AN ANALYSIS OF THE GROWTH OF NATIONAL INCOME OF INDIA SINCE INDEPENDENCE

BY: KAUSTUV MONI KALITA (ROLL NO: BAM11021) PARINITA BARUAH (ROLLNO: BAM11022) RAMAKANTA SINGHA (ROLLNO: BAM11023) DEBOPRATIM BORAH (ROLL NO: BAM11024) KAUSHIK HANDIQUE (ROLLNO: BAM11025)

INTRODUCTION

National income measures the flow of goods and services in an economy

during a given period, i.e. it measures the productive power of the economy in the given period. It provides a wide view of the countrys entire economy, as well as of the various groups in the population who participate as producers and income receivers. Some countries are wealthy while some countries are not and some countries are in-between. Under such circumstances, it would be difficult to evaluate the performance of an economy. Performance of an economy is directly proportionate to the amount of goods and services produced in an economy. Thus, national income available over a substantial period reveals the basic changes in the countrys economy in the past and can also suggest trends for the future. Moreover, these estimates depict a clear picture about the standard of living of the community.

OBJECTIVES OF THE STUDY: National Income is considered an important indicator of economic development of a country. There is no doubt that if national income increases over a long period of time, the economic conditions of the people improve. It is, therefore, suggested that while estimating the economic growth in a country, the level of income and the rate of increase in national income should both be taken into account. The study of National Income is important because of the following reasons: i) To measure the size of the economy and level of countrys economic performance. ii) To trace the trend or speed of the economic growth in relation to previous year as well as to other countries. iii) To know the structure and composition of national income in terms of various sectors.

iv) To make projection about the future development trend of the economy. v) To assess and compare the economic progress achieved by a country over a period of time. vi) To know progress achieved by a country over a period of time consideration.

CONCEPTS OF NATIONAL INCOME : The various concepts of national income are given below; 1) Gross National Product (G.N.P): This is the basic social accounting measure of total output or aggregate supply of goods and services. Gross National Product is defined as the total market value of all final goods and services produced in a year. 2) Gross Domestic Product (G.D.P): Gross Domestic Product is the most comprehensive measure of economic activity and a broad measure of peoples income and well-being. The growth in real GDP is hence a measure of the growth of peoples real incomes and therefore the pace of improvement in living standards. 3) Net National Product (N.N.P): In the production of gross national product of a year, we consume or use up some capital (equipment, machinery). It is generally known as depreciation. When charges for depreciation are deducted from the gross national product, we get net national product. NNP = GNP - DEPRECIATION 4) National Income at Factor cost : National Income at factor cost means the sum of all incomes earned by resources suppliers for their contribution of land, labour, capital and entrepreneurial ability which go into the years net production. In other words, it shows how much it costs society in terms of economic resources to produce net product. National Income at Factor Cost = NNP Indirect Taxes + Subsidies

MEASUREMENT OF NATIONAL INCOME: Before independence different economists like Dadabhai Naoroji, William Digby, Findly Shirras, Dr. V.K.R.V. Rao, R.C. Desai and many others tried to estimate the national income using various methods which suffered from serious limitations and as such these estimates were highly unreliable. It was only after independence, in Aug, 1949 that Government of India appointed a formal committee called the National Income Committee to compile authoritive estimates of national income. The first report of this committee appeared in 1951 and the final report appeared in 1954. This report is a landmark in the history of the country. There are three possible measures of national income: 1) The Income Method: This method approaches national income from the distribution side. According to this method, national income is obtained by summing up of the incomes of all individuals in the country. 2) The Production or Output Method: This method approaches national Income from the output side. According to this method, the economy is divided into different sectors such as agriculture, mining, manufacturing, small enterprises, commerce, transport, communication and other services. Then the gross product is found out by adding up net values of all the production that has taken place in these sectors during a given year. 3) The Expenditure Method: We can get national income by summing up all the consumption expenditure and investment expenditure made by all individuals as well as the government of a country during a year.

