Trends In The National Income (NNP)
In India, the national income estimates are now prepared by the Central Statistical Organisation (CSO) at 1999-2000 prices which are available for the period 1950-51 to 200607. Thus we have comparable data for a fairly long period spanning five and a half decades. According to this new series, the net national product of India at 1999-2000 prices was Rs. 2,04,924 crore in 1950-51. Since then it has grown at a modest rate of 4.5 per cent per annum in the five and a half decades of the economic planning and stood at Rs.25,30,494 crore in 1950-51. Since then it has grown at a modest rate of 4.5 per cent per annum in the five and a half decades of the economic planning and stood at Rs.25,30,494 crore in 2006-07.
On comparing this performance of the economy in the planning period with that in the pre-independence period, the progress does not look unsatisfactory. However, on viewing it in the light of targets laid down under various plans this performance is not all that encouraging. During the 16 year period from 1991-92 to 2006-07, the rate of increase in the national income has been 6.1 per cent per annum. During the Tenth Plan period (2002-03 to 2006-07), the NNP registered a growth rate of 7.8 per annum.
In official circles, this has generated great euphoria. However, international comparisons show that even this rate of growth is far below the rates of growth of some of the East Asian countries. In both China and South Korea the national income has increased during the past two decades at rates exceeding 8.0 per cent per annum. the increases in national income in Thailand and Malaysia during the 1980s and first half of the 1990s have also been quite impressive.
Among the developed countries increase in Japan’s national income at the rate of around 8.0 per cent per annum during the 1950s and 1960s was most spectacular. It is generally agreed that the Indian economy was not expected to perform as well as the Japanese economy. But what is most distressing is that while underdeveloped economies like China, South Korea, Thailand and Malaysia have performed exceedingly well, the Indian economy has grown at a rather low rate.
Plans study of the growth of real income in India, however, does indicate an encouraging fact that although the annual rate of increase in national income was pretty low at 3.6% during the first three decades of economic planning, it has lately risen to 5.5 per cent per annum since 1980-81. The target of growth in national income in the First Plan was very modest.
Bolder targets were fixed in the Second Plan in respect of national income. It was contemplated that national income would increase at the rate of 4.5 per cent per annum at constant prices. This, however, could not be realised and the rate of increase in national income was only 4.2 per cent per annum leaving a gap of 0.3 per cent per annum between the target and actual performance.
The Third Plan was comparatively a bigger plan from the point of view of investments and targets. It had contemplated a 5.6 per cent per annum increase in the national income. But the total increase in national income during the Third Plan period turned out to be a mere 9.5 per cent, giving a compound rate of growth of only 2.3 per cent per annum. During the next three years, long-term planning remained suspended and the national income trends were clearly influenced by the fluctuations in the harvest.
The Fourth Plan had contemplated a 5.7 per cent per annum increase in the national income. Recognising the fact that the level of activity in the Indian economy in the past had tended to fluctuate from year to year with fluctuations in the harvest, the Plan accorded a high priority to agricultural development. However, the actual growth experience under the Fourth Plan was the same as under the earlier plans.
The annual rate of increase in the national income was 3.2 per cent per annum. n. Moreover, the total increase in the national income was realised in the first two years and the last year of the Plan. Though the approach to the Fifth Plan was claimed to be different from that of the earlier Plans, its basic framework was as much growth-oriented as of the earlier Plans.
The Fifth Plan had contemplated an increase in the gross domestic product of the order of 4.4 per cent per annum. The national income, however, recorded a growth rate of 4.7 per cent per annum which was certainly impressive considering the record. During the Fifth Plan period though the national income target was surpassed, yet the growth rate was as erratic as it had been in the past.
Check out the notes for Rise And Fall Of National Income.