National Income Measurement in India

National income Measurement 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 economy of India is a developing mixed economy. It is the world’s sixth-largest economy by nominal GDP and the third-largest by purchasing power parity.After 1991 economic liberalization, India achieved 6-7% average GDP growth annually. In FY 2015 and 2017 India’s economy became the world’s fastest growing major economy surpassing China.

The Central Statistical Organization (CSO),Depart,of statistics,ministry of planning,publishes national income statistics on a regular basis. The CSO is entrusted with the task of estimating national income of India on yearly basis.

The methodology followed by the CSO to measure the domestic product in India is described in its “National Accounts Statistics: Sources and Methods”. In India it is not possible to estimate the national income by each of the three methods. The paucity and unreliability of data poses serious problems. For example,in India agriculture is not possible to use income method because reliable income data are not available. In the house hold enterprises it is not possible to estimate income generated and final expenditure. As such,different methods are used for different sectors. However,both value added method and income method are being used to cross-check the results.

Value Added method is used to estimate the domestic product in the following commodity producing sectors;

i. Agriculture and allied activities; ii. Forestry and logging; iii. Fishing; iv. Mining and quarrying; v. Registered manufacturing.

Income method is employed to estimate domestic product in the following sectors; i. Unregistered manufacturing; ii. Gas,electricity and water supply; iii. Banking and Insurance; iv. Transport,communication and storage; v. Real estate, Ownership of dwelling and business services; vi. Trade,hotels and restaurants; vii. Public administration and defence; viii. Other services.

In the construction sector,estimates are based on a combination of commodity output and expenditure approaches.

The CSO has divided the economy into primary,secondary and tertiary sectors for estimating National income.