Trends of National Income in India since 1951. According to five year plan.

2. Contents
 National Income
 Methodology of National Income Estimation in India
 Five Year Plans
 Niti Aayog
 National Income:2018
 Causes for Slow Growth of National Income in India
 Suggestions to Raise the Level and Growth Rate of National Income in India
 References

3. National Income
National Income refers to the money
value of all the goods and services
produced in a country during a financial
year. In other words, the final outcome of
all the economic activities of the nation
during a period of one year, valued in
terms of money is called as a National
income.

4.  In the above definition, the economic activities include
all the human activities that produce goods and services
that can be valued at market price. Such as production
by farmers, production by firms in different industrial
sectors, production of goods and services by government,
services produced by business intermediaries Viz.
Wholesalers and retailers, banks and other financial
institutions, educational institutes and professionals like
doctors, teachers, lawyers, etc.
 Also, there are non-economic activities that include the
production of goods and services but do not have any
market value. Such as hobbies, services of housewives,
service to self, an exchange of mutual service between
neighbors, etc.

5. Methodology of National Income
Estimation in India:
 In India, the estimation of national income is
being done by two methods, i.e., product method
and income method.

6.  Net Product Method:
 While estimating the gross domestic product of the country, the
contribution to GDP from various sectors like agriculture, livestock,
fishery, forestry and logging, mining and quarrying is estimated with
the adoption of product method.
 In this method, it is important to estimate the gross value of product,
bi-products and ancillary activities and then steps are taken to deduct
the value of inputs, raw materials and services from such gross value.
 In respect of other sub-sectors like animal husbandry, fishery, forestry,
mining and factory establishments, the gross value of their output is
obtained by multiplying the estimated output with their market price.
From such gross value of output, deductions are made for cost of
materials used and depreciation charges so as to obtain net value
added in each sector.
 In respect of secondary activities, the computation of gross domestic
product is done by the production approach only for the
manufacturing industrial units (both registered and unregistered). In
respect of constructions activity, the estimates of the value of pucca
construction is made by the commodity flow approach and that of the
kachcha construction is made by the expenditure method.

7.  Net Income Method:
 In India, the income from rest of the sectors, i.e., small enterprises,
commerce, transport and communications, banking and insurance professions,
liberal arts, domestic activities, house property, public authorities and rest of
the world is estimated by the income method.
 Here, the income approach is adopted to estimate the value added from these
aforesaid remaining sectors. Here, the process involves the measurement of
aggregate factor incomes in the shape of compensation of employees (wages
and salaries) and operating surpluses in the form of rent, interest, profits and
dividends.
 In order to measure the contribution of small enterprises, it is essential to
make an estimation of total number of workers employed in different
occupations under small enterprises through sample surveys and also to
estimate the per capita average earnings of such workers.
 After multiplying the total number of such workers employed by their average
earning, the contribution of small enterprises to national product is estimated.
In order to obtain the contribution of banking and insurance sector, necessary
information are collected from their balance sheets so as to add the wages,
salaries, directors’ fees and dividends.

8.  In order to derive the contributions of transport and communication,
trade and commerce, professions and liberal arts, the same procedure
as adopted by the small enterprises is followed. Regarding the
contribution of the public sector, the amounts related to wages,
salaries, pensions, other benefits, dividend or surpluses etc. are all
added up to derive the same.
 Again the contribution of house property to the national income is
obtained by estimating the imputed value of net rental of all houses
situated both in urban and rural areas.
 Finally, by adding up the contribution of all different sectors to
national income of the country, it is necessary to obtain net domestic
product at factor cost. In order to derive the net national income at
current prices, it is necessary to add the net income from abroad and
net indirect taxes with the net domestic product at factor cost.
 This same estimate is then deflated at the prices of the base year
selected to derive a series of national income at constant prices.

9. Five Year Plans

10. First Plan (1951-56):
 During the First Plan period, the national income
at constant (1980-81) prices has increased from
Rs. 41,443 crore in 1951-52 to Rs. 48,288 crore in
1955-56 showing an annual average, growth rate
of 3.6 per cent. Again the per capita income at
1980-81 prices has also increased from Rs. 1,135.4
in 1951-52 to Rs. 1,228.7 in 1955-56 showing an
average growth rate of only 1.7 per cent during
the same plan period.

11. Second Plan (1956-61):
 During the Second Plan period, the national
income at constant (1980- 81) prices has
increased from Rs. 50,955 in 1956-57 to Rs.
58,602 crore in 1960-61 showing an annual
average growth rate of 3.9 per cent during the
plan period. Moreover, the per capita income at
1980- 81 prices has also reached the level from
Rs. 1,270.7 in 1956-57 to Rs. 1,285.8 in 1960-61
showing an annual average growth rate of 1.9 per
cent during the plan period.

