Lovely Professional

University

TERM PAPER
Of
MANAGERIAL ECONOMICS
TOPIC: -
NATIONAL INCOME GROWTH AND RISE IN
STANDARD OF LIVING IN DEVELOPING COUNTRIES WITH
DATA

Submitted to: Submitted by:

Mr. Sumit Goyal Pramod
Ku.Tiwari

Lecturer, LSM Roll no.- B44

LPU Reg.No-
10901147
 Sec.-
S1906

MBA-IT

Index
1. Declaration Page no: 3
2. Acknowledgement Page
no: 4
3. Introduction Page
no: 5
5. Objectives of the Study Page
no: 10
6. National Income Of India Page
no: 10
7. National Income calculation in India Page
no: 14
8. Standard of living in India Page
no: 17
9. National Income of China Page
no: 19
10. National Income calculation in China
Page no: 20
11. Standard of living in China Page no:
23
12. National Income of Iran
Page no: 24
13. Conclusion Page no:
25
14. Recommendations Page
no: 26
15. Bibliography Page
no: 28

DECLARATION

I, Pramod Ku. Tiwari student of Lovely Professional

University have completed the Project on:
National Income Growth and rise in Standard of
living in
developing Countries with data.
The information given in this project is true to the
best of my knowledge.
 (P
RAMOD KU. TIWARI)

ACKNOWLEDGEMENT

First of all I would like to thank the Lovely Professional

University and take the opportunity to do this
project as a part of the MBA-IT.
Many people have influenced the shape and content
of this project, and many supported me through it.
I express my sincere gratitude to Mr. Sumit Goyal
for assigning me a project on Managerial
Economics, which is an interesting and exhaustive
subject.

He has been an inspiration and role model for this

topic. His guidance and active support has made it
possible to complete the assignment.

I would like to thank the Almighty for always helping

me.

INTRODUCTION-

1) NATIONAL INCOME:
It is defined as the aggregate factor income (earning of labour and land)
which arises from the current production of goods and services by the
nation’s economy.
 IMPORTANCE OF NATIONAL INCOME:
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 consideration.

TYPES OF MEASURE OF NATIONAL INCOME:

Following are the measures of national Income:

 As the sum of all incomes, in cash and kind, according to factor of

Production, in a given time period.

 As the sum of net output arising in several sectors of nation’s production.

 As the sum of consumer’s, government expenditure on goods and services
and net expenditure on capital goods.

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
people’s income and well-being. The growth in real GDP is hence a
measure of the growth of people’s 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. 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 year’s 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.

5) Personal Income (P.I): Personal Income is the sum of all incomes

actually received by all individuals or households during a given year.

Personal Income = National Income - Social Security Contribution

-Corporate Income Taxes - Undistributed Corporate Profits +
Transfer Payments.

6) Disposal Income (D.I): After a good part of personal income is paid

to government in the form of personal taxes like income tax, personal
property tax, etc., what remains of personal income is called disposable
income.

Disposable Income = Personal Income – Personal Taxes.

MEASUREMENT OF NATIONAL INCOME:
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 OR PROBLEMS IN CORRECT MEASUREMENT:

There are some problems which crop up when measuring national income of a
country, some are as below-

1) Problems of Definition: Ideally we should include all goods and services

produced in the course of the year; but there are some parts of the total which defy
measurement. The services of housewives, for example, are not included on the
ground that there is no means of assessing their market value.

2) Calculation of Depreciation: The question of calculation of depreciation

on capital consumption presents another formidable difficulty. Unless from the
gross national income correct deductions are made for depreciation, the estimate of
net national income is bound to go wrong. The main problem is that both the
amount and the composition of capital are changing all the time.

3) Value of Inventories: It is not easy to calculate the value of inventories,

i.e., raw materials, semi-finished and finished goods in the custody of the
producers.

4) The Treatment of Government: Another difficulty arises with regard to

the treatment of Government in national income accounts. On this point, the
general viewpoint is that as regards the administrative functions of the government
like justice, administration and defence, they should be treated as giving rise to
final consumption of such services by the community as a whole, so that the
contribution of general government activities will be equal to the amount of wages
and salaries paid by the government.

