Lovely Professional University

TERM PAPER Of MANAGERIAL ECONOMICS TOPIC: NATIONAL INCOME GROWTH AND RISE IN STANDARD OF LIVING IN DEVELOPING COUNTRIES WITH DATA

Submitted to:Mr. Sumit Goyal Ku.Tiwari Lecturer, LSM LPU 10901147

Submitted by:Pramod Roll no.- B44 Reg.No-

Sec.S1906 MBA-IT

Index1. Declaration Page no: 3 Page Page Page Page Page Page Page 2. Acknowledgement no: 4 3. Introduction no: 5 5. Objectives of the Study no: 10 6. National Income Of India no: 10 7. National Income calculation in India no: 14 8. Standard of living in India no: 17 9. National Income of China no: 19 10. National Income calculation in China Page no: 20 11. Standard of living in China 23 Page no:

12. National Income of Iran Page no: 24 13. Conclusion 25 14. Recommendations no: 26 15. Bibliography no: 28 Page no: Page Page

DECLARATIONI, Pramod Ku. Tiwari student of Lovely Professional University have completed the Project on: National Income Growth and rise in Standard of living in developing Countries with data. The information given in this project is true to the best of my knowledge.

(P RAMOD KU. TIWARI)

ACKNOWLEDGEMENTFirst of all I would like to thank the Lovely Professional University and take the opportunity to do this project as a part of the MBA-IT.

Many people have influenced the shape and content of this project, and many supported me through it. I express my sincere gratitude to Mr. Sumit Goyal for assigning me a project on Managerial Economics, which is an interesting and exhaustive subject. He has been an inspiration and role model for this topic. His guidance and active support has made it possible to complete the assignment. I would like to thank the Almighty for always helping me.

INTRODUCTION-

1)

NATIONAL INCOME:

It is defined as the aggregate factor income (earning of labour and land) which arises from the current production of goods and services by the nations economy.

IMPORTANCE OF NATIONAL INCOME:National Income is considered an important indicator of economic development of a country. There is no doubt that if national income increases over a long period of time, the economic conditions of the people improve. It is, therefore, suggested that while estimating the economic growth in a country, the level of income and the rate of increase in national income should both be taken into consideration.

TYPES OF MEASURE OF NATIONAL INCOME:Following are the measures of national Income: As the sum of all incomes, in cash and kind, according to factor of Production, in a given time period. As the sum of net output arising in several sectors of nations production. As the sum of consumers, government expenditure on goods and services and net expenditure on capital goods.

CONCEPTS OF NATIONAL INCOME:The various concepts of national income are given below;1) Gross National Product (G.N.P): This is the basic social accounting

measure of total output or aggregate supply of goods and services. Gross National Product is defined as the total market value of all final goods and services produced in a year.

2) Gross Domestic Product (G.D.P): Gross Domestic Product is the most

comprehensive measure of economic activity and a broad measure of peoples income and well-being. The growth in real GDP is hence a measure of the growth of peoples real incomes and therefore the pace of improvement in living standards.

3)

Net National Product (N.N.P): In the production of gross nationalproduct of a year, we consume or use up some capital (equipment, machinery). It is generally known as depreciation, when charges for

depreciation are deducted. When charges for depreciation are deducted from the gross national product, we get net national product.

NNP = GNP - DEPRECIATION

4)

National Income at Factor Cost: National Income at factor costmeans the sum of all incomes earned by resources suppliers for their contribution of land, labour, capital and entrepreneurial ability which go into the years net production. In other words, it shows how much it costs society in terms of economic resources to produce net product.

National Income at Factor Cost = NNP Indirect Taxes + Subsidies.

5)

Personal Income (P.I): Personal Income is the sum of all incomesactually received by all individuals or households during a given year.

Personal Income = National Income - Social Security Contribution -Corporate Income Taxes - Undistributed Corporate Profits + Transfer Payments.

