Question

Read the passage below and answer the questions that follow.

The Central Statistical Office (CSO) in the Ministry of Statistics and Programme Implementation of Government is entrusted with the responsibility of compilation of national income and the related aggregate in the country. It regularly publishes national income data NSO, in its Press Release of 28 February, 2022, has given data of India's national income 2021-22 (Advanced Estimates). These data relate to GNP, GDP, per capita income, various categories of expenditure, savings, capital formation, etc.

1. What is per capital income?   [1]
2. Distinguish between domestic product and national product.   [2]
3. Distinguish between GDP at current prices and GDP at constant prices.   [2]
4. What is operating surplus?   [1]
5. State any two problems faced in the calculation of national income in developing countries.   [2]

Answer 1

1. Per capita income is the average income earned per person in a country in a given year. It is obtained by dividing the national income of a country by its population.
   Formula: Per Capita Income = `"National Income​"/"Total Population"`

2. Basis	Domestic product	National product
   Definition	Income generated within the domestic territory, including income by foreigners within the country.	Income earned by residents of a country, both domestically and abroad.
   Includes	All production inside the country, regardless of the producer's nationality.	All income earned by nationals, whether from within or outside the country.
   Excludes	Factor income earned abroad by residents.	Factor income earned by foreigners in the domestic economy.

3. Basis	GDP at current prices	GDP at constant prices
   Definition	GDP is measured using prices of the current year.	GDP is measured using prices of a base year.
   Effect of Inflation	Includes the impact of inflation or deflation.	Excludes the effect of price changes (shows real growth).
   Usefulness	Shows nominal growth of the economy.	Reflects a real increase in production or output.

4. Operating surplus refers to the income from property and entrepreneurship, i.e., rent, interest, and profit earned by private and public enterprises after paying wages and salaries.
5. 1. Non-monetised Sector: Many transactions (e.g., subsistence farming, household work) are not recorded in money terms, making valuation difficult.
   2. Lack of Reliable Data: Poor statistical infrastructure and informal economic activities make accurate data collection and estimation challenging.