5) Income by Foreign Firms: Another major problem arises with regard to

the treatment of income arising out of activities of the foreign firms in a country.
On this point, The IMF viewpoint is that production and income arising from an
enterprise should be ascribed to the territory in which production takes place.
However, profits earned by foreign branches and subsidiaries are credited to the
parent concern.

THE EQUILIBRIUM LEVEL OF INCOME:

When the income earned in a given period is totally spent on the goods and
services produced in that specific period, national income is said to be at
equilibrium level in such a case, aggregate expenditure equals aggregate income.

Let, C = Consumption Expenditure

I = Investment

X = Value of Exports

G = Government Expenditure

Aggregate Expenditure (Y) = C + I + X + G

The income earned is spent on:

1. Consumption goods (C)

2. Imports (M)

3. The payment of taxes levied by the government (T)

4. Savings (S)

Y=C+S+T+M

Thus, national income is at equilibrium level when:

C+I+X+G=C+S+T+M
Since the consumption expenditure item (C) appears on both sides of the equation,
it can be cancelled out.

I+X+G=S+T+M

Aggregate demand is the amount domestic and foreign residents wish to spend on
the national product of a country and aggregate supply is the amount of national
output domestic firms wishes to produce. When national income equals aggregate
demand, there is equilibrium in the economy. That is, planned expenditure by
economic agents (individuals, firms and government) is equal to national income.
If aggregate demand were less than national income then firms would be left with
unsold goods on their hands and so would cut back production. National income
would be falling over time and so would not be in equilibrium and the economy
will tend to decrease and output, employment, imports and prices will decrease. In
the opposite situation of aggregate demand in excess of output, firms would
respond by increasing production provided that they had underutilized productive
capacity. Excess aggregate demand at full employment would lead to rising prices
and the economy will tend to grow and output, employment, import and prices will
rise.

STANDARD OF LIVING:
Standard of living is the level of consumption that an individual, group, or nation
has achieved. The evaluation of a standard of living is relative, depending upon the
judgment of the observer as to what constitutes a high or a low scale. A relative
index to the standard of living of a certain economic group can be gathered from a
comparison of the cost of living and the wage scale or personal income. Factors
such as discretionary income are important, but standard of living includes not only
the material articles of consumption but also the number of dependents in a family,
the environment, the educational opportunities, and the amount spent for health,
recreation, and social services. Unemployment, low wages, crowded living
conditions, and physical calamities, such as drought, flood, or war, may bring a
drop in the standard of living, and, conversely, an increase in social benefits and
higher wages may bring about a rise. While standard of living may vary greatly
among various groups within a country, it also varies from nation to nation, and
international comparisons are sometimes made by analyzing gross national
products, per capita incomes, or any number of other indicators from life
expectancy to clean water. Overall, industrialized nations tend to have a higher
standard of living than developing countries. In the United States, as in most
Western nations, the standard of living has shown a steady trend upward.

2) OBJECTIVES OF THE STUDY:

i) To measure the size of the economy and level of country’s 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.

3) NATIONAL INCOME OF INDIA:

NATIONAL INCOME SERIES IN INDIA:
After independence, a regular national accounts system was initiated in the mid-
sixties. Indian system of national account statistics (NAS) follows the united
nation’s (UN) system of national accounts (1968). Based on the national income
committee’s recommendation (1954), the central statistical organization (CSO) has
been making continuous efforts to improve the quality of these statistics. Shifting
the base year to revise the series is one such effort. The CSO revised its national
accounts series by shifting the base year to 1970-71. With improved data base and
extended coverage, the CSO revised its series again by shifting the base year to
1980-81, and then to 1993-94. Recently CSO has revised its series within six year
period by shifting the base to 1999-2000.

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 India’s 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) source: computed from central statistical organization. The data given
below provides the trend of the GDP growth from the year 1950 to 2005. 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.

SECTOR 1950-1980 1980-2005

GDP TOTAL 3.5 5.6

GDP PER CAPITA 1.4 3.6

TRENDS IN PER CAPITA INCOME:

The size of the per capita income at constant prices has recorded only five fold
increase from 1950 to 2005. The growth rate of per capita income during the same
period has increased from 1.4 percent to 3.6 percent. The per capita income is not
the correct indicator for the living standards of people. The actual income of the
people would have deviated well above or below than that of the per capita
income. Some measure of poverty and income inequality would help us to
understand the actual distribution of the income growth achieved.