DIFFICULTIES IN CALCULATION OF NATIONAL INCOME: In India there are various difficulties in calculating the national incomes .The most severe one is the finding of reliable data. The major problems which remain in the calculation of National Income are: Most of the data is not from the current year. Even if current data are available then values are underreported. Unreported illegal income. Non-monetised output and its transactions.

RESEARCH QUESTIONS

Q. What are the causes for slow growth rate of National Income in India?

The rate of growth of national income in India is very poor. A target of growth rate of national income remains all along unfulfilled. The following are some of the causes of slow growth of national income in India: 1. High growth rate of population: The population of India has been ever increasing. Whatever increase in national income has been taking place, all these are eaten away by the growing population. Thus high rate of growth of population is retarding the growth process and is responsible for the slow growth of national income in India. 2. Excessive dependence on agriculture: Indian economy is characterised by too much dependence on agriculture. Agriculture contributes a major share of the nation income, i.e. nearly 34% and engages about 66% of the total working population. Such excessive dependence on agriculture prevents quick rise in the level of national income as well as per capita income as it is not a well organised sector. 3. Occupational structure: the peculiar occupational structure is also responsible for the slow growth of national income. At present about 66% of the working force is engaged in agriculture and allied activities, 3% in industry and mining and the remaining 31% in the tertiary sector. Moreover, prevalence of high degree of under-employment among the agricultural labourers and also among the work force engaged in other sectors is also responsible o this slow growth of national income. 4. Poor industrial development: The industrial sector in India has failed to maintain a consistent and sustainable growth rate during the planned development period and more particularly in recent years. Moreover, the development of basic industry is also lacking in the country. All these have resulted to a poor growth of national income in the country. 5. Poor development of infrastructural facilities: In India, the infrastructural facilities viz., transport, communication, power, irrigation etc. have not yet been developed satisfactorily as per the requirement. This is

resulting as a major hurdle in the path of development of agricultural as well as the agricultural sector. 6. Poor rate of saving and investment: the rate of savings and investment in India is very poor as compared to that of the developed countries. In 1996-97 the rate of savings was restricted to 26.1% of GDP and that of investment was 27.3% of GDP. such low rate of saving and investment has resulted in a slow growth of national income. 7. Socio-political conditions: Socio-political conditions prevailing in the country is not very much conducive towards rapid development. Peculiar social institutions like caste system, joint family system, illiteracy, unstable political scenario, etc. are all responsible for the slow growth of India.

Q. Is national income a reliable indicator of our economic well-being? We know that national income of a country is considered as an indicator of the standard of living of its people. The standard of living is a measure of the material welfare of the inhabitants of a country. The measure of the standard of living is real national output per head of population or real GDP per capita. This is the value of national output divided by the resident population. Other things being equal, a sustained increase in real GDP increases a nations standard of living providing that output rises faster than the total population. However it should be noted that the real income per capita on its own is both an inaccurate and insufficient indicator of true living standards both within and between countries. Critics of economic growth often cite disparities between the rich and the poor as an example of the misleading nature of figures of high growth rate of Gross Domestic Product. In order to assess the standard of living in India, certain factors like poverty and life expectancy must also be taken into account.

Problems in using national income statistics to measure living standards GDP data on its own is an insufficient indicator of our economic well-being. If

one takes a look at the trend in the rise of national income in India, one would find that it has grown at a lower rate since independence till the 80s. The rate of growth of the GDP was higher in the 80s and the 90s and it had been growing at a quicker rate since 2000.The following quote adapted from an article in the Independent in December 2002 sums up the issue quite well. Improving living standards is about poor families gaining access to what is available at the time to make life comfortable, healthy and rewarding. In the end, economic statistics only measure what they measure, which may not bear much relation to how well off we are. Source: Adapted from the Independent The major problems faced in this regard are as follows: Problems of accuracy: A nations official GDP data tends to understate the true growth of real national income per capita over time. This is due to fact that the income from shadow (or underground) economy and also the value of unpaid work done by millions of volunteers and people caring for their family members is not included in its computation. The "shadow economy" usually embraces a range of illegal activities such as drug production and distribution, prostitution, theft, fraud and concealed legal activities such as tax evasion on otherwise-legitimate business activities such as unreported self-employment income. The scale of the shadow economy varies widely across countries at different stages of development. According to the IMF, in developing countries it may be as high as 40% of GDP; while in developed countries it may be anywhere around 15-30%. The national income also does not include the services of the people or organisations provided free of cost like the NGOs. Moreover, the values of the services provided by the home makers to their family members are not taken into account. Thus, we see that the data so collected is not an accurate measure of the real per capita income. Problems of interpretation: Many a times the GDP data may give a distorted picture of living standards in a country. The main reason behind this being the regional variations in income

