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Chapter: 11th 12th std standard Indian Economy Economic status Higher secondary school College

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).

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.

 

Trends in National Income

 

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.


Trends in Per Capita Income

 

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.

 

Sectoral Composition of National Income

 

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

                                GDP

                               

                               

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.

 

Sectoral Growth Rate of National Income in India (in percent)

 

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.

 

International Comparison of National Income

 

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.


International Comparison of National Income (2001)

Name of the Country    Per Capita Income in dollars )

       

High Income Countries 26,710

       

MiddleIncome Countries        1850

       

Low Income Countries 430

       

India          460



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