Indian National Account

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India’s National Accounts

It is emphasised that in view of the essentially de-centralized character of the Indian Statistical System, the continental size of the country with large diversities and federal character of Polity, the Indian System of National Accounts to include regional accounts at the State level and below. The term National Accounts Statistics (NAS) in this overview should be interpreted in the inclusive sense.

The NAS is a framework that provides an internally consistent description of National macro economy based on the processing of data generated by the entire National statistical system. The estimates of NATIONAL INCOME and related aggregates and accounts are derived statistics that draw on basic data available from different primary sources. The primary sources consist of data generated as a by-product of Public Administration system (such as land records, collection of direct and indirect taxes, civil registration of births and deaths, etc.) as well as data collected directly through censuses and sample surveys conducted by official agencies of the Central and State Governments. For certain newly emerging activities such as Software, where official statistical system is not currently in place, NAS also draws on selective non-official sources. The accuracy and quality of the National account estimates depend on (a) geographical coverage and quality of primary data; and (b) the methods, procedures and approximations used in translating the primary data into NAS framework. While the underlying concepts and methodology of compilation has been mostly standardised under the United Nations’ System of National Accounts (UN-SNA), procedures and approximations are shaped by the country-specific data collection system. For making the estimates comparable over time and internationally, the National Accounts Division (NAD) of the Central Statistical Organisation (CSO) maintains detailed, well documented methods and procedures unchanged till the revision of the Base Year when efforts are made to bring about improvements in these respects while bridging data gaps and introducing newly available better quality data.

Given the use of wide-ranging data sources with varying quality in different spheres in the compilation of National Accounts in all the countries of the world, weaknesses in the National statistical system get reflected in the NAS. In the federal political framework, the Indian Statistical System is decentralised in character so that NAS necessarily have to depend on a large number of autonomous source agencies. NAD often finds itself unable to make source agencies appreciate the requirements of National Accounts for timely reporting as well as for additional data or wider coverage. In a continental country like India, regional diversities in public administration and the importance given to collection, maintenance and dissemination of statistics also influence their quality. Data used for Central fund allocation to States create their own problems of reliability when they are generated by the concerned administrative departments. National Sample Survey Organisation (NSSO) has been carrying out periodic surveys that provide input into the National income estimation. While the surveys give reasonably good estimates at the all-India level, they have to grapple with the basic character of the Indian economy while collecting information about EMPLOYMENT, incomes, trade and profit margins. This relates to predominance of self-employment in agriculture as well as non-agricultural rural and urban areas where connection of earning members to the labour market is loose and amorphous, workers often engage in multiple activities during the year, income streams are irregular, enterprises do not keep accounts and entries into and exits out of enterprises are common. Over the years, the involvement of State statistical bureaus in conducting surveys and type studies for evolving norms for National income estimation has also been on the decline. It is also important to point out that survey-based estimates have their inherent limitation in terms of known sampling errors and unknown non-sampling errors.

Standard texts on National Accounts do mention independent checks on National account aggregates by estimating them through three alternative methods: income, expenditure and commodity flow. Data limitations however, do not permit these independent consistency checks. Often, certain National account identities are used to derive certain components as residuals. For example, aggregate PFCE in the Indian system of National Accounts.

In India, the basic (gross or net) domestic product estimates at Factor Cost by Industry or sector of origin can be broadly classified into two broad categories from the viewpoint of differences in Database. Direct estimates are based on annually available statistics on a regular basis so that they reflect year-to-ear variations in the concerned economic activities. The second broad category of indirect estimation has to be resorted to when regular annual statistics are not available. In such cases, periodic benchmark survey based estimates are derived for the survey year and are extrapolated backward or forward on the basis of (often) -physical indicator of activity in the sector. The degree of approximation in this context critically depends on the sensitivity of the indicator in reflecting year-to-year variations in the concerned economic activity. By type of institutions, direct estimates mostly relate to public (of which Government proper is a component) and private corporate sector so that the estimates relating to them usually constitute what is usually referred to as “organized” sector or segment of the economy. Indirect estimates mostly relate to households (including non-profit institutions serving households) and constitute the residual ‘unorganized’ sector or segment of the economy.

While direct estimates are based on annually available statistics, their translation into National account aggregates often requires the use of certain norms, rates and ratios or other assumptions. In the absences of timely availability of annual estimates, advance, quick or provisional estimates often resort to readily available indicators of activity in the sector. Their revisions after the use of regular annual statistics sometimes bring about major changes in the provisional estimates. In such cases, the fault lies with the quality of data provided by the source agency supplying provisional indicators as well as delays by the source agency generating annual regular statistics. NAD of CSO however unfairly finds itself at the receiving end of the criticism.

