National Income of India

UNIT-I

National Income Estimates

A national income estimates measures the volume of commodities and services turned out during a given period, counted without duplication.

First report of National Income committee, April 1951.

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Pre-Independence Period Estimates:

In

Dadabhai Naoroji (1868) William Digby (1899) Findlay Shirras (1911). V.K.R.V. Rao (1931-32) Ministry of Commerce (1945-46)

British period:

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Pre-Independence of National Income in India Estimated by Year National Income (Rs. Crore) 370 390 1,942 1,689 6,234 Per capita Income (Rs.) 20 17 80 62 198

Dadabhai Naoroji William Digby Findlay Shirras V.K.R.V. Rao Ministry of Commerce

1868 1899 1911 1931-32 1945-46

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Growth rate of per capita income by J.R.Hicks, M. Mukherjee and S.K.Ghosh for the period 1860-1945 at 1970-71 prices is as under:
Per capita income during 1860-1945 = 0.5 % per annum

Time Period
1860-1885 1885-1905 1905-1925 1925-1950

Rate of Growth
1.1 -0.3 1.3 -0.1

Stagnation during 1860-1945 or in the British period

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Post-Independence Period Estimates

Estimates of National Income Committee; under the chairmanship of Prof. P.C. Mahalanobis. Prof. Gadgil and Dr. V.K.V.R. Rao were the members In August 1949 First report 1951 final report 1954 Main features of National Income Committee report are as under; During 1950-51, agriculture and allied sector contributed half of the national income. Industrial sector contributed 1/6 of the total national income
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 Service sector also contributed 1/6 of the total

Contd.

national income. Other services like professions, arts and administrative services contributed 15% of national income. The share of government sector in net domestic product was 7.6% in 1950-51. The margin or error in the calculation of national income estimates worked out at about 10%.
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National income Estimates by C.S.O (Central Statistical Organization) : between 1952-1967

Conventional

Series: at 1948-49 prices as

base year

It divided the economy into 13 sectors. Income from six sectors: agriculture,

animal husbandry, forestry, fishery, mining and factory establishments is calculated by Output method Other seven sectors : small enterprises. Banking and insurance, commerce, transport, professionals and arts are computed by income method.
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Difficulties of measuring national income of India

Non - Monetised Sector Lack of Distinct Differential of Economic Function Incomplete Statistics Difficulties in availability of statistics Inter-regional Differences

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Trends in National income Growth and Structure : Annual growth rates during the plan at 1993-94 prices plan First Plan(1951-56) Second Plan (1956-61) Third Plan (1961-66) Annual Plans (1966-69) Fourth plan (1969-74) Fifth plan (1974-79) Annual Plan (1979-80) Sixth Plan (1980-85) NNP at factor cost 3.6 4.1 2.5 3.8 3.3 5.0 -6.0 5.4
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plan Seventh Plan (1985-90) Annual Plan (1990-91) Annual Plan (1991-92) Eighth plan (1992-97) Ninth Plan (1997-2002) Tenth Plan (2002-2007) Eleventh Plan

NNP at factor cost 5.8 5.4 0.5 6.7 7.0 7.6 9.0

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Overall trends can be observed:

The real national income of India has increased at an annual average rate of 4.5 percent. During this period, population has also increased at an annual average rate of 1.6 percent. Per capita income has increased only at a nominal annual average rate of 2.5 percent. The rate of growth initially decelerated over the years but has then accelerated continuously. 1950 3.8 %, 1960 3.5, 1970 3.1 and 1980 5.5

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Economic slowdown
The

growth process slowed down during 2008-09 due to global economic crisis. As a result there is fall in IIP and GDP, especially in the private sector.

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