6)

Disposal Income (D.I): After a good part of personal income is paidto government in the form of personal taxes like income tax, personal property tax, etc., what remains of personal income is called disposable income. Disposable Income = Personal Income Personal Taxes.

MEASUREMENT OF NATIONAL INCOME:There are three possible measures of national income:

1)

The Income Method: This method approaches national income from the

distribution side. According to this method, national income is obtained by summing up of the incomes of all individuals in the country.

2)

The Production or Output Method: This method approaches national

Income from the output side. According to this method, the economy is divided into different sectors such as agriculture, mining, manufacturing, small enterprises, commerce, transport, communication and other services. Then the gross product is found out by adding up net values of all the production that has taken place in these sectors during a given year.

3)

The Expenditure Method: We can get national income by summing up

all the consumption expenditure and investment expenditure made by all individuals as well as the government of a country during a year.

DIFFICULTIES OR PROBLEMS IN CORRECT MEASUREMENT:There are some problems which crop up when measuring national income of a country, some are as below-

1)

Problems of Definition: Ideally we should include all goods and services

produced in the course of the year; but there are some parts of the total which defy measurement. The services of housewives, for example, are not included on the ground that there is no means of assessing their market value.

2)

Calculation of Depreciation: The question of calculation of depreciation

on capital consumption presents another formidable difficulty. Unless from the gross national income correct deductions are made for depreciation, the estimate of net national income is bound to go wrong. The main problem is that both the amount and the composition of capital are changing all the time.

3)

Value of Inventories: It is not easy to calculate the value of inventories,

i.e., raw materials, semi-finished and finished goods in the custody of the producers.

4)

The Treatment of Government: Another difficulty arises with regard to

the treatment of Government in national income accounts. On this point, the

general viewpoint is that as regards the administrative functions of the government like justice, administration and defence, they should be treated as giving rise to final consumption of such services by the community as a whole, so that the contribution of general government activities will be equal to the amount of wages and salaries paid by the government.

5)

Income by Foreign Firms: Another major problem arises with regard to

the treatment of income arising out of activities of the foreign firms in a country. On this point, The IMF viewpoint is that production and income arising from an enterprise should be ascribed to the territory in which production takes place. However, profits earned by foreign branches and subsidiaries are credited to the parent concern.

THE EQUILIBRIUM LEVEL OF INCOME:When the income earned in a given period is totally spent on the goods and services produced in that specific period, national income is said to be at equilibrium level in such a case, aggregate expenditure equals aggregate income. Let, C = Consumption Expenditure I = Investment X = Value of Exports G = Government Expenditure Aggregate Expenditure (Y) = C + I + X + G The income earned is spent on: 1. 2. 3. 4. Consumption goods (C) Imports (M) The payment of taxes levied by the government (T) Savings (S)Y=C+S+T+M

Thus, national income is at equilibrium level when: C+I+X+G=C+S+T+M

Since the consumption expenditure item (C) appears on both sides of the equation, it can be cancelled out. I+X+G=S+T+M Aggregate demand is the amount domestic and foreign residents wish to spend on the national product of a country and aggregate supply is the amount of national output domestic firms wishes to produce. When national income equals aggregate demand, there is equilibrium in the economy. That is, planned expenditure by economic agents (individuals, firms and government) is equal to national income. If aggregate demand were less than national income then firms would be left with unsold goods on their hands and so would cut back production. National income would be falling over time and so would not be in equilibrium and the economy will tend to decrease and output, employment, imports and prices will decrease. In the opposite situation of aggregate demand in excess of output, firms would respond by increasing production provided that they had underutilized productive capacity. Excess aggregate demand at full employment would lead to rising prices and the economy will tend to grow and output, employment, import and prices will rise.