SECTORAL COMPOSITION OF NATIONAL INCOME:

National income is derived from many sectors. We generally classify them into
three major sectors namely primary, (agriculture), secondary (manufacturing) and
tertiary (services). During the initial stage of development, share of primary sector
in the national income will be high. But this will decline during the course of
development and share of industry will be greater. At very high level of
development, the share of service sector in the national income will be more.

The following data gives sect oral composition of national income (in percent)
figures up to 1990-91 are based on 1993-94 series. From 2000-01 onwards, figures
are based on the new series with 1999-2000 as the base year.

YEAR PRIMARY SECONDARY TERTIARY TOTAL GDP

1950-51 59 13 28 100

1980-81 42 22 36 100

2002-03 24 24 52 100

The sectoral composition of national income presented in above table confirms

such general pattern but partially. The share of primary sector has declined from
59 per cent to 24 percent. However, the industrial sector has not grown to the
expected level. Instead, the service sector has almost reached more than half (52
%) of our national income.
NATIONAL COMPARISON OF NATIONAL INCOME:
We have compared the growth performance of India since independence to date.
How has India performed with other countries of the world? Data given below
provides such a comparison of per capita income with reference to some select
countries. The performance of India in terms of the per capita dollars in 2001 in
relation to high and middle income countries of the world is far below. With a per
capita dollar of 460, India has just managed to be marginally above the average per
capita income of (430) very poor countries in the world.

SECTOR 1950 - 80 1980 – 05

PRIMARY SECTOR 2.2 2.9

SECONDARY SECTOR 5.3 6.1

TERITARY SECTOR 4.5 7.1

4) NATIONAL INCOME CALCULATION IN INDIA:

The first attempt to calculate national income of India was made by Dada Bai
Naroji in 1867-68. This was followed by several other attempts. The first scientific
attempt was made by Prof. V.K. Rao in 1931-32. But it was not a satisfactory
attempt. The first official attempt was made by Prof. P.C. Mahalanobis in 1948-49.
The final report was submitted in 1954.Today national income is calculated and
published by the Central Statistical Organization. All the three methods are used
for calculating national income in India. The following table shows the gross
national product and the net national product of India for the last ten years.

YEAR GNP NNP

RS. CRORES RS. CRORES

1992 - 93 618969 546023

93 - 94 769265 685912

94 - 95 901111 803090

95 – 96 1053736 936548

96 – 97 1224208 1089563

97 - 98 1376943 1224946

98 - 99 1583110 1415044

99-2000 1740207 1557781

2000 -01 1900310 1702454

2001-2002 2801350 228396

From the analysis, it is seen that the national income of India is growing slowly
because of the following reasons-

i) Slow growth of agricultural sector

ii) Defect in planning

iii) Rapid growth of population.

iv) Under-utilisation of the productive capacity of machines

v) Poverty

Growth in national income is considered as an index of development. Try to

identify various measures whereby India can increase its national income.

COUNTRIES GNP (BILLION DOLLARS)

1997 1998 1999 2000

INDIA 1055.4 928.9 979.9 1062.9

CHINA 64.6 63.2 62.9 61.0

AMERICA 4812.1 4089.9 4054.5 4519.1

INDONESIA 7783.1 7921.3 8879.5 9601.5

GDP OF INDIA:
The Indian economy is the 12th largest in USD exchange rate terms. India is the
second fastest growing economy in the world. India’s 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.

Indian GDP –Trend of Growth Rate

1960-1980 : 3.5%

1980-1990 : 5.4%

1990-2000 : 4.4%

2000-2009 : 6.4%

CONTRIBUTION OF VARIOUS SECTORS IN GDP:

The contributions of various sectors in the Indian GDP for 1990-1991 are as
follows:

Agriculture 32%

Industry 27%

Service Sector 41%

The contributions of various sectors in the Indian GDP for 2005-2006 are as
follows:

Agriculture 20%

Industry 26%

Service Sector 54%

The contributions of various sectors in the Indian GDP for 2007-2008 are as
follows:

Agriculture 17%
 Industry 29%

Service Sector 54%

It is great news that today the service sector is contributing more than half of the
Indian GDP. It takes India one step closer to the developed economies of the
world. Earlier it was agriculture which mainly contributed to the Indian GDP.