The CSO has been publishing the basic documentation of methods of National account compilation in the periodical publication, National Accounts Statistics – Sources and Methods. It is released after each major revision of the estimates at updated price-base. Two publications so far available relate to 1970-71 and 1980-81 price series. The latest revision has been undertaken with 1993-94 price base. The share of “direct estimates” in aggregate GDP rose from 57.6 per cent in the 1970-71 base series to 63.7 per cent in the 1980-81 base series and further to 89.6 per cent in 1993-94. In the latest series, the sectoral share of direct estimates varies between 100 per cent (mining, registered manufacturing, electricity, gas and water supply, railways and public administration and defence sectors) to 26.6 per cent (Forestry sector).

The detailed documentation in the foregoing sections at the sectoral, sub-sectoral and regional level of methods and data sources for compilation of NAS was meant to bring out the underlying problems and difficulties most of which are shared by many other countries in the world. Steps for improvements should obviously be directed toward improving the quality, coverage and timeliness of “direct” estimates while raising their share in a given aggregate or sub-aggregate at the National and regional level. “Indirect” method of estimation has to be resorted to in sectors and activities mostly marked by self-employment in small Own-account or household enterprises (requiring periodical survey-based benchmark estimates) or where large regional diversities in economic practices exist (requiring type-studies). In these cases, often times, the physical indicators used for extrapolating the benchmark year estimate backward and forward are themselves interpolated estimates thereby further increasing the degree of in-directness. While type studies necessarily have to be regionally dispersed and decentralized, the possibility of carrying out annual surveys obviously suggests itself to reduce the degree of in-directness. However, the costs and benefits of doing so Centrally need to be weighed carefully. Uneven development of survey capabilities across States would favour Centralized arrangement. While this argument is indeed persuasive, two considerations go against it. One, the decentralized character of the Indian Statistical System that has also been stressed in terms of reference of the Commission. Two, Centrally carried out sample surveys with uniform survey methods have possibly come in the way of innovative experimentation in survey methods to capture the regionally unique features. Eliciting cooperation of the States in carrying out requisite State level sample surveys and type studies would not only improve the quality of regional accounts but would also improve the reliability of National estimates.

 



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National income is the total monetary or market value of all the finished goods and Services produced within a country’s borders in a specific time period, such as a year. National income accounts are used to measure the economic performance of a country and to track its progress over time.

Gross domestic product (GDP) is the most commonly used measure of national income. It is calculated by adding up the value of all Final Goods and services produced within a country’s borders in a given year. GDP can be expressed in nominal terms, which means that it is not adjusted for Inflation, or in real terms, which means that it is adjusted for inflation.

Gross national product (GNP) is similar to GDP, but it also includes the income that residents of a country earn from abroad. GNP is calculated by adding up the value of all final goods and services produced by a country’s residents, regardless of where they are located, in a given year.

Net national product (NNP) is calculated by subtracting the depreciation of capital from GNP. Depreciation is the decrease in the value of Capital Goods over time due to wear and tear. NNP is a more accurate measure of a country’s economic output than GNP because it takes into account the fact that capital goods are used up over time.

Personal income is the total income received by individuals from all sources, including wages, salaries, interest, dividends, and rents. Disposable income is personal income minus personal taxes. Disposable income is the amount of Money that individuals have available to spend or save.

Consumption expenditure is the total amount of money that individuals spend on goods and services. Consumption expenditure is the largest component of GDP. Gross fixed Capital Formation is the total amount of money that businesses spend on new capital goods, such as machinery and equipment. Government final consumption expenditure is the total amount of money that the government spends on goods and services. Net exports of goods and services is the difference between the value of a country’s exports and the value of its imports. Net Factor Income from abroad is the income that residents of a country earn from abroad minus the income that foreigners earn in the country. Statistical discrepancy is the difference between the total value of goods and services produced in a country and the total value of income earned in the country.

National income accounts are important because they provide a comprehensive measure of a country’s economic activity. They can be used to track a country’s economic Growth, to compare the economic performance of different countries, and to identify areas where the government may need to take action to stimulate the economy.

The following are some of the limitations of national income accounts:

  • They do not include the value of non-market activities, such as housework and volunteer work.
  • They do not include the value of environmental damage.
  • They can be affected by changes in the price level.
  • They can be affected by changes in the exchange rate.