12. Third Plan (1961-66):
 During the Third Plan, the net national product at
constant (1980-81) prices has increased from Rs.
60,168 crore in 1961-62 to Rs. 65,734 crore in
1965-66 showing an annual average growth rate of
only 2.3 per cent during the plan period. Again,
the per capita income at 1980-81 prices has also
increased insignificantly from Rs. 1,355.1 in 1961-
62 to Rs. 1,355.3 in 1965-66 showing an annual
average growth rate of only 0.1 per cent during
the plan period.

13. Fourth Plan (1969-74):
 During the Fourth Plan, the national income at
constant (1980-81) prices has increased from Rs.
78,177 crore in 1969-70 to Rs. 86,010 crore in
1973-74 which revealed the annual average
growth rate of only 3.3 per cent during the plan
period.
 Again the per capita income at 1980-81 prices has
also increased marginally from Rs. 1,478 in 1969-
70 to Rs. 1,483 in 1973-74 showing an annual
average growth of only 0.9 per cent during the
same period.

14. Fifth Plan (1974-78):
 During the Fifth Plan period, the net national
product at constant (1980- 81) prices has
increased from Rs. 87,116 crore in 1974-75 to Rs.
1,03,670 crore in 1977-78 showing an annual
average growth rate 4.9 per cent during the plan
period. Again the per capita income at 1980-81
prices has also increased from Rs. 1,469 in 1974-
75 to Rs. 1,635 in 1977-78 showing an annual
average growth rate of 2.6 per cent during the
plan period.

15. Sixth Plan (1980-85):
 During the Sixth Plan period, the net national
product at constant (1980- 81) prices has
increased from Rs. 1,10,685 crore in 1980-81 to
Rs. 1,33,808 crore in 1984-85 showing an annual
average growth rate of 5.4 per cent during the
plan period.
 Similarly, the per capita income at 1980-81 prices
has also increased from Rs. 1,630 in 1980-81 to
Rs. 1,811 in 1984-85 showing an annual average
growth of 3.2 per cent during the plan period.

16. Seventh Plan (1985-90):
 During the Seventh Plan period, the national
income of India at constant (1980-81) prices has
increased from Rs. 1,39,025 crore in 1985-86 to
Rs. 1,77,315 crore in 1989-90 showing an annual
average growth rate of 5.8 per cent during the
plan period. Again the per capita income at 1980-
81 prices has also increased from Rs. 1,841 in
1985-86 to Rs. 2,157 in 1989-90 showing an annual
average growth rate of 3.6 per cent during the
plan period.

17. Eighth Plan (1992-97):
 During the Eighth Plan period, the national
income at constant (1980- 81) prices has
increased considerably from Rs. 1,95,602 crore in
1992-93 to Rs. 2,58,465 crore in 1996-97 showing
an annual average growth of 6.8 per cent during
the plan period.
 Again the per capita income at 1980-81 prices,
has also increased from Rs. 2,243 in 1992-93 to
Rs. 2,761 in 1996-97 showing an annual average
growth rate of 4.9 per cent during the plan
period.

18. Ninth Plan (1997-2002):
 The Ninth Plan which has started from 1st April,
1997 continued till 31st March, 2002. The draft of
the Ninth Plan approved by the National
Development Council (NDC) on 19th February,
1999 has projected a GDP growth rate of 6.5 per
cent during the plan period. But the achievement
is estimated at 5.5 per cent during the plan
period.

19.  During the Ninth Plan period, the national income
at constant prices (1993-94) has increased
considerably from Rs. 8,90,890 crore in 1997-98 to
Rs. 11,15,157 crore in 2001-02, showing an annual
average growth rate of 5.5 per cent during the
plan period. Again the per capita income at 1993-
94 prices has also increased from Rs. 9,243.6 in
1997-98 to Rs. 10,753.7 in 2001-02, showing an
annual average growth rate of 3.6 per cent during
the plan period.

20. Tenth Plan (2002-2007):
 The Tenth Plan which started in 1st April. 2002
continued till 31st March, 2007. The draft of the
Tenth Plan approved by NDC on 1st September, 2001
has set a target of achieving growth rate of 8.0 per
cent in GDP during the plan period.
 During the Tenth Plan period, the national income at
constant prices (1999-2000) has increased
considerably from Rs. 18,05,830 crore in 2002-03 to
Rs. 25,30,494 crore in 2006-07, showing the annual
growth rate of 3.9 per cent in the first year (2002-03)
and 9.7 per cent in 2006-07.

21. Eleventh Plan (2007-2012):
 The Eleventh plan which started in 1st April, 2007 and
continue till 31st March 2012. The draft of the
Eleventh Plan approved by NDC on 9th December,
2006 has set a target of achieving growth rate of 9.0
per cent of GDP during the plan period.
 During the Eleventh Plan period, the national income
at constant prices (2004-05) has increased from Rs.
3,449,970 crore in 2007-08 to Rs. 3,672,192 crore in
2008-09 (Q), showing the annual growth of rate of 6.4
per cent.