India has one of the lowest external debts to national income ratios globally,
according to the last round of the economic survey. China's external debt to
national income ratio is lower than India.

In fact, India's external debt to GNP ratio stands at 22 percent, while China stands
at about 15 percent. Argentina has the highest external debt to GNP ratio of 104
percent. Others like Indonesia and Turkey have heavy external debt to GNP ratios.

5) STANDARD OF LIVING IN INDIA:

INDIA GDP AND STANDARD OF LIVING COMPARATIVE
ANALYSIS:
The substantial growth in various sectors like IT, Real Estate, ITES has led to the
improvement of the standard of living at a constant rate. However, the statistical
figures still delineate that approximately 27.5 % of the Indian population lives
below the poverty line. The most significant indicator required to measure the
standard of living is in realty per capita purchasing power parity-adjusted gross
domestic product. A comparative analysis of the standard of living of India with
other countries will aid in the assessment of the position of India in the standard of
living chart. The per capita- adjusted gross domestic product of China in the year
2003 was $4,900 and that of the majority of western European countries is $26,000
and that of the most developed country like US is $33,000. The per capita-
adjusted gross domestic product of India has been calculated to be US $ 31, 00.

MEASUREMENT OF INDIA GDP AND STANDARD OF LIVING:

GDP makes an assessment of India's national output by dividing the current GDP
of India with the total population of the country. In the examination of overall
production, GDP takes into account both the public as well as the private
consumption accompanied with the manufacture of capital goods that consequently
aid in the further production of commodities.

ALTERNATIVE TO INDIA GDP AND STANDARD OF LIVING:

A recent innovation in the field of India GDP and Standard of Living can be used
in place of per capita GDP in order to examine India's present material well -being.
Subtracting military expenditures from the total consumption in order to identify
the standard of living will do this. This new measure has substantially reduced the
difference in material well being of the Indian citizens when compared with that of
the foreign countries.

STANDARD OF LIVING IN INDIA IS LOW BUT IMPROVING:

As of 2005, 85.7% of the population lives on less than $2.50 (PPP) a day, down
from 92.5% in 1981. This compares with 80.5% in Sub-Saharan Africa. 75.6% of
the population lives on less than $2 a day (PPP), which is around 20 rupees or $0.5
a day in nominal terms. It was down from 86.6% and compares with 73.0% in Sub-
Saharan Africa. A 24.3% of the population earned less than $1 (PPP, around $0.25
in nominal terms) a day in 2005, down from 42.1% in 1981.41.6% of its
population is living below the new international poverty line of $1.25 (PPP) per
day, down from 59.8% in 1981.

The single most common indicator used to quantify standard of living is the per
capita purchasing power parity (PPP) adjusted gross domestic product (GDP). In
2007, the per capita PPP-adjusted GDP for India was US$2,659. These figures can
be compared to $5, 96 for neighbouring China.

With one of the fastest growing economies in the world, clocked at an average
growth rate of 8% between 2004-2005, India is fast on its way to becoming a large
and globally important consumer economy. The Indian middle class, estimated to
be 300 million people by Indian standard (but much lower by European or North
American standard), is fast becoming used to Western culture.[citation needed] If
current trends continue, Indian per capita purchasing power parity will grow to be
approximately one third that of the developed world by the middle of the 21st
century.[citation needed] In 2006, 22 percent of Indians lived under the poverty
line. India aims to eradicate poverty by 2020.
The standard of living in India shows large disparity. For example, rural areas of
India exist with very basic (or even non-existent) medical facilities, while cities
boast of world class medical establishments.

6) NATIONAL INCOME OF CHINA:

According to a survey by the State Statistics Bureau, less than five percent of
China's wealthiest hold nearly a half of the country's savings deposits worth more
than 6 trillion Yuan.