STANDARD OF LIVING:Standard of living is the level of consumption that an individual, group, or nation has achieved. The evaluation of a standard of living is relative, depending upon the judgment of the observer as to what constitutes a high or a low scale. A relative index to the standard of living of a certain economic group can be gathered from a comparison of the cost of living and the wage scale or personal income. Factors such as discretionary income are important, but standard of living includes not only the material articles of consumption but also the number of dependents in a family, the environment, the educational opportunities, and the amount spent for health, recreation, and social services. Unemployment, low wages, crowded living conditions, and physical calamities, such as drought, flood, or war, may bring a drop in the standard of living, and, conversely, an increase in social benefits and higher wages may bring about a rise. While standard of living may vary greatly among various groups within a country, it also varies from nation to nation, and international comparisons are sometimes made by analyzing gross national products, per capita incomes, or any number of other indicators from life expectancy to clean water. Overall, industrialized nations tend to have a higher

standard of living than developing countries. In the United States, as in most Western nations, the standard of living has shown a steady trend upward.

2)

OBJECTIVES OF THE STUDY:

i) To measure the size of the economy and level of countrys economic performance. ii) To trace the trend or speed of the economic growth in relation to previous year as well as to other countries. iii) To know the structure and composition of national income in terms of various sectors. iv) To make projection about the future development trend of the economy.

v) To assess and compare the economic progress achieved by a country over a period of time. vi) To know progress achieved by a country over a period of time.

3)

NATIONAL INCOME OF INDIA:

NATIONAL INCOME SERIES IN INDIA:After independence, a regular national accounts system was initiated in the midsixties. Indian system of national account statistics (NAS) follows the united nations (UN) system of national accounts (1968). Based on the national income committees recommendation (1954), the central statistical organization (CSO) has been making continuous efforts to improve the quality of these statistics. Shifting the base year to revise the series is one such effort. The CSO revised its national accounts series by shifting the base year to 1970-71. With improved data base and extended coverage, the CSO revised its series again by shifting the base year to 1980-81, and then to 1993-94. Recently CSO has revised its series within six year period by shifting the base to 1999-2000.

TRENDS IN NATIONAL INCOME:

As noted already, national income is a rough indicator to measure the economic growth performance of a country. The outcome of Indias development effort can be seen, to some extent, in terms of the size, growth and the composition of our national income.

The following data shows growth of national income in India (in percent) source: computed from central statistical organization. The data given below provides the trend of the GDP growth from the year 1950 to 2005. The size of the national income at constant prices has increased by about 15 percent during this period. The growth rate of national income has increased from 3.5 percent during 1950-80 to 5.6 percent during 1980- 2005.

SECTOR

1950-1980

1980-2005

GDP TOTAL

3.5

5.6

GDP PER CAPITA

1.4

3.6

TRENDS IN PER CAPITA INCOME:The size of the per capita income at constant prices has recorded only five fold increase from 1950 to 2005. The growth rate of per capita income during the same period has increased from 1.4 percent to 3.6 percent. The per capita income is not the correct indicator for the living standards of people. The actual income of the people would have deviated well above or below than that of the per capita income. Some measure of poverty and income inequality would help us to understand the actual distribution of the income growth achieved.

SECTORAL COMPOSITION OF NATIONAL INCOME:

National income is derived from many sectors. We generally classify them into three major sectors namely primary, (agriculture), secondary (manufacturing) and tertiary (services). During the initial stage of development, share of primary sector in the national income will be high. But this will decline during the course of development and share of industry will be greater. At very high level of development, the share of service sector in the national income will be more. The following data gives sect oral composition of national income (in percent) figures up to 1990-91 are based on 1993-94 series. From 2000-01 onwards, figures are based on the new series with 1999-2000 as the base year.

YEAR

PRIMARY

SECONDARY

TERTIARY

TOTAL GDP

1950-51

59

13

28

100

1980-81

42

22

36

100

2002-03

24

24

52

100

The sectoral composition of national income presented in above table confirms such general pattern but partially. The share of primary sector has declined from 59 per cent to 24 percent. However, the industrial sector has not grown to the expected level. Instead, the service sector has almost reached more than half (52 %) of our national income.

