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National and Per-Capita IncomeNational income is the total value of a country’s final output of all new goods and services produced in a year. There are various ways to calculate it:The income method, which adds up all incomes received by the factors of production generated in the economy during a year. This includes wages from employment and self-employment, profits to firms, interest to lenders of capital and rents to owners of landThe output method, which is the combined value of the new and final output produced in all sectors of the economy, including manufacturing, financial services, transport, leisure and agricultureThe expenditure method, which adds up all spending in the economy by households and firms on new and final goods and services by households and firmsPatterns, trends, aggregate and sectoral composition and changes therein Rates of economic growth in India during the 20th century (CSO data):1950-20041960s1970s1980s1990s2000s2002-072007-12Agriculture2.52.51.34.43.22.52.43.3Industry*5.36.33.65.95.77.79.26.7Services5.44.84.46.57.38.68.89.9GDP4.2435.65.87.27.67.9Population growth rate2.22.22.221.6GDP per capita2.11.80.93.43.8* For industry, no need to remember decadal; just remember the broad phases: 1900-1947: 1%; 1951-1965: 6.3%; 1965-1980: 4.1%; 1981-1990: 7%; 1991-2000: 5.7%; 2001-10: 7.8%)** Decadal population growth rates taken from: of sectoral shares in GDP:Sector195119611971198119912013Primary534842363014Secondary172124262826Manufacturing (part of secondary)7 (check)13.514.515.4Tertiary303134384260Trends of employment shares:Sector1951196119711981199120012013Primary73%74%69%64%56%49%Secondary9%11%14%15%19%24%Manufacturing (part of secondary)Tertiary19%15%18%21%25%27%* In 1951, Large scale (or ‘modern’) industry only accounted for 7% of national income and 2.3% of employment. Small-scale industry, on the other hand, accounted for 10% of national income, and 7% of employment.Broad factors that determine national income: availability of natural resources and raw materials, stock of factors of production, state of technology, connectivity, political stability, state of education and technical know-how etc.Period1950-19801991-2011GDP growth rate3%7%Population growth rate2.5%<2%As seen above, during 1950-1980 there was very little growth in per-capita income, because of low GDP growth rate and high population growth rate. This hasn’t been the case since the 1980s. ................
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