National Income and Per Capita

Income Estimates In India

1) Introduction of National income accounting
2) National Income trends in Planning Period
3) PCI trends in Planning period

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What is NI?

 National income of India constitutes total amount of income earned by the

whole nation of our country and originated both within and outside its territory
during a particular year.
 The National Income Committee in its first report wrote, “A national income
estimate measures the volume of commodities and services turned out during a
given period, without duplication.”
 The national income is not a stock but a flow.
 In India, the estimation of national income is being done by two methods, i.e.,
product method and income method.

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 Pre-Independence period estimates
 The estimate of National Income in India was, for the first time, prepared by Dada Bhai Naoroji
for the year 1867-68.
 Many others also attempted to estimate the NI and PCI
 These were individual efforts which lacked thorough statistical and scientific methods.

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 Post Independence estimates
 After independence, the Government of India appointed the National Income Committee in
August, 1949 with Prof. PC. Mahalnobis as its Chairman and Prof. D.R. Gadgil and Dr. V.K.R.V.
Rao as its two members
 In its first report, the total national income of the year 1948-49 was estimated at Rs. 8,830 crore
and the per capita income of the year was calculated at Rs. 265 per annum.
 Later the task of estimation of GDP was transferred to the Central Statistics Office (CSO) and a
fully developed NI division under CSO was created at the national level. Since 1955, the NI
estimates were compiled by CSO based on the national level survey conducted by National
Sample Survey Office (NSSO).
 CSO is based in Delhi with some of its divisions of Industrial Statistical Work located in Calcutta.
The CSO was first instituted on 2 May 1951 as a part of the cabinet secretary with the name
Central Statistical Institute.

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  It is headed by the Secretary of the Ministry of Statistics and Program Implementation.
  The current base year for GDP calculations on constant prices is 2011-12. 
 This base year has historically been revised 6 times in the past
 The new base year was proposed to be 2017-18.
 The base year of the national accounts is chosen to enable inter-year comparisons. It gives an idea
about changes in purchasing power and allows calculation of inflation-adjusted growth estimates
 In 2015, the Central Statistics Office (CSO) did away with GDP at factor cost and adopted the
international practice of GDP at market price and the Gross Value Addition (GVA) measure to
better estimate economic activity.

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 National Income Trends
 Trends are seen in the following way:
a) Trend throughout planning period
b) Trend in 80’s
c) Trend post liberalisation
d) Summary of trends

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Vaidehi Dhamankar 19/07/2023
  The growth rate was uneven till the 5th plan
 The performance of the first plan was good and sustained throughout the plan period despite modest
target.
 The second plan raised the targets which could not be achieved due to not so good monsoon.
 exogenous reasons such as
The performance in third and fourth plan was distressing due to
droughts, the Indo- Pak war, and the oil shocks in 1973.
 The growth rate has improved well after the 4th plan and surpassed
the 5 percent rate
 From the tenth plan period a major part of the growth was
accounted for by the service sector and manufacturing sector
 In the 10th plan, the manufacturing sector accounted to a sharp rise
from 303 percent to 8.6 percent
 The 11th plan had a target of 9 percent which was not met.
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 Trend’s in 80’s
 In the 6th Plan the performance was fairly well. This was on account of good agricultural
performance but not a very stable manufacturing growth.
 In the seventh plan almost all sectors registered an improvement with specific contribution of
service sectors.
 This decade was observed to be the one of economic recovery and buoyancy. This was largely
due to the following factors:
 Increased govt expenditure giving the fiscal stimulus
 Liberalisation of imports of capital goods
 Increased reliance of state on external commercial borrowing

Vaidehi Dhamankar 19/07/2023