NATIONAL COMPARISON OF NATIONAL INCOME:We have compared the growth performance of India since independence to date. How has India performed with other countries of the world? Data given below provides such a comparison of per capita income with reference to some select countries. The performance of India in terms of the per capita dollars in 2001 in relation to high and middle income countries of the world is far below. With a per capita dollar of 460, India has just managed to be marginally above the average per capita income of (430) very poor countries in the world.

SECTOR

1950 - 80 2.2 5.3

1980 05 2.9 6.1

PRIMARY SECTOR SECONDARY SECTOR

TERITARY SECTOR

4.5

7.1

4)

NATIONAL INCOME CALCULATION IN INDIA:

The first attempt to calculate national income of India was made by Dada Bai Naroji in 1867-68. This was followed by several other attempts. The first scientific attempt was made by Prof. V.K. Rao in 1931-32. But it was not a satisfactory attempt. The first official attempt was made by Prof. P.C. Mahalanobis in 1948-49. The final report was submitted in 1954.Today national income is calculated and published by the Central Statistical Organization. All the three methods are used for calculating national income in India. The following table shows the gross national product and the net national product of India for the last ten years.

YEAR

GNP RS. CRORES

NNP RS. CRORES 546023 685912 803090 936548 1089563 1224946 1415044 1557781 1702454 228396

1992 - 93 93 - 94 94 - 95 95 96 96 97 97 - 98 98 - 99 99-2000 2000 -01 2001-2002

618969 769265 901111 1053736 1224208 1376943 1583110 1740207 1900310 2801350

From the analysis, it is seen that the national income of India is growing slowly because of the following reasonsi) Slow growth of agricultural sector

ii) iii) iv) v)

Defect in planning Rapid growth of population. Under-utilisation of the productive capacity of machines Poverty

Growth in national income is considered as an index of development. Try to identify various measures whereby India can increase its national income.

COUNTRIES 1997 INDIA CHINA AMERICA INDONESIA 1055.4 64.6 4812.1 7783.1

GNP (BILLION DOLLARS) 1998 928.9 63.2 4089.9 7921.3 1999 979.9 62.9 4054.5 8879.5 2000 1062.9 61.0 4519.1 9601.5

GDP OF INDIA:The Indian economy is the 12th largest in USD exchange rate terms. India is the second fastest growing economy in the world. Indias GDP has touched US$1.25 trillion. The crossing of Indian GDP over a trillion dollar mark in 2007 puts India in the elite group of 12 countries with trillion dollar economy. The tremendous growth rate has coincided with better macroeconomic stability. India has made remarkable progress in information technology, high end services and knowledge process services. However, cause for concern would be this rapid growth has not been an inclusive in nature, in the sense it has not been accompanied by a just and equitable distribution of wealth among all sections of the population. This economic growth has been location specific and sector specific. For e.g. it has not percolated to

sectors were labour is intensive (agriculture) and in states where poverty is acute (Bihar, Orissa, Madhya Pradesh and Uttar Pradesh). Though India has the second highest growth rate in the world, its rank in terms of human development index (which is broadly used has a measure of life expectancy, adult literacy and standard of living) has gone down to 128 among 177 countries in 2007 compared to 126 in 2006. Indian GDP Trend of Growth Rate 1960-1980 1980-1990 1990-2000 2000-2009 : : : : 3.5% 5.4% 4.4% 6.4%

CONTRIBUTION OF VARIOUS SECTORS IN GDP:The contributions of various sectors in the Indian GDP for 1990-1991 are as follows: Agriculture Industry Service Sector 32% 27% 41%

The contributions of various sectors in the Indian GDP for 2005-2006 are as follows: Agriculture Industry Service Sector 20% 26% 54%

The contributions of various sectors in the Indian GDP for 2007-2008 are as follows: Agriculture 17%

Industry Service Sector

29% 54%

It is great news that today the service sector is contributing more than half of the Indian GDP. It takes India one step closer to the developed economies of the world. Earlier it was agriculture which mainly contributed to the Indian GDP. India has one of the lowest external debts to national income ratios globally, according to the last round of the economic survey. China's external debt to national income ratio is lower than India. In fact, India's external debt to GNP ratio stands at 22 percent, while China stands at about 15 percent. Argentina has the highest external debt to GNP ratio of 104 percent. Others like Indonesia and Turkey have heavy external debt to GNP ratios.