and spending of a nation. National GDP data can hide regional variations in output, employment and income per head of the population. The Indian economy is characterised by a highly skewed pattern of income distribution. It is found that the top 20% of the population shares more than 80% of the total national income; while the bottom 20% only shares about 2% of it. So a small wealthy class can increase the measured per-capita income far above that of the majority of the population. Thus this pattern of high income inequality in income distribution is not reflected in our per capita income and as such it is quite misleading as an indicator of the standard of living. Some economists have felt that GNP as a measure of national income has limitations since they exclude poverty, literacy, public health, gender equity and other measures of human prosperity. Instead they formulated other measures of welfare like Human Development Index (HDI) which is a better indicator of a nations standard of living. Moreover GDP doesnt take into account nonmarket activities ,leisure, improved product quality, black market, the detrimental effects upon the environment, and the composition and distribution of output. However, that despite such flaws, levels of most measures of well-being are closely correlated to GDP per capital. One more fact is that although India is showing a healthy GDP growth in the last decade, still according to 2005 world bank estimate,41.6% of its total population still lives below the international poverty line($1.25 a day).

Q. How has the economic reforms affected the distribution of national income? In 1991, India adopted the policy of economic liberalization in the wake of balance of payment crisis. The economic reforms introduced in that period led to complete overhaul of the Indian economy in course of time. It opened new avenues for investment and expansion while simultaneously bringing in new technology and foreign capital. This was bound to have an impact on the distribution of national income among different categories of people. Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalization of 1991. The reforms did away with the Licence Raj, reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of foreign direct investment in many

sectors. Since then, the overall thrust of liberalisation has remained the same. By the turn of the 20th century, India had progressed towards a free-market economy, with a substantial reduction in state control of the economy and increased financial liberalisation. This has been accompanied by increases in life expectancy, literacy rates and food security, although the beneficiaries have largely been urban residents. The basic effect that globalization had on India was both positive as well as not so positive. Rajat Acharya, in his report, (Trade Liberalization, Poverty, and Income Inequality, World Bank, 2006) in India interprets the trend in following words: Poverty and income inequality in India, as measured by the head count ratio (poverty gap ratio) and the Gini coefficient, respectively, show considerable fluctuations during the reform period 1985.97. The adjusted estimates of Deaton and Drze (2002) show decline in both rural and urban poverty ratios in the period 1993-94 to 1999-2000: from 33% to 26.3% for rural India and from 17.8% to 12% for urban India.1 But statistically speaking, though urban poverty showed a declining trend during this period, rural poverty showed no trend of decline or increase. On the other hand, the all-India Gini coefficient showed an increasing trend during 1987.97, in a complete reversal of the trend of decline during 1960.73. The inequality between the top and bottom 10% of the population was disproportionately higher than that between the top and bottom 20% during 1994.2000. Thus, most of the income was still concentrated in the top 10% of the population. There was also a general increase in inequality among wage-earners of different skills (Marjit and Acharyya 2003). In the subsequent section, Acharya seeks to clarify the role played by liberal trade policies in increasing income inequalities in that same period. According to him the strategies adopted to break trade barriers and increase growth does not automatically translate welfare of the poor in the short run. He emphasizes that though in the short term, trade liberalization acts more like an indirect income distribution policy than a poverty alleviating policy, in the long run the acceleration of growth of output, opportunities for upward income mobility for the lower income groups increase.

