Now, let us begin with studying the national income estimates in India. National income measures the total value of the goods and services (output) produced by an economy over a period of time (usually a year). It is also a standard of the income flown from production, and/or the sum total of all expenditure involved for the production of output. The study of national income is essential because of the following reasons:
1. To measure the size of the economy and level of nation’s economic performance
2. To trace the trend or speed of the economic growth in relation to previous year(s) as well as to other nations
3. To know the structure and composition of the national income in terms of several sectors and the periodical variations in them
4. To make projection about the future development pattern of the economy
5. To measure the size of the economy and level of nation’s economic performance
6. To trace the trend or speed of the economic growth in relation to previous year(s) as well as too their countries
7. To know the structure and arrangement of the national income in terms of various sectors and the periodical variations in them
8. To make projection about the future development trend of the economy
You may already be aware that internationally some nations are wealthy, some nations are not wealthy and some nations are in-between. Under such conditions, it would be difficult to assess the performance of an economy. Performance of an economy is directly proportionate to the amount of goods and services manufactured in an economy. Measuring national income is also essential to chalk out the future course of the economy. It also broadly signifies people’s standard of living. National Income Accounting represents the tools and techniques by which economists and policy-makers measure economic activity and economic growth over time. It measures the total value of the goods and services (output) manufactured by an economy over a period of time (usually a year). It is also a measure of the income flown from production, and/or the sum total of all expenditure involved for the production of output.
You must keep in mind that income can be computed by Gross National Income (GNI), Gross Domestic Product (GDP), Gross National Product (GNP), Net National Product (NNP) and Net National Income (NNI). In India, the Central Statistical Organisation has been expressing national income. Nevertheless, some economists have experienced that GNP has a measure of national income has limitation, since they exclude public health, literacy, poverty, gender equity and other measures of human prosperity. Rather, they formulated other measures of welfare like Human Development Index (HDI).
