National Income Series in India
After independence, a regular national accounts system was initiated in the mid-sixties. Indian system of national account statistics (NAS) follows the United Nation's (UN) system of national accounts (1968). Based on the National Income Committee's recommendation (1954), the Central Statistical Organisation (CSO)has been making continuous efforts to improve the quality of these statistics. Shifting the base year to revise the series is one such effort.
The CSO revised its national accounts series by shifting the base year to 1970-71. With improved data base and extended coverage, the CSO revised its series again by shifting the base year to 1980-81, and then to 1993-94. Recently CSO has revised its series within six year period by shifting the base to 1999-2000.
As noted already, national income is a rough indicator to measure the economic growth performance of a country. The outcome of India's development effort can be seen, to some extent, in terms of the size, growth and the composition of our national income.
Growth of National Income in India ( in percent)
Sector 1950-1980 1980-2005
GDP Total 3.5 5.6
GDP Per capita 1.4 3.6
Source: Computed from Central Statistical Organisation.
Table 4.1 provides the trend of the GDP growth from the year 1950 to 2005. The size of the national income at constant prices has increased by about 15 percent during this period. The growth rate of national income has increased from 3.5 percent during 1950-80 to 5.6 percent during 1980-2005.
Table 4.1 also gives the trend of per capita income. The size of the per capita income at constant prices has recorded only five fold increase from 1950 to 2005. The growth rate of per capita income during the same period has increased from 1.4 percent to 3.6 percent. The per capita income is not the correct indicator for the living standards of people. The actual income of the people would have deviated well above or below than that of the per capita income. Some measure of poverty and income inequality would help us to understand the actual distribution of the income growth achieved.
National income is derived from many sectors. We generally classify them into three major sectors namely primary, (agriculture), secondary (manufacturing) and tertiary (services). During the initial stage of development, share of primary sector in the national income will be high. But this will decline during the course of development and share of industry will be greater. At very high level of development, the share of service sector in the national income will be more.
Sectoral Composition of National Income (in percent)
Year Primary Secondary Tertiary Total
1950-51 59 13 28 100
1980-81 42 22 36 100
2002-03 24 24 52 100
Source: Central Statistical Organisation.
Note : Figures upto 1990-91 are based on 1993-94 series. From 2000-01 onwards, figures are based on the new series with 1999-2000 as the base year.
Sector 1950 - 80 1980 - 05
Primary Sector 2.2 2.9
SecondarySector 5.3 6.1
Teritary Sector 4.5 7.1
Source: Central Statistical Organisation
The sectoral composition of national income presented in Table 4.2 confirms such general pattern but partially. The share of primary sector has declined from 59 per cent to 24 percent. However, the industrial sector has not grown to the expected level. Instead, the service sector has almost reached more than half (52 %) of our national income. The growth rates of these three sectors presented in Table 4.3 also show similar trend.
We have compared the growth performance of India since independence to date. How has India performed with other countries of the world? Table 4.4 provides such a comparison of per capita income with reference to some select countries. The performance of India in terms of the per capita dollars in 2001 in relation to high and middle income countries of the world is far below. With a per capita dollar of 460, India has just managed to be marginally above the average per capita income of (430) very poor countries in the world.
Name of the Country Per Capita Income in dollars )
High Income Countries 26,710
MiddleIncome Countries 1850
Low Income Countries 430
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