Below are few of the findings put forward by Acharya in his research paper During the reform period most Indian states experienced high average growth rates in real unskilled informal wage and real unskilled agricultural wage. This may explain the fall in poverty rates. Declining urban poverty and increasing income inequality were associated with growth in manufacturing exports and imports. Among manufacturing exports, during the 1990s, there was a phenomenal growth in exports of skill-intensive high-technology goods. This change in the skill composition of Indian manufacturing export basket offers a plausible explanation of the rise in income inequality during the 1990s. Three unskilled labour-intensive manufacturing goods, clothing, textiles, and leather still account for around 40% of manufacturing exports. Expectedly, their growth had a favourable impact on urban poverty through increase in the unskilled money wage.

Growth in aggregate output. Both in per capita net state domestic product (PCNSDP) and gross domestic product (GDP) appears to be another source of lower urban poverty and higher income inequality. Exports found to be (Granger) causing GDP growth means that the growth impact of trade may be an important factor underlying the observed changes in poverty and inequality. Growth in exports of high-technology goods seems to be one major source of such trade growth nexus. Reference:
http://www.adb.org/Documents/Papers/INRM-PolicyBriefs/inrm10.pdf www.google.co.in

ARGUMENTS FOR THE QUESTIONS PUT FOWARD Is national income a reliable indicator of our economic wellbeing? We have raised this question because although national income or GDP is considered as a measure of economy around the world it doesnt reflect many factors that an economy consists of. To ascertain the actual economic growth and development of any country certain indicator are require which are reliable and accurate. Without a reliable indicator the economic wellbeing of a country cannot be correctly measured so we need to ascertain if national income is a reliable indicator.

What are the reasons behind the slow rate of growth in national income in India? The reason behind inclusion of this question is that we need information on how much spending, income and output is being created in an economy over a period of time. National income data gives us this information. Without knowing the causes behind the slow growth rate of national income of India we cannot conclusively ascertain the real scenario behind the growth of national income in India and hence cannot present any conclusion toward the remedies.

How has the economic reforms effected the distribution of national income? The analysis regarding this question shows that economic reforms are one of the key factors of the countrys growth of national income. Without understanding the effects of the economic reform on the distribution of national income the basic concepts of the topic cannot be understood and it is very important to know the details of effects of the economic reforms.

ANALYSIS

TRENDS IN NATIONAL INCOME As noted already, national income is a rough indicator to measure the economic growth performance of a country. The outcome of Indias development effort can be seen, to some extent, in terms of the size, growth and the composition of our national income. The following data shows growth of national income in India (in percent). The data given below provides the trend of the GDP growth from the year 1950 to 2005.

PERIOD 1950-1980 1980-2005

GDP TOTAL 3.5 5.6

GDP PER CAPITA 1.4 3.6

source: computed from central statistical organization The size of the national income at constant prices has increased by about 15 percent during this period. The growth rate of national income has increased from 3.5 percent during 1950-80 to 5.6 percent during 1980- 2005. SECTORAL CONTRIBUTION OF NATIONAL INCOME Sectoral contribution of national depicts a clear picture about the composition or distribution of national income by industrial origin. In India, among the different sectors, the primary sector and more particularly agriculture still plays a dominant role in contributing the major portion of the national income of the country. Trends of the contribution of various sectors to the GDP is briefly shown below: Primary sector: the contribution of primary sector which is composed of agriculture, forestry, fishery and mining has gradually declined from 56.4% of GDP in 1950-51 to 45.8% in 1970-71 and then finally to 20.5% in 2006-07. The

agricultural sector contributed about 48.6% of GDP in 1950-51 and then its share declined to 39.7% in 1970-71 and then to 29.5% in 1990-91 and then finally to around 24.0% in 1996-97. Secondary sector: The secondary sector which is composed of manufacturing industries, construction, electricity, gas and water supply has increased its share of GDP from 15% in 1950-51 to 22.3% in 1970-71 and then to 24.7% in 2006-07. The share of manufacturing industries to GDP has also increased from 11.4% in 1950-51 to 22.5% in 1996-97. Tertiary sector: The share of tertiary sector which is constituted by trade, transport, storage, communications, banking, insurance, real estate ,etc. has gradually increased from 28.5% in1950-51 to 31.8% in 1970-71 and then finally to 54.8% in 2006-07. The share of transport, communication and trade has also increased from 11% in 1950-51 to 26.8% in 2006-07.