5)

STANDARD OF LIVING IN INDIA:

INDIA GDP AND STANDARD OF LIVING COMPARATIVE ANALYSIS:The substantial growth in various sectors like IT, Real Estate, ITES has led to the improvement of the standard of living at a constant rate. However, the statistical figures still delineate that approximately 27.5 % of the Indian population lives below the poverty line. The most significant indicator required to measure the standard of living is in realty per capita purchasing power parity-adjusted gross domestic product. A comparative analysis of the standard of living of India with other countries will aid in the assessment of the position of India in the standard of living chart. The per capita- adjusted gross domestic product of China in the year 2003 was $4,900 and that of the majority of western European countries is $26,000 and that of the most developed country like US is $33,000. The per capitaadjusted gross domestic product of India has been calculated to be US $ 31, 00.

MEASUREMENT OF INDIA GDP AND STANDARD OF LIVING:GDP makes an assessment of India's national output by dividing the current GDP of India with the total population of the country. In the examination of overall production, GDP takes into account both the public as well as the private

consumption accompanied with the manufacture of capital goods that consequently aid in the further production of commodities.

ALTERNATIVE TO INDIA GDP AND STANDARD OF LIVING:A recent innovation in the field of India GDP and Standard of Living can be used in place of per capita GDP in order to examine India's present material well -being. Subtracting military expenditures from the total consumption in order to identify the standard of living will do this. This new measure has substantially reduced the difference in material well being of the Indian citizens when compared with that of the foreign countries.

STANDARD OF LIVING IN INDIA IS LOW BUT IMPROVING:As of 2005, 85.7% of the population lives on less than $2.50 (PPP) a day, down from 92.5% in 1981. This compares with 80.5% in Sub-Saharan Africa. 75.6% of the population lives on less than $2 a day (PPP), which is around 20 rupees or $0.5 a day in nominal terms. It was down from 86.6% and compares with 73.0% in SubSaharan Africa. A 24.3% of the population earned less than $1 (PPP, around $0.25 in nominal terms) a day in 2005, down from 42.1% in 1981.41.6% of its population is living below the new international poverty line of $1.25 (PPP) per day, down from 59.8% in 1981. The single most common indicator used to quantify standard of living is the per capita purchasing power parity (PPP) adjusted gross domestic product (GDP). In 2007, the per capita PPP-adjusted GDP for India was US$2,659. These figures can be compared to $5, 96 for neighbouring China. With one of the fastest growing economies in the world, clocked at an average growth rate of 8% between 2004-2005, India is fast on its way to becoming a large and globally important consumer economy. The Indian middle class, estimated to be 300 million people by Indian standard (but much lower by European or North American standard), is fast becoming used to Western culture.[citation needed] If current trends continue, Indian per capita purchasing power parity will grow to be approximately one third that of the developed world by the middle of the 21st century.[citation needed] In 2006, 22 percent of Indians lived under the poverty line. India aims to eradicate poverty by 2020.

The standard of living in India shows large disparity. For example, rural areas of India exist with very basic (or even non-existent) medical facilities, while cities boast of world class medical establishments.

