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Trends In National Income

23rd February 2022

OF INDIA

WEDNESDAY

Introduction

National Income

National income means the value

of goods and services produced by

a country during a financial year.

Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.

  • Per capita income is a measure of the amount of money earned per person in a nation or geographic region.
  • Per capita income =

total income ÷ total population.

A detail study of the trend of the national income in India over the last 40 years is very much essential for attaining a clear understanding about the impact of planning on the Indian economy.

1

Methods to measure

National Income

  • Income Method
  • Production Method
  • Expenditure Method

2

Income Method

Estimated by adding all the factors of production (rent, wages, interest, profit) and the mixed-income of self-employed.

In India, one-third of people are self-employed.

This is the ‘domestic’ income, related to the production within the borders of the country

Production Method

Estimated by adding the value added by all the firms.

Value-added = Value of Output – Value of (non-factor) inputs

Expenditure Method

The expenditure method to measure national income can be understood by the equation given below:

Y = C + I + G + (X-M),

5 Year Plans

5 Year Plans

From 1947 to 2017, the Indian economy was premised on the concept of planning. This was carried through the Five-Year Plans

The Five-Year Plans were laid to rest by the Narendra Modi-led NDA government in 2015. Hence, the 12th five-year plan is considered the last five-year plan of India.

The first five-year plan in India was launched in 1951 and since then, India has witnessed twelve Five Year Plans. The present government had however discontinued the Five-year plan system and a new mechanism was put into place. Let us have a look at all the Five Year Plans the country has witnessed so far.

1st Year Plan

First Five Year Plan:

  • It was launched for the duration of 1951 to 1956 .
  • Its main focus was on the agricultural development of the country.
  • Its key objective was to achieve self-sufficiency in food production, so the highest preference was given to agriculture. The total outlay of this plan was Rs. 2069 Crore which was later increased to Rs. 2378 Crore.
  • The country was able to achieve the targeted growth and was able to increase national income.

2nd Year Plan

Second Five Year Plan:

  • It was made for the duration of 1956 to 1961 .
  • Its main focus was on the industrial development of the country.
  • The second five-year plan is based on the so-called Mahalanobis model. This Model suggested that there should be an emphasis on the heavy industries.
  • Growth rate of 4.5% and achieved a growth rate of 4.27%.

3rd Year Plan

Third Five Year Plan:

  • It was made for the duration of 1961 to 1966 .
  • The main target of this plan was to make the economy independent. The stress was laid on agriculture and the improvement in the production of wheat.
  • However, the plan period saw lots of political and economic problems.
  • The Indo-China war 1962 and Indo-Pak War 1965 etc. exposed the weakness of the country. These conflicts substantially shifted the focus towards defense production.

4th Year Plan

Fourth Five Year Plan:

  • Its duration was from 1969 to 1974 .
  • Two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.
  • The result was that this plan period was also no better than the third five-year plan.
  • India fought yet another war with Pakistan and helped in the creation of Bangladesh.
  • The international economic turmoil due to Oil crisis upset the calculations for Fourth Plan. So only 3.4% growth could be achieved.

5th Year Plan

Fifth Five Year Plan:

  • Its duration was 1974 to 1978 .
  • This plan focussed on Garibi Hatao, employment, justice, agricultural production and defence.
  • However, in 1975, Indira Gandhi imposed an emergency, and planning became subject to much politicization.
  • Growth of 4.8% against the target of 4.4%.

#Rolling Plans: 1978-80

6th Year Plan

Sixth Five Year Plan:

  • Its duration was from 1980 to 1985 .
  • The basic objective of this plan was economic liberalization by eradicating poverty and achieving technological self-reliance.
  • The poverty was 47% at the beginning of the plan and a target of 30% was fixed to achieve. The actual target achieved at that time was 37%.
  • Growth target was 5.2% but it achieved a 5.7% growth.

7th Year Plan

Seventh Five Year Plan:

  • Its duration was from 1985 to 1990 .
  • The objectives of this plan include the establishment of a self-sufficient economy, opportunities for productive employment, and up-gradation of technology.
  • Growth target was 5.0% but it achieved 6.01%.

#Annual Plans: 1990-92

8th Year Plan

Eighth Five Year Plan:

  • Its duration was from 1992 to 1997 .
  • In this plan, the top priority was given to the development of human resources i.e. employment, education, and public health.
  • Also known as "Rao and Manmohan Plan" .
  • Growth rate of 6.8% against the target of 5.6%.

9th Year Plan

Ninth Five Year Plan:

  • Its duration was from 1997 to 2002 .
  • The main focus of this plan was “Growth with Social Justice and Equality”.
  • Improving the quality of the life.
  • Growth target of 6.5% and achieved a growth rate of 5.6%.

10th Year Plan

Tenth Five Year Plan:

  • Its duration was from 2002 to 2007 .
  • Change in the Government.
  • Aimed to double the Per Capita Income of India in the next 10 years and to reduce the poverty ratio to 15% by 2012.
  • Increased Industrial Production.
  • Growth target was 8.0% but it achieved only 7.6%.

Continue... NITI Aayog

The Niti Aayog has replaced the Planning Commission in the Modi Cabinet and launched three-year action plans from April 1, 2017, onwards..

Trends of National Product and per capita income during different plans

Eleventh Five Year Plan:

  • Its duration was from 2007 to 2012 .
  • Its main theme was “rapid and more inclusive growth”.
  • Impressive record of economic growth.
  • Growth rate of 8% against a target of 9% growth.

Twelfth Five Year Plan:

  • Its duration is from 2012 to 2017 .
  • India's last five year plan.
  • Its main theme is “Faster, More Inclusive and Sustainable Growth”.
  • Its growth rate target was 8%.
  • NDA government dissolve the planning commission which was replaced by NITI AAYOG.

NITI AAYOG

National Institution for Transforming India, better known as NITI Aayog.

NITI Aayog is the premier policy think tank of the Government of India, providing directional and policy inputs. Apart from designing strategic and long-term policies and programmes for the Government of India, NITI Aayog also provides relevant technical advice to the Centre, States, and Union Territories.

National Income:

2017-2018

  • India's per capita income grew at a pace of 8.6 per cent to Rs 1,12,835 during the last fiscal ended March 2018, official data showed.
  • The per capita net national income in 2016-17 stood at Rs 1,03,870, witnessing a growth of over 10.3 per cent from the preceding fiscal ended March 2016 (at Rs 94,130).
  • "The per capita income at current prices during 2017-18 is estimated to have attained a level of Rs 1,12,835 as compared to the estimates for the year 2016-17 of Rs 1,03,870, showing a rise of 8.6 per cent," showed the provisional estimates of annual income, 2017-18 released by the Ministry of Statistics and Programme Implementation (MOSPI).

Important Causes Of Slow Growth Of NNP

The following are some of the important causes of slow growth of national income in India:

The following are some of the important causes of slow growth

of national income in India:

1

High Growth Rate of Population

2

Excessive Dependence on Agriculture

3

Occupational Structure

4

Low Level of Technology

5

Poor Industrial Development

6

Poor Development of Infrastructural Facilities

7

Poor Rate of Saving

and Investment

8

Socio-Political Conditions

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