Table : Sectoral distribution of GDP Sector A. Primary sector 1. Agriculture 2. Forestry 3. Fishing 4. Mining B. Secondary sector 5. Manufacturing 6. Construction 7. Electricity, gas &water supply C. Tertiary sector 8. Trade, transport etc. 9. Finance and real estate 10.Community and personal services Gross Domestic Product 1950-51 56.4 48.6 6.0 0.7 1.1 15.0 11.4 3.3 0.3 28.5 11.0 9.0 8.5 100.0 197071 45.8 39.7 4.0 0.8 1.3 22.3 16.1 5.0 1.2 31.8 14.2 8.0 9.2 100.0 199091 33.4 29.5 1.4 0.8 1.7 27.0 20.6 4.1 2.3 39.6 18.1 10.3 11.2 100.0 2.1 1.7 29.3 22.5 4.3 2.5 42.7 20.2 12.2 10.4 100.0 100.0 54.8 24.7 1996-97 27.8 24.0 2006-07 20.5

Source: National Accounts Statistics

Inequalities of Income Distribution in India: The distribution of national income in India totally remained inequal although its volume has grown sizeably, more particularly during the last two decades. Rather with this growth of national income over the last two decades, inequality in the distribution of income has been accentuated. Table : Pattern of distribution of Income Fractile Group Estimates of the RBI 1953-54 to 1956-57 Rural 17.0 25.0 69.0 9.0 Urban 26.0 37.0 75.0 7.0 Estimates of Iyengar & Mukherjee 195253 to 1956-57 Rural Urban 14.0 17.5 34.0 25.0 7.5 8.5 Estimates of NCAER 1960 Rural 33.6 79.3 4.0 Urban 31.0 42.4 83.0 4.0

Top 5% Top 10% Top 50% Bottom 20% (Source: Report of Mahalnobis committee on distribution of income)

From the above table, the estimates of RBI shows that the top 5% of the rural population enjoyed 17% of the income while the bottom 20% of the rural population enjoyed only 9% of the aggregate income. The top 50% of the rural population has 69% of the income while bottom 50% has only 31% of it. Again in the urban areas, the top 5% of the urban population enjoyed 26% of the total income while the bottom 20% received only 7% of it. Moreover, the top 50% of the urban population enjoyed only 25% of the income leading to a situation where few rich become richer and a few poor become poorer.

FINDINGS Social democratic policies governed India's economy from 1947 to 1991. The economy was characterised by extensive regulation, protectionism, public ownership , pervasive corruption and slow growth. The policy reforms at the start of the 1990s has been a major factor in the acceleration of economic growth rate of India. The announcement of sweeping liberalization by the minority government of P.V. Narasimha Rao in July 1991 opened the economy. With dismantled import controls, lowered customs duties, devalued currency, abolishment of licensing controls on private investment, dropped tax rates, India became an attractive venture for the foreign countries to invest leading to the rapid growth of Indian economy. Since 1991, continuing economic liberalisation has moved the country towards a market-based economy. A revival of economic reforms and better economic policy in first decade of the 21st century accelerated the economic growth rate. In recent years, Indian cities have continued to liberalise business regulations. By 2008, India had established itself as the world's second-fastest growing major economy. Yet the aggregate growth data tells us that the acceleration of economic growth began earlier, in the early or mid-1980s, long before the exchange crisis of 1991.Thus apparently the policy changes in the early and mid-1980s under the last governments of the Nehru dynasty were sufficient to start the acceleration of growth, small as those policy reforms appear in retrospect. However, in the absence of the second wave of reforms in the 1990s it is unlikely that the rapid growth of the second half of the 1980s could be sustained. But hard evidence to support such a strong counterfactual judgment is lacking. During the first decade of planning (1950-51 to 1960-61) the national income and the per capita income increased at the average annual rate of 3.8% and 1.8% respectively .After that the performance of the economy started to show a decline. During the second decade of planning (1960-61 to 1970-71) the annual rate of growth of national income declined to 3.4% and that of per