6) NATIONAL INCOME OF CHINA:

According to a survey by the State Statistics Bureau, less than five percent of China's wealthiest hold nearly a half of the country's savings deposits worth more than 6 trillion Yuan. China's national income has risen along with its swift economic growth. The number of Chinese who enjoy a fairly well-off and even wealthy lifestyle has increased and the number of Chinese who remain in poverty has dwindled. However, in recent years a new phenomenon has risen - the income gap between rural and urban Chinese has grown wider and wider. According to the National Bureau of Statistics Urban Social Economic Survey of nearly 40,000 families nationwide, the average income per person in 1999 was 5,854 Yuan, up 7.9% from the year before. After adjusting for inflation, the actual growth was 9.3%, which is higher than the increase in China's growth national product. But as the national income has increased, the income disparity between rich and poor has also grown; the contrast between rich and poor grows starker daily. Of the 1.25 billion people polled in this survey, the top 20% in terms of highest income held 42.4% of the total wealth. In truth, the gap between China's rich and poor first began to appear ten years ago. At the time, rough estimates said that the top 10% held 40% of the banks' savings. By the mid-1990s, 20% owned 80% of the savings in banks. The government is extremely concerned over the reasons for the disparity between rich and poor and has adopted numerous policies to address the problem. For example, the current call to develop China's western region is the biggest move aimed at shrinking the affluence gap. This year, there have been ten major projects started in the West whose investments range from 1 billion to 20 billion Yuan to get instant results in terms of local production, employment and income. According to a survey by the State Statistics Bureau, less than five percent of China's wealthiest hold nearly a half of the country's savings deposits worth more than 6 trillion Yuan.

China's national income has risen along with its swift economic growth. The number of Chinese who enjoy a fairly well-off and even wealthy lifestyle has increased and the number of Chinese who remain in poverty has dwindled. However, in recent years a new phenomenon has risen - the income gap between rural and urban Chinese has grown wider and wider. According to the State Statistics Bureau, Urban Social Economic Survey of nearly 40,000 families nationwide, the average income per person in 1999 was 5,854 Yuan, up 7.9% from the year before. After adjusting for inflation, the actual growth was 9.3%, which is higher than the increase in China's growth national product. But as the national income has increased, the income disparity between rich and poor has also grown; the contrast between rich and poor grows starker daily. Of the 1.25 billion people polled in this survey, the top 20% in terms of highest income held 42.4% of the total wealth. In truth, the gap between China's rich and poor first began to appear ten years ago. At the time, rough estimates said that the top 10% held 40% of the banks' savings. By the mid-1990s, 20% owned 80% of the savings in banks. The Chinese government is relying on its policies to close the income disparity. For example, it is considering taxing the upper, middle and lower classes differently. The upper class would be taxed more while the lower class would. Experts have criticized the government's previous policies to distribute everything evenly. But the recent trend in income disparity isn't a good thing either. As a socialist country in its primary phase, China should strive for the goal of having all Chinese grow rich together.

7)

NATIONAL INCOME CALCULATION OF CHINA:

How China's GDP rose and fell from 1952 to 2009 1953 Hyperinflation conquered; civil war and land reform ended: GDP up 15.6% in real terms. 1958-59 So-called "Great Leap Forward" devastated agriculture: result was falling GDP in 1960-62. (Figures for 1958-59 highly suspect, as the statistical network was largely destroyed in the "Leap", when absurdly high increases in output were reported by frightened local officials.)

1963-66 Partial restoration of market economy in the countryside promoted faster growth of agriculture. 1967-68 Production undermined by the so-called "Great Proletarian Cultural Revolution", that was initiated by Mao in mid-1966 and effectively ended by People's Liberation Army intervention in 1968 1969-70 High growth rates followed the restoration of order after the "cultural revolution". 1976 Widespread earthquakes, including the worst ever at Tangshan, hit industrial centres, while agricultural output was hit by drought; policy paralysis resulted from the anti-Deng campaign, followed by Mao's death and the arrest of the Gang of Four. GDP fell. 1978-1982 Smashing the communes and restoring family farming jacked up agricultural (especially grain) output. 1983-85 Double-digit real GDP growth accompanied the first wave of foreign investment into China, and non-state enterprises started to develop. 1989-91 Growth slowed after the government broke the overheating

economy following an aborted effort at wholesale price reform in 1988 which resulted in panic buying and runaway inflation. Price stability was achieved by cancelling large fixed investment projects, slowing domestic demand. Foreign investment fell off after the Beijing Massacre of June 198. 1992 Deng Xiaoping's Southern Tour at the beginning of the year massively boosted foreign direct investment inflows into coastal areas and started a wave of government investment in Shanghai. Record trade and GDP growth and inflation followed.

