Trends in National Income in India

1. Trends of National
Income
in India

2. Trends of National Income
( Percent Per annum) : The Hindu Growth rate
Period Target Actual
First Plan
(1951-56)
2.1 3.5
Second Plan
(1956-61)
4.5 4.2
Third Plan
(1961-66)
5.6 2.8
Fourth Plan
(1966-75)
5.7 3.2
Fifth Plan
(1974-79)
4.4 4.7
The target growth rate in first three plans was set with respect to National Income .In fourth
Plan it was Net Domestic Product and thereafter it has been GDP( at factor cost) Actual
Growth rates are in terms of National Income ( NNP at factor cost at 1999-200 Price )

3. Trends of National Income
( Percent Per annum) The Hindu Growth rate
Period Target Actual
Sixth Plan ((1980-85) 5.2 5.5
Seventh Plan (1985-90) 5.0 5.6
Eight Plan ( 1992-97) 5.6 6.5
Ninth Plan (1997-2002) 6.5 5.5
Tenth Plan (2002-07) 8.0 7.8
1951-1980 3.6
1981-1990 5.6
1992-2007 6.1
The target growth rate is at GDP( at factor cost) .Actual Growth rates are estimated in
terms of National Income ( NNP at factor cost at 1999-200 Price )

4. Observation
• The real national income of India has increased at an annual
average rate of 4.0 percent. During this period, population has also
increased at an average rate of 2 %. Thus, per capita income has
increased only by 2%
• The rate of growth initially decelerated over the years but has
subsequently accelerated continuously.
• Fluctuations in year-to-year growth rates in early stages were
very marked, which indicated that economy had failed to create
conditions conducive to stable economic growth.
• An examination of the annual rates of change-observed by the
three sectors of the economy, primary, secondary and the tertiary-
further shows that the annual variations are not specific to any
one sector.

5. National Product by Industry Origin
Industry Group
1.Primary of which 21.3
Agriculture 19.5
Mining and quarrying 1.8
2.Secondary of which 22.2
Manufacturing Registered 8.6
Manufacturing unregistered 4.5
3..Tertiary of which 56.4
Transport and communication and Trade of
which
28.0
Railway 1.1
Trade and Hotel 16.9
Finance and Real Estate of which 14.4
Financing and Insurance 7.3
Community and Personal Services of which 14.0
public administration and defense 5.5

6. The share of Primary sector was 75 percent in the first decade of twentieth
century came down to 21.6 percent in 2006-07
Sub sector 1970-71 price At 1980-81 price At 1999-
2000 prices
1960-61 1970-71 1981-82 1991-92 2006-07
Agriculture
and allied
54.4 47.4 36.5 29.4 19.5
Mining and
Quarrying
0.9 0.9 1.4 1.5 1.8
Primary
Sector
56.6 50.1 41.1. 33.2 21.3

7. Declining share of Agriculture Progress
of stagnation
• This decline is more because of rate of growth
has been less than other sector.
• The rate of agriculture growth has been less
than the overall growth of the economy
• Agriculture still is the single largest contributor
is GDP

8. Deceleration in
Agriculture Growth
Rate of Growth of Agriculture 1951-52 to 2006-07
Period Total
Econo
my
Agri.
and
Allied
Crops
and
live
stock
Non
agricul
ture
Pre Green
Revolution 1951-
52 to 1967-68
3.7 2.5 2.7 4.9
Green revolution
1968-69 to 1980-
81
3.5 2.4 2.7 4.4
Wider technology
Dissemination
period 181-82
to -1990-91
5.4 3.5 3.7 6.4
Early Reform
Period 1991-92
to 1996-97
5.7 3.7 3.7 6.6
1997-98 to
2006-07
6.6 2.5 2.5 7.9
Govt of India – Economic Survey 2007-08 table 7.1
1. The rate of growth of
agriculture ( 1950-51 to
2006-07) about 2.7
percent is much less
than other sectors, but
on an average higher
than the growth rate of
population 2.1percent
2. The rate of growth of
food grain production in
1990-2007 decelerated
to 1.2 percent , lower
than the growth rate of
population 1.9 percent
per annum

9. Structural Change in
Manufacturing
1. The share of registered
manufacturing over
the period of time has
grown and that of
unregistered has
declined .
2. Although the growth
rate of industrial
production has been
less than stipulated in
plan , but the industrial
growth rate of
impressive vis-à-vis
agriculture

10. Other trends in Secondary sector
• The growth of water – gas and electricity
services has been quite less.
• The share of construction has risen from 4
percent in 1950-51 to 6.2 percent and
thereafter it increased to about 7.4 percent in
the year 2005-6

11. Change in Tetriary sector
1. The tetriary sector has
registered significant
growth, as its share in GDP
has gone up from one
fourth to close to sixty
percent
2. All the groups and sub
groups of this sector have
grown substantially
3. Among transport trade
and communication the
share of trade , hotel and
restaurant has grown
from 13 percent in 1960-
61 to 16.9 percent in
2006-07. The share of
communication- IT enable
services in to the GDP has
gone up to 7 percent
(2007-08)

12. Some Implication
• Though these trends are in line with global trends, two features are
distinctive to India.s services sector. First ;
• The share of agriculture in GDP has declined by about 25 percentage
points, while industry and services gained equally.
• The share of industry has stabilized since 1990 and consequently, the
entire subsequent decline in the share of agriculture in GDP has been
picked up by the services sector.
• This trend (rising share of services in GDP and corresponding)decline in
the share of agriculture and manufacturing sector) is seen in the growth
process of high-income countries and not in general in developing
countries.