capita income to 1.2%. But during the 1980s, the economy registered a spectacular improvement in achieving its growth rate. During the period 1980-81 to 1990-91 the national income registered a growth rate of 5.3% and the per capita income showed a growth rate of 3.1% per annum. The average Indian's income in 2007-08 has nearly doubled since the turn of the millennium. The estimates of per capita income for 2007-08, put out by the Central Statistical Organisation (CSO), peg per capita income for that year at Rs 33,283 in current prices. In 2000-01, the per capita income was only Rs 16,688 or roughly half of the 2007-08 figure. A sharp rise in average income levels has happened in the five years starting 2003-04. The 2007-08 figures were 76% higher than those of 2002-03 in nominal terms and 42% higher in inflation-adjusted terms. That's because the economy grew at 12% plus rates in nominal terms for each of these five years or 7.5% plus rates in real terms. The Indian economy is the 12th largest in USD exchange rate terms. India is the second fastest growing economy in the world. Indias GDP has touched US$1.25 trillion. The crossing of Indian GDP over a trillion dollar mark in 2007 puts India in the elite group of 12 countries with trillion dollar economy. The tremendous growth rate has coincided with better macroeconomic stability. India has made remarkable progress in information technology, high end services and knowledge process services. However, cause for concern would be this rapid growth has not been an inclusive in nature, in the sense it has not been accompanied by a just and equitable distribution of wealth among all sections of the population. This economic growth has been location specific and sector specific. For e.g. it has not percolated to sectors were labour is intensive (agriculture) and in states where poverty is acute (Bihar, Orissa, Madhya Pradesh and Uttar Pradesh). Though India has the second highest growth rate in the world, its rank in terms of human development index (which is broadly used has a measure of life expectancy, adult literacy and standard of living) has gone down to 128 among 177 countries in 2007 compared to 126 in 2006.

TABLE INDEX:

TABLE 1 : MACRO-ECONOMIC AGGREGATES (At Current Prices) (Concld.) (Amount in ` crore) Year NDP of Gross Net Gross Net Per Per Public Domestic Domestic Domestic Domestic Capita Capita Sector Capital Capital Saving Saving GNP at NNP at Formation Formation Factor Factor Cost Cost (Rupees) (Rupees) 1 16 17 18 19 20 21 22 (Base Year : 1999-2000 ) 1952. 811 177 845 211 271 254 53 1953. 862 215 875 228 290 273 54 1954. 1004 327 988 311 267 250 55 1955. 1395 914 1356 875 267 255 56 1956. 1921 1375 1561 1015 313 299 57 1957. 1829 1208 1356 735 313 298 58 1958. 1755 1070 1379 694 343 326 59 1959. 1951 1186 1720 955 353 335 60 19601352 2433 1586 1952 1105 379 359 61 19611520 2419 1474 2074 1129 390 369 62 19621758 2880 1834 2440 1394 408 385 63 19632038 3143 2094 2703 1654 456 434 64 19642271 3677 2472 3077 1872 522 496 65 19652586 4432 3028 3833 2429 534 505 66 19662882 5251 3599 4328 2676 594 561 67 19673268 5130 3234 4293 2397 683 646

68 196869 196970 197071 197172 197273 197374 197475 197576 197677 197778 197879 197980 198081 198182 198283 198384 198485 198586 198687 198788 198889 198990 199091 199192

3859 4397 4909 5458 5979 6995 9027 10735 12661 13930 15408 17491 20472 25436 31315 36976 42119 49013 58154 67571 80550 93380 105835 125983

5073 6285 6965 7759 8085 11304 12951 14079 16011 18530 23729 24793 28975 33507 36353 40608 48745 59623 64391 79089 99470 118371 148206 144466

3138 4067 4403 4840 4737 7245 7675 7999 9457 11299 15529 14780 17239 19422 20048 22075 27348 34328 35456 46110 60836 72804 97128 82495

4657 6044 6571 7281 7788 10912 12298 14196 17320 19995 23601 24213 26881 30896 33787 38091 45453 53389 58036 72264 87166 106092 130010 141089

