A CASE STUDY ON NATIONAL INCOME

OF INDIA

Prsented by:

Robin Varghese

Section : C

Summary of the case

Growth of Indian economy: 1975-76: 9.5% Growth 1988-89: 11% Growth 2005-06: 9.0% Growth 2006-07: 9.6% Growth 2007-08: 6.7% Growth 2010 : 8.9% Growth

National Income

« The value of goods and services produced

With in the country during a year »

Préparation of National Income in India

• Category A: Agriculture, forestry, fishing, mining and quarrying, registred manufacturing and construction.

• CategoryB: Electricity, transportation and communication, banking and insurance, real estate, pablic administration and defence.

• Category C: gas and water supply, unorganised transport, storage, trade, hotels and restaurants, other services.

QUESTION AND ANSWERS

Significant of preparing national income at constant price

Current price: price prevailing in the year.

Constant price: price prevailing at a particular base year.

NI at constant price is prepared to measure the physical output in an economy,

between deferent time periods

Deflator: ratio of nominal GDP to real GDP

“No method of national income is perfect” prove.

Limitations of deferent methods1) Product method Double counting Non applicability in service sector Exclusion of non-marketed products

2) Income method Exclusion of non monitory income Exclusion of non marketed services

3) Expenditure method Neglects barter system Ignore own consumption Affected by inflation

Put the values in the equation on the data given in statement 2

NNP = GNP – Depreciation

2004-05: 2833558 – 332491 = 2501067

2005- 06: 3225963 – 379201 = 2846762

2006-07: 3722669 – 426030 = 3296639

GNP

GNP = GDP + Net income from Abroad

• 2004-05: 2855933 + (-22375) = 2833558• 2005-06: 3250932 + (-24969) = 3225963• 2006-07: 3743472 + (-20803) = 3722669

Per capita income

PCI= NNPFC / Population

2004-05: 2,50,10,670 1,090 = 22,946

2005-06: 2,84,67,620 1,107 = 25,716

2006-07: 3,29,66,390 1,122 = 29,382