1. National Income Statistics: Background
Scholars attempting to estimate national income statistics for pre-independence India have confronted innumerable difficulties in finding reliable data. Whatever estimates they make, they are forced to rely on macrolevel data and/or to make numerous assumptions. Only for the period after India became independent in 1947 is it possible to find reliable official statistics. However, Pakistan's secession and the consequences difficulties experienced by the Indian territory have meant that no one has as yet made a concerted effort to link Indian national income statistics for the periods before 1946 and after 1947.
In 1949, soon after the establishment of independent India, the National Income Committee (NIC) was formed to compile statistics and estimate national income. The committee was headed by P.C. Maharanobis and included D.R. Gadgil and V.K.N.V. Rao. Assisting the NIC was the National Income Unit (NIU), directed to prepare estimates of national income every year. The NIU was under the jurisdiction of the Ministry of Finance, later changed to the Central Statistical Organisation.
Estimates of Indian national income have been based upon four sets of statistical series. First, The Estimates of National Income was published in 1956, and had a 1948-49 base year. Second, The Estimates of National Product was published in 1957 as a revision of the conventional series. The revised edition had a 1960-61 base year and gradually came to include personal consumption expenditure, savings, capital formation, factor incomes, consolidated accounts, and public sector accounts. Renamed The National Accounts Statistics (NAS) in 1975, it included estimated values for the period 1950-51 through 1972-73. Thirdly, another revised edition was published in 1978, which shifted the base year from 1960-61 to 1970-71. In 1980 estimated values starting from 1950-51 were published. Fourthly, a new series was published in 1988, and it had a 1980-81 base year. In 1989, estimated values from 1950-51 through 1979-80 were published.
2. Special Features of the 1980-81 Series
The main method adopted to compile estimates of domestic production by industrial origin is to estimate gross value added in terms of the difference between input and output values. Among the sectors examined by this production approach are agriculture/forestry/fishing, manufacturing (excluding unregistered manufacturing), and construction. The income approach is adopted for other sectors, such as electrical power, transportation, commerce, and administration. Under the income approach, factor payments for organized sectors (registered sectors plus the public sector) are estimated on the basis of budget documents and annual reports of enterprises. Applied to unorganized sectors, the income approach means multiplying value added per worker by labor force (number of workers). In addition, the commodity flow method has been adopted to estimate private final consumption expenditure and capital formation.
The new series features revisions regarding data on and methods of estimating forestry (production of firewood); textiles (categorized in India as an unregistered sector and also regarded as a decentralized sector) and kutcha construction (which is in contrast to pucca construction, is labor intensive and based on crude materials), as well as different areas of domestic industrial production. The most important revisions were made with regard to consumption, savings, and capital formation.
First, because the depreciation entered in enterprise account books has usually not been shown as a cost of replacement of fixed capital, and there has been no regulation regarding fixed capital in the government departments, the consumption of fixed capital has been underestimated. As a result, there has been criticism that net savings as well as capital consumption have been underestimated. In line with recommendations of The United Nations...
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