China's national income has risen along with its swift economic growth. The
number of Chinese who enjoy a fairly well-off and even wealthy lifestyle has
increased and the number of Chinese who remain in poverty has dwindled.
However, in recent years a new phenomenon has risen - the income gap between
rural and urban Chinese has grown wider and wider.

According to the National Bureau of Statistics Urban Social Economic Survey of

nearly 40,000 families nationwide, the average income per person in 1999 was
5,854 Yuan, up 7.9% from the year before. After adjusting for inflation, the actual
growth was 9.3%, which is higher than the increase in China's growth national
product. But as the national income has increased, the income disparity between
rich and poor has also grown; the contrast between rich and poor grows starker
daily. Of the 1.25 billion people polled in this survey, the top 20% in terms of
highest income held 42.4% of the total wealth.

In truth, the gap between China's rich and poor first began to appear ten years ago.
At the time, rough estimates said that the top 10% held 40% of the banks' savings.
By the mid-1990s, 20% owned 80% of the savings in banks. The government is
extremely concerned over the reasons for the disparity between rich and poor and
has adopted numerous policies to address the problem. For example, the current
call to develop China's western region is the biggest move aimed at shrinking the
affluence gap. This year, there have been ten major projects started in the West
whose investments range from 1 billion to 20 billion Yuan to get instant results in
terms of local production, employment and income.

According to a survey by the State Statistics Bureau, less than five percent of
China's wealthiest hold nearly a half of the country's savings deposits worth more
than 6 trillion Yuan.
China's national income has risen along with its swift economic growth. The
number of Chinese who enjoy a fairly well-off and even wealthy lifestyle has
increased and the number of Chinese who remain in poverty has dwindled.
However, in recent years a new phenomenon has risen - the income gap between
rural and urban Chinese has grown wider and wider.

According to the State Statistics Bureau, Urban Social Economic Survey of nearly
40,000 families nationwide, the average income per person in 1999 was 5,854
Yuan, up 7.9% from the year before. After adjusting for inflation, the actual
growth was 9.3%, which is higher than the increase in China's growth national
product. But as the national income has increased, the income disparity between
rich and poor has also grown; the contrast between rich and poor grows starker
daily. Of the 1.25 billion people polled in this survey, the top 20% in terms of
highest income held 42.4% of the total wealth.

In truth, the gap between China's rich and poor first began to appear ten years ago.
At the time, rough estimates said that the top 10% held 40% of the banks' savings.
By the mid-1990s, 20% owned 80% of the savings in banks.

The Chinese government is relying on its policies to close the income disparity.
For example, it is considering taxing the upper, middle and lower classes
differently. The upper class would be taxed more while the lower class would.

Experts have criticized the government's previous policies to distribute everything

evenly. But the recent trend in income disparity isn't a good thing either. As a
socialist country in its primary phase, China should strive for the goal of having all
Chinese grow rich together.

7) NATIONAL INCOME CALCULATION OF CHINA:

How China's GDP rose and fell from 1952 to 2009-

 1953 Hyperinflation conquered; civil war and land reform ended: GDP up
15.6% in real terms.

 1958-59 So-called "Great Leap Forward" devastated agriculture: result was

falling GDP in 1960-62. (Figures for 1958-59 highly suspect, as the
statistical network was largely destroyed in the "Leap", when absurdly high
increases in output were reported by frightened local officials.)
 1963-66 Partial restoration of market economy in the countryside promoted
faster growth of agriculture.

 1967-68 Production undermined by the so-called "Great Proletarian Cultural

Revolution", that was initiated by Mao in mid-1966 and effectively ended
by People's Liberation Army intervention in 1968

 1969-70 High growth rates followed the restoration of order after the
"cultural revolution".

 1976 Widespread
earthquakes, including the
worst ever at Tangshan, hit
industrial centres, while
agricultural output was hit
by drought; policy paralysis
resulted from the anti-Deng
campaign, followed by
Mao's death and the arrest
of the Gang of Four. GDP
fell.

 1978-1982 Smashing the

communes and restoring
family farming jacked up
agricultural (especially grain) output.

 1983-85 Double-digit real GDP growth accompanied the first wave of

foreign investment into China, and non-state enterprises started to develop.

