Q. 5

Write four limitations in estimating the national income of India.

Answer :

National income refers to the amount of total income acquired by the country in one year. This amount is acquired through the production of goods and services mainly from the three sectors - Agriculture sector, Industrial sector and Service sector. To get the national income of the country of a particular year, we have to calculate the money value of goods and services produced in that year. The four limitations in estimating the national income of India are as follows –

• Sometimes the money value of goods and services is calculated twice when it passes through different stages of production which leads to double counting.


• National income doesn’t take into consideration the Services of housewives.


• In the estimation of the National income, production of goods for self-consumption is not included.


• Due to issues like Ignorance and illiteracy, it becomes difficult to collect statistical data.


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