Gross National Product
The Gross National Product at factor cost is arrived at by adding the net factor income from abroad to Gross Domestic Product at factor cost. National income estimation in India is not possible by using a single method. The contribution to the domestic product from agriculture, livestock, forestry and logging, fishing and mining and quarrying is estimated by using the production approach. This method requires in the first sentence estimation of the gross value of products, by-products and ancillary activities under the value of inputs of raw materials and services is deducted from it.
Since for income in irrigation, this method cannot be conveniently used, the total factor incomes measuring income in irrigation, this met generated as a result of providing the irrigation services are measured. Thus almost whole of the national income generated in the primary sector which is about 34 per cent of the total national income is estimated by the output method:
As far as the secondary activities are concerned, the estimates of the gross domestic product are worked out by the production approach only for the manufacturing (by both registered and unregistered units).
The estimates of the value of output from construction activity are prepared separately for pucca construction and kutcha construction. While for estimating the output in the former, the commodity flow approach is followed, in the latter, value-added is estimated by the expenditure methods using data from sample surveys, budget documents, etc.
The income approach is used to estimate value-added in the remaining sectors. This involves the measurement of aggregate factor income in the form of compensation of employees (wages and salaries) and operating surplus interest, rent, profits and dividends).
The database for estimating the national income has improved over the years. The principal source of data for agricultural output is estimates of area and out-turn for principal crops which are generally based on the results of crop estimation surveys conducted by the State Government agencies. For evaluating the value of agricultural outputs, crop-wise average wholesale prices prevailing in the primary markets during the peak marketing periods are used. The main source of. information of livestock numbers is the ‘India Livestock Censuses’ which is conducted once every five years.
For forest products, the main source of data is ‘Forest in India’ released annually by the Directorate of Economics and Statistics, Ministry of Agriculture. The mineral output data are available in the Indian Bureau of Mines publications. Apart from these main sources, there are other sources of data as well. Annual Survey of Industries data is used for estimating output in the registered manufacturing sector.
For unregistered manufacturing which includes small-scale manufacturing and self-employed households in non-agricultural enterprises, results of the National Sample Survey (NSS) are being used. These results provide comprehensive data on capital investment. output, input and value-added in respect of the small enterprises. For other sectors, the required data is obtained from various official publications, departmental records, annual reports of financial institutions like the RBI, budget documents, etc.
Here are the notes for Problems In Estimating National Income And Important Terminology.