1993 Zhu Rongji appointed to rein in the overheating economy, this time more selectively than in 1989-91. Growth rates subsided gradually in subsequent years, producing a so-called "soft landing". During the 1990s, living standards continued to rise, as evidenced by the proliferation of consumer durables, especially among the urban population. Continuing FDI inflows helped boost foreign exchange reserves to record heights in the late 1990s. Despite efforts to cool the overheating economy, the officially recorded GDP growth rate was 11.4% in 2007. In 2008 the global economic crisis began to reduce China's growth rate. In the face of forecasts that this might drop below the rate at which school leavers can be absorbed by the growing economy (7%-8%) the government decided to pump RMB 4 trillion into the economy in the form of an economic stimulus package consisting largely of investment in fixed infrastructure and human capital. In 2009 China's GDP growth rate, though lower than the double-digit average of recent years, has held up well, rising from 6.1% year-on-year in the first quarter to 7.7% in the first three quarters of the year. This means that year-on-year GDP growth was around 9% in the second quarter. A similar rate of growth (9%) is expected in the final quarter, ensuring a rate of over 8% for 2009 as a whole.

China's Gross Domestic Product (GDP) in 2009 Absolute Value Growth Rate over the Gross Domestic Product Primary Industry Secondary Industry Tertiary Industry 33,535.3 3,547.7 15,695.8 14,291.8 (CNY billion yuan ) Same Period Last Year (%) 8.7 4.2 9.5 8.9

8)

STANDARD OF LIVING IN CHINA:

Before 1949 the Chinese economy was characterized by widespread poverty, extreme income inequalities, and endemic insecurity of livelihood. By means of centralized economic planning, the People's Republic was able to redistribute national income so as to provide the entire population with at least the minimal necessities of life (except during the "three bad years" of 1959, 1960, and 1961) and to consistently allocate a relatively high proportion of national income to productive investment. Equally important to the quality of life were the results of mass public-health and sanitation campaigns, which rid the country of most of the conditions that had bred epidemics and lingering disease in the past. The most concrete evidence of improved living standards was that average national life expectancy more than doubled, rising from around thirty-two years in 1949 to sixty-nine years in 1985. In 1987 the standard of living in China was much lower than in the

industrialized countries, but nearly all Chinese people had adequate food, clothing, and housing. In addition, there was a positive trend toward rapid improvements in living conditions in the 1980s as a result of the economic reforms, though improvements in the standard of living beyond the basic level came slowly. After thirty years of austerity and marginal sufficiency, Chinese consumers suddenly were able to buy more than enough to eat from a growing variety of food items. Stylish clothing, modern furniture, and a wide array of electrical appliances also became part of the normal expectations of ordinary Chinese families. Signs that Chinas economic recovery is gaining speed have led to a flurry of optimistic revisions to GDP growth forecasts in the past week. First the World Bank upped its estimate for Chinese economic growth to 7.2% as against its March forecast of only 6.5% growth for this year. A few days later, the OECD weighed in with a prediction of 7.7%, versus a 6.3% figure three months ago. Credit Suisse is calling for 8% growth this year and 9% in 2010. [And for our many readers, who come blogs on China for Indian content, Credit Suisse is calling for 6.2% and 7.4% growth of the Indian economy in 2009 and 2010.So the living standard of China is improving in a faster rate.

