Importance of National Income Statistics Essay Example for Free

richness of National Income Statistics EssayThere be several important uses of study income statistics and, therefore, there is great take aim for their regular preparation. National income estimates provide not only a single recruit suggesting the field income, but to a fault supply the detailed figures in regard to the various components of the issue income. It is both the figure of subject area income and the details regarding its various constituents that throw light on the functioning and performance of the economy. The following are some of the important uses of national income estimates (i) National income estimate queers the overall production performance of the economy, as it seeks to total the take aim of production in a year. Per capita income, which is found out by dividing the total national income by the population, gives us an idea about the average standard of living of the people. Economic welfare depends to a capacious degree on the level of nation al income and the average standard of living of the people. Thus, the figures of national income and per capita income indicate the level of scotch welfare of the people of a country.(ii) By comparing national income estimates over a point of time, we hobo know whether the economy is growing, stagnant or declining. If the national income increases over years, it means that the economy is growing. And if the national income remains more or less unchanged, it indicates that economy is stagnant. But if the national income is falling over a period of time, it indicates that the economy is deteriorating. In case the economy is growing, we can also judge the rate of economic growth or development by measuring the rate of increase in national income. Further, by comparing the per capita income over years, we can know the changes in the standards of living and economic welfare of the people. (iii) The national income estimates show the contribution made by the various sectors of the econ omy, such as agriculture manufacturing industry, trade, etc., to the national income. Thus, the national income estimates of India reveal that about 50 per cent of the national income originates in agriculture. That shows the overwhelming importance of agriculture in the Indian economy.(iv) National income estimates throw light on the dissemination of national income among different categories of income, such as wages, profits, rents, and interest. The distribution of national income between wages on the one hand and profits, interest, rent on the otherwise, is of special significance, since disagreement in personal incomes depends to a large extent on the share of working classes (i.e., wages) and the share of stead owners (i.e., rents, profits and interest). (v) The national income estimates also contain the figures of breathing in manner of speaking and investment in the economy. Information regarding consumption saving and investment is indispensable for both economic stu dy concerning economic growth and planning. It is the rate of saving and investment in the economy that determines the rate of economic grow plus investment constitute the level of aggregate demand on which the level of income or employment in a country.(vi) With the help of national income estimates of various countries of the world, we can compare the standards of living and the levels of the people living in those countries. For this purpose we have to even out national income figures for differences in production and price levels. In other words, by the figures of the real national income per capita, we can compare the standards of living or levels of welfare in different countries. Moreover, developed and under-developed countries ire usually sort out o the basis of per capita income. (vii) National income estimates are a valuable guide to economic policy in particular in these days of development planning and active government intervention in the economy. By sounding at th e national income statistics, the government can decide if the economy or its various actors need any stimuli or regulation. From the national income estimates we can see the part played b the government in the national economy. There are 3 main bothers involves in measuring National IncomeThese areErrors and Omissions this is a problem in collecting and calculating statistics. This is a problem as people breed what they earn and firms hide their output, to avoid buckle undering tax, this is the black economy also known as the ray gun all over recording of figures (Double Counting) This is losing all perks as you are not revived and incomes are being counted multiple times. This also affects firms as their output/produce is taken account for more than once, as it is used by other Juggernoob production firms.Over Recording of incomes (Double Counting) As people pay taxes their incomes are taking into account, and used to pay such things as benefits and pensions, if these are al so counted sleight of hand is in progress. This is when quick revivals are not appropriate and electrics must be turned on to ensure the survival of the round.