Uses of National Income Data

Uses of National Income Data:1:National Income as a measure of economic growth - Estimates of national income at constant prices indicate economic growth of a country. 2:National Income as an indicator of success or failure of planning - If a country has adopted planning as a means of economic growth then national income data can help in assessing the achievements of planning. 3: Useful in estimating per capita income - Per capita income is obtained by dividing national income by total population of the country. 4:Useful in assessing the performance of different production sectors - Production units of a country are broadly classified into primary, secondary and tertiary sectors. These sectors generate factor incomes. The data on factor incomes generated by these sectors can be used to measure their relative contributions to national income. 5:Useful in measuring inequalities in the distribution of income - All individuals so not have the same income. It means national income is unequally distributed among people. The extent of inequality in a country can be measured from the national income data collected through the income distribution methods. 6:Useful in measuring standards of income - The expenditure method reveals consumption expenditure and investment expenditure. If the total consumption expenditure is divided by the total investment expenditure we get per capita consumption expenditure which indicates the average standard of living of the people of the country. 7:Makes international comparisons possible - We can compare the economies of any two countries on the basis of their national income data. Various utilities of the national income estimates can be described as below: 1 National income estimates help us to know this performance of an economy during one year and over a period of years. 2 National income estimates also tell us about the economic welfare enjoyed by the people. We can know the per capital income by dividing national income by population. 3 on the basis of national income estimate comparison between various economics of the world may be made. National income figures for various countries provides us the rates of growth in different economies. 4 In an economy, inter-sector comparison can be made with the help of national income statistics 5 national income figures are inevitable for an economy, which wants to develop with the help of economic planning. 6 National income accounts reflect the structural change in a growing economy.

7 National income estimated over period of years enable us evaluate the planning. 8National income estimated are also important in the formation of the budget by the finance Minister of the country. 9 National income estimates are also important because they indicate how the income or wealth is distributed among the various classes. Thus we can know whether the national income is equally distributed or not. Great Answer Not Helpful Report