2722 3826 4009 4362 4440 6853 7022 8116 10766 12764 15401 14200 15145 16811 17482 19558 24056 28094 29101 39285 48532 60525 78932 79118

704 759 789 820 882 1057 1219 1265 1332 1488 1566 1672 1957 2243 2439 2791 3062 3351 3656 4048 4712 5309 6049 6823

667 717 742 768 823 987 1130 1165 1227 1374 1439 1521 1784 2039 2209 2535 2772 3016 3281 3629 4232 4755 5440 6100

199293 199394 199495 199596 199697 199798 199899 199900 200001 200102 200203 200304 200405

143386 164453 191718 226628 245414 292533 337584 383305 403526 439414 486584 517139 560533

173498 194724 259355 311782 330806 385808 408109 506244 511788 520656 618035 759325 1011212

101369 113842 165533 200656 202415 242059 245907 324823 309970 292359 367528 479277 682171

159682 189933 247462 291002 313068 363506 389747 484256 499033 534885 646521 820685 997873

87553 109050 153640 179876 184677 219757 227545 302835 297215 306588 396014 540637 668832

7682 8745 10024 11528 13188 14406 16288 17693 18668 19977 17693 23484 26220

6855 7838 8993 10331 11831 12915 14638 15881 16688 17782 18885 20871 23198

(Base Year : 2004-05 ) 2004571514 1064041 744150 1050703 730812 27081 24143 05 2005609665 1279891 916178 1235288 871575 30411 27123 06 2006687429 1531568 1112957 1486044 1067433 34929 31198 07 2007768687 1901928 1417370 1837498 1352940 40078 35820 08 2008911021 1927107 1363817 1798347 1235057 45487 40605 09 2009- 1107264 2389213 1733540 2207423 1551750 52096 46492 10 2010. . . . . 61054 54835 11 Note: 1. Data for 2008-09 are Provisional, 2009-10 are based on Quick Estimates and data for 2010-11are based on Revised Estimates. 2. Population data relates to mid-financial year. 3. Regarding Personal Disposable Income, separate data on fees, fines, etc., paid by producers are not available and to that extent, personal disposable income is underestimated. Also see Notes on Tables. Source: Central Statistics Office (CSO).

Table 2 : Trends in the Growth Rates of Real GDP Period 1950-51 to 1960-61 1960-61 to 1970-71 1970-71 to 1980-81 1950-51 to 1980-81 1980-81 to 1990-91 1990-91 to 2000-01 1980-81 to 2000-01 Agriculture 3.03% 2.31% 1.50% 2.28% 3.48% 2.79% 3.13% Industry 6.18% 5.44% 4.02% 5.21% 7.22% 6.03% 6.62% Services 4.14% 4.62% 4.34% 4.36% 6.50% 7.70% 7.10% Non-Agri. 4.85% 4.93% 4.22% 4.66% 6.79% 7.06% 6.92% GDP 3.85% 3.63% 3.04% 3.50% 5.58% 5.83% 5.71%

CONCLUSION: To conclude, if India wants to sustain and raise even higher its current growth, the main bottlenecks in the Indian economy will need to be addressed. In addition, the current erratic and low growth pattern of the agricultural sector, and the rising inequalitybetween, states, between rural and urban areas, and within urban and within rural areas .Of these numerous factors, we have addressed only a few. Each of these factors deserves inquiry and research. Greater income inequality which results in higher povertyis a serious problem for India. This could lead to political tensions and could destabilize the otherwise optimistic growth scenario. Indias trajectory over the last 15 years has been remarkable, but there will truly be reason to celebrate this when the overall gains filter down to the poorest and the most deprived sections of Indias vast population.

Bibliography:
Oxford Review of Economic Policy, Volume 23, Number 2, 2007, pp.143167 World Development Indicators database, World Bank, 1 July 2011 Srinivasan, T. N. (2000), Eight Lectures on Indias Economic Reforms, New Delhi, Oxford University Press. (2005), http://www.adb.org/Documents/Papers/INRM-PolicyBriefs/inrm10.pdf www.google.co.in Central Statistics Office (CSO). Indian economy by P.K. DHAR; ISBN 978-81-272-4695-2; 16 edition.
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