 1989-91 Growth slowed after the government broke the overheating

economy following an aborted effort at wholesale price reform in 1988
which resulted in panic buying and runaway inflation. Price stability was
achieved by cancelling large fixed investment projects, slowing domestic
demand. Foreign investment fell off after the Beijing Massacre of June 198.

 1992 Deng Xiaoping's Southern Tour at the beginning of the year massively
boosted foreign direct investment inflows into coastal areas and started a
wave of government investment in Shanghai. Record trade and GDP growth
and inflation followed.
  1993 Zhu Rongji appointed to rein in the overheating economy, this time
more selectively than in 1989-91. Growth rates subsided gradually in
subsequent years, producing a so-called "soft landing". During the 1990s,
living standards continued to rise, as evidenced by the proliferation of
consumer durables, especially among the urban population. Continuing FDI
inflows helped boost foreign exchange reserves to record heights in the late
1990s.

 Despite efforts to cool the overheating economy, the officially recorded

GDP growth rate was 11.4% in 2007.

 In 2008 the global economic crisis began to reduce China's growth rate. In
the face of forecasts that this might drop below the rate at which school
leavers can be absorbed by the growing economy (7%-8%) the government
decided to pump RMB 4 trillion into the economy in the form of an
economic stimulus package consisting largely of investment in fixed
infrastructure and human capital.

 In 2009 China's GDP growth rate, though lower than the double-digit
average of recent years, has held up well, rising from 6.1% year-on-year in
the first quarter to 7.7% in the first three quarters of the year. This means
that year-on-year GDP growth was around 9% in the second quarter. A
similar rate of growth (9%) is expected in the final quarter, ensuring a rate
of over 8% for 2009 as a whole.

China's Gross Domestic Product (GDP) in 2009 -

Absolute Value (CNY billion yuan )

Growth Rate over the Same Period Last Year
(%)

Gross Domestic Product 33,535.3 8.7

Primary Industry 3,547.7 4.2

15,695.8 9.5
Secondary Industry
Tertiary Industry 14,291.8 8.9
8) STANDARD OF LIVING IN CHINA:
 Before 1949 the Chinese economy was characterized by widespread
poverty, extreme income inequalities, and endemic insecurity of livelihood.
By means of centralized economic planning, the People's Republic was able
to redistribute national income so as to provide the entire population with at
least the minimal necessities of life (except during the "three bad years" of
1959, 1960, and 1961) and to consistently allocate a relatively high
proportion of national income to productive investment. Equally important
to the quality of life were the results of mass public-health and sanitation
campaigns, which rid the country of most of the conditions that had bred
epidemics and lingering disease in the past. The most concrete evidence of
improved living standards was that average national life expectancy more
than doubled, rising from around thirty-two years in 1949 to sixty-nine
years in 1985.

 In 1987 the standard of living in China was much lower than in the
industrialized countries, but nearly all Chinese people had adequate food,
clothing, and housing. In addition, there was a positive trend toward rapid
improvements in living conditions in the 1980s as a result of the economic
reforms, though improvements in the standard of living beyond the basic
level came slowly. After thirty years of austerity and marginal sufficiency,
Chinese consumers suddenly were able to buy more than enough to eat from
a growing variety of food items. Stylish clothing, modern furniture, and a
wide array of electrical appliances also became part of the normal
expectations of ordinary Chinese families.

 Signs that China’s economic recovery is gaining speed have led to a flurry
of optimistic revisions to GDP growth forecasts in the past week. First the
World Bank upped its estimate for Chinese economic growth to 7.2% as
against its March forecast of only 6.5% growth for this year. A few days
later, the OECD weighed in with a prediction of 7.7%, versus a 6.3% figure
three months ago. Credit Suisse is calling for 8% growth this year and 9% in
2010. [And for our many readers, who come blogs on China for Indian
content, Credit Suisse is calling for 6.2% and 7.4% growth of the Indian
economy in 2009 and 2010.So the living standard of China is improving in
a faster rate.
9) NATIONAL INCOME OF IRAN:

The National Income. Iran is a large country (over 600,000 square miles), sparsely
populated (about 18 to 20 millions), predominantly agricultural, and sadly lacking
in statistics. Any estimate of its national income is bound to be hardly more than a
reasonable guess. The latest such guess appears in the U.N. Statistical Year Book
for 1952, which puts the figure at about $1,800,000,000 annually during recent
years. Experts will affirm that the figure is more likely to be an under- than an
overestimate.

