Indian Economy- National Income Accounting

TABLE OF CONTENT

1. Meaning and concept of economics and economy

2. History of National Income in India
3. Circular flow of income
4. Meaning and concept of National Income (NI)
5. Important terms under National Income
6. Important Variants of National Income
7. Other Variants of National Income
8. Various estimates of National Income
9. Methods of calculating National Income
10. Precautions while calculating National Income
11. New method of national income accounting
12. National Income and Economic Welfare
13. Green GDP
14. Social Accounting
15. Role of measuring national income
16. Limitations in the measurement of National Income
17. Factors affecting national Income
 Meaning and Concept of Economics

What is
Economics?
Resources in an Economy- Limited Wants & Needs- Unlimited
 Distribution of Limited Resources

Why? How?

To maximise satisfaction and Demand – Supply relationship

Needs
Price – Demand relationship
Demand - price relationship

Supply – price relationship

Price – Supply relationship
 E c o n o m i c s a t I n d i v i d u a l L ev e l Vs C o u n t r y L ev e l

Basis Micro Economics Macro Economics

Meaning The branch of economics that
studies the behaviour of an
individual consumer, firm, family
is known as microeconomics.
Scope It covers various issues like
demand, supply, product pricing,
factor pricing, production,
consumption, economic welfare
et cetera.
Importanc It is helpful in determining prices
e of a product along with the
prices of factors of production
(land, labour, capital,
entrepreneur et cetera) within
the economy.
The branch of economics that
studies the behaviour of the
whole economy (both national
and international) is known as
macroeconomics.
It covers various issues like
national income, general price
level, distribution, employment,
money etc.
Maintain stability in the general
price level and resolve the major
macro problems of the
economy such as inflation,
unemployment etc as a whole.
 Ty p e s o f E c o n o m i e s

Market Non Market Economy Mixed Economy

Economy
Prices Prices determined by the Prices largely determined by
determined by Government market. Government can intervene
market forces for social Welfare

Production production determined by the Production largely determined by

determined by government market. Government can intervene
Market Forces for social Welfare

Unrestricted Government decides allocation Government functions along with

Competition of resources and prices the private sector for enhancing
competition in the market and
regulate price, production
Sectors Of Indian Economy
Sectors Of Indian Economy
 History of National Income in India

Britain imported agri

• First Estimate of National Income in 1867-68 products
• Drain of Wealth Theory-
• Book- Poverty and Un-British rule in India Britain exported
Export manufactured goods
earnings are
• Collect Taxes from Indians. Use this money to used to pay
buy goods from India and export to Britain. British
Free Export subjects
• Home charges- Expenses of British Officers
were charged from Indians. These salaries,
pensions etc were then sent to Britain
• Triangular Foreign Trade
• Drain of wealth-
• European inv. In infrastructure projects in
India. Interest income
• Home charges India Exports agri
• Imports of agri from india and exports of products to china
manufactured products to India
 History of National Income in India

• First scientific method to compute National Income was used by Dr

V.K.R.V. Rao in 1931-32. In doing so, he divided the Indian economy
into two parts:
• Primary sector which included agriculture, forest, fishing and
hunting, and
• Secondary sector which included industries, construction,
transport, public services and business.
 Po s t I n d e p e n d e n c e

• P C Mahalanobis- National Income Committee (1949)

• CSO created for estimating GDP
• NI Estimates created by CSO based on survey of NSSO
• 2019- NSSO and CSO merged to form NSO under MoSPI