes and in each pair one Chromosome comes from the father and the other comes from the mother. So, there are 46 Chromosomes in every cell. Of these 23 pairs, there is one pair called the Sex Chromosomes which decide the gender of the person. If the resultant cell has XX sex chromosomes then the child will be a girl and if it is XY then the child will be a boy.

In the south marriage between cousins ( brother and sisters children) is very common  and preferred because of various reasons. In some communities marrying mother's brother is also the norm and is very much in practice ..

Marrying mother's brother ( Mena Mama) is prevalent in AP too. This is done to keep the property within the family. But this trend is gradually disappearing in urban regions, Though it's there in rural affluent families.

Marriage between blood relation is not good for healthy offsprings. The Ghotra system is in Hindus only but the underlying priciple is just that there should not be marriages between blood relation. 

usha manohar wrote:

In the south marriage between cousins ( brother and sisters children) is very common  and preferred because of various reasons. In some communities marrying mother's brother is also the norm and is very much in practice ..

In North these type of marriages are not allowed. If couple have same Gotra, then may be they have no family relation, are considered as brother and sister and not allowed to marry.

In reality marriage between close relations increases the chances of produceing genetically deficient children. Scientifically these should be avoided.

Marriages within the relative circles lead to the birth of deformed children. But this practice is prevalent in villages. The intention is to keep the wealth and lands within the family.

Does the Law of Diminishing Returns not apply to marriage between relations

Definitely Law of diminishing returns apply to marriages made within the relations. The level of profits or benefits gained in the marriages within the family are less than  the profits as believed by certain section of the society