Despite these limitations, national income accounts are an important tool for understanding a country’s economic performance.

Here are some frequently asked questions and short answers about the Indian economy:

  1. What is the Indian economy?
    The Indian economy is the world’s sixth-largest economy by Nominal GDP and the third-largest by purchasing power parity. It is a Mixed Economy with a large private sector and a significant public sector.

  2. What are the main sectors of the Indian economy?
    The main sectors of the Indian economy are agriculture, manufacturing, services, and construction.

  3. What are the main challenges facing the Indian economy?
    The main challenges facing the Indian economy are POVERTY, inequality, Corruption, and Infrastructure-2/”>INFRASTRUCTURE.

  4. What are the main opportunities for the Indian economy?
    The main opportunities for the Indian economy are its large Population, growing middle class, and young workforce.

  5. What is the future of the Indian economy?
    The future of the Indian economy is bright. It is expected to grow at a rapid pace in the coming years.

Here are some frequently asked questions and short answers about the Indian government:

  1. What is the Indian government?
    The Indian government is a parliamentary Democracy. The head of state is the President, who is elected by an electoral college consisting of members of both houses of Parliament and the legislative assemblies of the states. The head of government is the Prime Minister, who is appointed by the President.

  2. What are the main branches of the Indian government?
    The three main branches of the Indian government are the executive, the legislative, and the judiciary.

  3. What are the main Political Parties in India?
    The main political parties in India are the Indian National Congress, the Bharatiya Janata Party, the All India Trinamool Congress, and the Communist Party of India (Marxist).

  4. What are the main issues facing the Indian government?
    The main issues facing the Indian government are poverty, inequality, corruption, and infrastructure.

  5. What is the future of the Indian government?
    The future of the Indian government is bright. It is expected to continue to be a stable democracy and a major player on the world stage.

Here are some frequently asked questions and short answers about the Indian people:

  1. What are the main languages spoken in India?
    The main languages spoken in India are Hindi, English, Bengali, Telugu, Marathi, Tamil, Gujarati, and Kannada.

  2. What are the main religions practiced in India?
    The main religions practiced in India are Hinduism-2/”>Hinduism, Islam, Christianity, Sikhism, and Buddhism-2/”>Buddhism.

  3. What is the main culture of India?
    The main culture of India is a mix of many different cultures, including Hindu, Muslim, Sikh, and Buddhist cultures.

  4. What are the main festivals celebrated in India?
    The main festivals celebrated in India are Diwali, Holi, Durga puja, and Ganesh Chaturthi.

  5. What is the future of the Indian people?
    The future of the Indian people is bright. They are a diverse and talented group of people who are making significant contributions to the world.

  1. The following are the components of the Indian National Accounts except:
    (A) Gross Domestic Product (GDP)
    (B) Gross National Product (GNP)
    (C) Net National Product (NNP)
    (D) Gross National Income (GNI)

  2. The following are the methods of estimating GDP except:
    (A) Income Method
    (B) Expenditure Method
    (C) Value Added Method
    (D) Production method

  3. The following are the types of GDP except:
    (A) Nominal GDP
    (B) Real GDP
    (C) Per capita GDP
    (D) Gross National Income (GNI)

  4. The following are the components of the Expenditure method of estimating GDP except:
    (A) Consumption expenditure
    (B) Investment expenditure
    (C) Government expenditure
    (D) Net exports

  5. The following are the components of the Income method of estimating GDP except:
    (A) Compensation of employees
    (B) Net operating surplus
    (C) Mixed income
    (D) Taxes on production and imports

  6. The following are the components of the Value added method of estimating GDP except:
    (A) Value added by agriculture
    (B) Value added by industry
    (C) Value added by services
    (D) Value added by construction

  7. The following are the limitations of GDP except:
    (A) It does not take into account the distribution of income.
    (B) It does not take into account the quality of goods and services produced.
    (C) It does not take into account environmental costs.
    (D) It does not take into account the underground economy.

  8. The following are the uses of GDP except:
    (A) To measure the size of the economy.
    (B) To track economic growth.
    (C) To compare economic performance across countries.
    (D) To measure the standard of living.

  9. The following are the factors that affect GDP except:
    (A) The level of investment.
    (B) The level of consumption.
    (C) The level of government expenditure.
    (D) The level of exports.

  10. The following are the policies that can be used to increase GDP except:
    (A) Increase investment.
    (B) Increase consumption.
    (C) Increase government expenditure.
    (D) Decrease taxes.