How oil industry contribute to the national income Growth:

1- There are the cash revenues which accrue directly to the government.
2- The wages and salaries earned by Iranians in the industry.
3- The goods and services purchased by the in-dustry in Iran.

Even at the peak of its operation, the industry employed fewer

than 100,000, mostly unskilled labor. Assuming an average income for these
workers of $500 a year (an optimistic guess, about six times greater than the
national average), this amounts to $50,000,000. The industry's purchases in Iran
are limited, for its technical equipment, and the nontechnical goods and
services for its non-Iranian employees, are purchased abroad. If we put the
figure at $20,000,000 a year we are probably overesti-mating.

 Let us recapitulate. Oil royalties at their peak amounted to $30,000,000;

wages and salaries, $50,000,000; goods and services, $20,000,000. The oil
industry's total contri-bution amounted to $100,000,000 -- or about 6 per
cent of the annual national income of $1,800,000,000.

 Employment. Iran's male labor force can be estimated at 5,000,000 persons.

The oil in-dustry never employed more than 100,000,000, or about 2 per
cent.

 Oil Industry's Role. To the vast majority of the people of Iran the oil
industry simply does not exist. They get nothing from it directly or
indirectly. At least 85 per cent of the people live on a primitive agriculture,
20 per cent still lead a nomadic tribal existence. It has yet to be proven that
the oil industry has raised the abysmally low standard of living of these
Iranian masses by any substantial amount.
GDP OF IRAN:

Year (million current US$)

2007 289933

2005 192020

2000 102930

GROTH RATE OF GDP:

Year (% p.a.)

2007 5.8

2005 4.5

2000 2.8

10) CONCLUSION:
From the above discussion, we may easily conclude that
national income plays an integral role in the development of an economy. It is the
important measure of standard of living of the people of a count

 Continuous increase in production can be considered as an index of progress

that an economy has achieved. This increase in production will naturally
promote the growth of National Income.

 India’s Economy has grown by more than 9% for three years running, and
has seen a decade of 7% positive growth.

 The growth rate of the service sector was 11.18% in

 2007 and now contributes 53% of GDP.

 The industrial sector grew 10.63% in the same period

 And is now 29% of GDP.

 Agriculture is 17% of the Indian economy.

 The growth rate of the manufacturing sector rose steadily from 8.98% in
2005, to 12% in 2006.

 The storage and communication sector also registered a significant growth

rate of 16.64% in the same year.

 The percentage of gross capital formation in GDP is concerned, there has

been a significant rise from 22.8%

 In the fiscal year 2001, to 35.9% in the fiscal year 2006.

11) RECOMMENDATIONS:

 It needs legal reform to focus sharply on the interests of the public,

and not those of the public servant, in the functioning of the
governmental .

 All forms of special protection for persons working for Government

or public sector

Agencies (except for armed forces or agencies engaged in maintenance of law

and order) deserve to be eliminated.

 Government should be free to engage the services of non-governmental

organizations or private service providers at competitive costs to ensure
effective delivery of essential services.

 Freedom of information and full disclosure of all financial decisions

made by Governments and its multifarious agencies on a daily rather
than quarterly or annual basis.
 12) LIMITATIONS OF THE STUDY:

The report has been prepared on the basis of secondary data. The report and my
findings are subjected to the following limitations:

 The information collected from the different sources may not be up

to the mark.

 There may be more areas which are unexposed in this study, but may
cover the national income of the country.

13) BIBLIOGRAPHY:

1. www.indiastat.com

2. www.flipkart.com/national-income-india.../0195650506-

3. http://dqw3fn8dnd.487/trh
4. www.worldbank.org /Data

5. www.economywatch.com

6. www.china-embassy.org

7. http://business.mapsofindia.com

8. http://www.Economictimes.com

9. http://www.Businesstimes.com