23. Twelfth Plan (2012-2017):
 This plan was started from 1st april 2012 and
continued till 31st march 2017.
 The growth rate was showcased as 8.2% but the
National Development Council (NDC) approved 8%
growth for the period.
2012-
2013
2013-
2014
2014-
2015
2015-
2016
2016-
2017
2017-
2018
National
Income
88.41
lakh cr
100.56
lakh cr
106.57
Lakh cr
113.81
lakh cr
121.65
lakh cr
129.85
lakh cr

24. Niti Aayog
 The NITI Aayog (Hindi for Policy Commission), also National Institution for
Transforming India, is a policy think tank of the Government of India,
established with the aim to achieve Sustainable Development Goals and to
enhance cooperative federalism by fostering the involvement of State
Governments of India in the economic policy-making process using a bottom-
up approach. Its initiatives include "15 year road map", "7-year vision,
strategy and action plan",
2012-13 2013-14 2014-15 2015-16
GDP at market
prices
5.6 6.6 7.2 7.6

25. National Income:2017-2018
 India's per capita income grew at a pace of 8.6 per cent to Rs
1,12,835 during the last fiscal ended March 2018, official data
showed.
The per capita net national income in 2016-17 stood at Rs 1,03,870,
witnessing a growth of over 10.3 per cent from the preceding fiscal
ended March 2016 (at Rs 94,130).
"The per capita income at current prices during 2017-18 is estimated
to have attained a level of Rs 1,12,835 as compared to the estimates
for the year 2016-17 of Rs 1,03,870, showing a rise of 8.6 per cent,"
showed the provisional estimates of annual income, 2017-18 released
by the Ministry of Statistics and Programme Implementation (MOSPI).

26. National Income Trend line
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
NNP @ current price
NNP @ current price
From: CSO
* All figures in crore

28. The following are some of the important
causes of slow growth of national income in
India:
 1. High Growth Rate of Population:
 Rate of growth of population being an important determinant of
economic growth, is also responsible for slow growth of national income
in India. Whatever increase in national income has been taking place, all
these are eaten away by the growing population. Thus high rate of growth
of population in India is retarding the growth process and is responsible
for slow growth of national income in India.
 2. Excessive Dependence on Agriculture:
 Indian economy is characterized by too much dependence on agriculture
and thus it is primary producing. The major share of national income that
is usually coming from the agriculture, which is contributing nearly 34 per
cent of the total national income and engaged about 66 per cent of the
total working population of the country.

29.  Such excessive dependence on agriculture prevents quick rise in the level of
national income as well as per capita income as the agriculture is not
organized on commercial basis rather it is accepted as way of life.
 Excessive dependence on agriculture and low land-man ratio, inferior soils,
poor ratio of capital equipment, problems of land holding and tenures,
tenancy rights etc. are also responsible for slow growth of agricultural
productivity which, in turn, is also responsible for slow growth of national
income.
 3.Occupational Structure:
 The peculiar occupational structure is also responsible for slow growth of
national income in the country. At present about 66 per cent of the working
force are engaged in agriculture and allied activities, 3 per cent in industry
and mining and the remaining 31 per cent in the tertiary sector.
 Moreover, prevalence of high degree of under-employment among the
agricultural labourers and also among the work force engaged in other
sectors is also responsible for this slow growth of national income.

30.  4. Low Level of Technology and its Poor Adoption:
 In India low level of technology is also mostly responsible for its slow
growth of national income. Moreover, whatever technology that has been
developed in the country, is not properly utilised in its production process
leading to slow growth of national income in the country.
 5. Poor Industrial Development:
 Another important reason behind the slow growth of national income in
India is the poor rate of development of its industrial sector. The
industrial sector in India has failed to maintain a consistent and
sustainable growth rate during the planned development period and more
particularly in recent years.
 Moreover, the development of basic industry is also lacking in the country.
All these have resulted a poor growth in the national income of the
country.
 6. Poor Development of Infrastructural Facilities:
 In India, the infrastructural facilities viz., transport, communication,
power, irrigation etc. have not yet been developed satisfactorily as per its
requirement throughout the country. This has been creating major
hurdles in the path of development of agriculture and industrial sector of
the country leading to poor growth of national income.

31.  7. Poor Rate of Saving and Investment:
 The rate of savings and investment in India is also quite poor as
compared to that of developed countries of the world. In recent
times, i.e., in 2008-09, the rate of gross domestic savings was
restricted to 32.5 per cent of GDP and that of investment was 33.0
per cent of GDP in the same year. Such low rate of saving and
investment has resulted in a poor growth of national income in the
country.
 8. Socio-Political Conditions:
 Socio-political conditions prevailing in the country is also not very
much conducive towards rapid development. Peculiar social
institutions like caste system, joint family system, fatalism, illiteracy,
unstable political scenario etc. are all responsible for slow growth of
national income in the country.
 In the mean time, the Government has taken various steps to attain a
higher rate of growth in its national income by introducing various
measures of economic reforms and structural measures. All these
measures have started to create some impact on raising growth of
national income of the country.

33. References
 www.pib.nic.in
 Tradingeconomics.com
 Economicsdiscussion.net
 Wikipedia.org
 Economictimes.indiatimes.com
 Yourarticlelibrary.com