9)

NATIONAL INCOME OF IRAN:

The National Income. Iran is a large country (over 600,000 square miles), sparsely populated (about 18 to 20 millions), predominantly agricultural, and sadly lacking in statistics. Any estimate of its national income is bound to be hardly more than a reasonable guess. The latest such guess appears in the U.N. Statistical Year Book for 1952, which puts the figure at about $1,800,000,000 annually during recent years. Experts will affirm that the figure is more likely to be an under- than an overestimate.

How oil industry contribute to the national income Growth:123There are the cash revenues which accrue directly to the government. The wages and salaries earned by Iranians in the industry. The goods and services purchased by the in-dustry in Iran.

Even at the peak of its operation, the industry employed fewer than 100,000, mostly unskilled labor. Assuming an average income for these workers of $500 a year (an optimistic guess, about six times greater than the national average), this amounts to $50,000,000. The industry's purchases in Iran are limited, for its technical equipment, and the nontechnical goods and services for its non-Iranian employees, are purchased abroad. If we put the figure at $20,000,000 a year we are probably overesti-mating. Let us recapitulate. Oil royalties at their peak amounted to $30,000,000; wages and salaries, $50,000,000; goods and services, $20,000,000. The oil industry's total contri-bution amounted to $100,000,000 -- or about 6 per cent of the annual national income of $1,800,000,000. Employment. Iran's male labor force can be estimated at 5,000,000 persons. The oil in-dustry never employed more than 100,000,000, or about 2 per cent. Oil Industry's Role. To the vast majority of the people of Iran the oil industry simply does not exist. They get nothing from it directly or indirectly. At least 85 per cent of the people live on a primitive agriculture, 20 per cent still lead a nomadic tribal existence. It has yet to be proven that the oil industry has raised the abysmally low standard of living of these Iranian masses by any substantial amount.

GDP OF IRAN: Year 2007 2005 2000 GROTH RATE OF GDP: Year 2007 2005 2000 (% p.a.) 5.8 4.5 2.8 (million current US$) 289933 192020 102930

10) CONCLUSION:From the above discussion, we may easily conclude that national income plays an integral role in the development of an economy. It is the important measure of standard of living of the people of a count Continuous increase in production can be considered as an index of progress that an economy has achieved. This increase in production will naturally promote the growth of National Income. Indias Economy has grown by more than 9% for three years running, and has seen a decade of 7% positive growth. The growth rate of the service sector was 11.18% in 2007 and now contributes 53% of GDP.

The industrial sector grew 10.63% in the same period And is now 29% of GDP. Agriculture is 17% of the Indian economy. The growth rate of the manufacturing sector rose steadily from 8.98% in 2005, to 12% in 2006. The storage and communication sector also registered a significant growth rate of 16.64% in the same year. The percentage of gross capital formation in GDP is concerned, there has been a significant rise from 22.8% In the fiscal year 2001, to 35.9% in the fiscal year 2006.

11)

RECOMMENDATIONS:

It needs legal reform to focus sharply on the interests of the public, and not those of the public servant, in the functioning of the governmental . All forms of special protection for persons working for Government or public sector Agencies (except for armed forces or agencies engaged in maintenance of law and order) deserve to be eliminated. Government should be free to engage the services of non-governmental organizations or private service providers at competitive costs to ensure effective delivery of essential services. Freedom of information and full disclosure of all financial decisions made by Governments and its multifarious agencies on a daily rather than quarterly or annual basis.

12)

LIMITATIONS OF THE STUDY:

The report has been prepared on the basis of secondary data. The report and my findings are subjected to the following limitations: The information collected from the different sources may not be up to the mark. There may be more areas which are unexposed in this study, but may cover the national income of the country.

13) BIBLIOGRAPHY:

1. www.indiastat.com

2. www.flipkart.com/national-income-india.../01956505063. http://dqw3fn8dnd.487/trh

4. www.worldbank.org /Data

5. www.economywatch.com 6. www.china-embassy.org7. http://business.mapsofindia.com 8. http://www.Economictimes.com 9. http://www.Businesstimes.com