Explain the structure of National Income in India.
Answers
the structure of national income in india:
Meaning of National Income:
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 estimates of national income depict a clear picture about the standard of living of the community. The national income statistics diagnose the economic ills of the country and at the same time suggest remedies. The rate of savings and investment in an economy also depends on the national income of the country.
Moreover, the national income measures the flow of all commodities and services produced in an economy.
Thus the national income is not a stock but a flow. It measures the total productive power of the community during given period. Further, the National Income Committee has rightly observed, “National income statistics enable an overall view to be taken of the whole economy and of the relative positions and inter-relations among its various parts”.
Thus the computation of national income and its analysis has been considered an important exercise on economic literature.
A. Estimates of National Income during Pre-Independence Period:
During the British period, several estimates of national income were made by Dadabhai Naoroji (1868), Willium Digby (1899), Findlay Shirras (1911, 1922 and 1934), Shah and Khambatta (1921), V.K.R.V. Rao (1925-29) and R.C. Desai (1931-40).
Among all these pre-independence estimates of national income in India, the estimates of Naoroji, Findlay Shirras and Shaw and Khambatta have computed the value of the output raised by the agricultural sector and then added some portion of the income earned by the non-agricultural sector. But these estimates were having no scientific basis of its own.
After that Dr. V.K.R.V. Rao applied a combination of census of output and census of income methods. While dividing the whole economy into two separate categories he included agriculture, pastures, forests, fishing, hunting and mines in the first category and applied output method to derive the value of output of these sectors.
The other activities like industry, trade, transport, administrative and public services, professions, liberal arts and domestic services were included in second category and applied income method to derive the amount of income raised from all these services.
He also added income from house property and other internal incomes along-with the total income earned from abroad to these two sub-totals mentioned above. Just to derive the net aggregate income he excluded those values of goods and services which we consumed in the process of production.