Composition of National Income

Trends in Sectoral Composition of Income in both countries
National Income
National income is the total value a countrys final output of all new goods
and services produced in one year.
Objective
To study the sector wise composition of National Income in India
To compare the trends in India national Income in comparison to China
To understand the factors affecting the sectoral changes in these two
countries
To understand if the growth achieved is a balanced growth.
Composition of National Income in India
This group assignment is focused on understanding the macroeconomic
indicators of Indian economy and comparing them with any other country to
assess its strengths and weaknesses.
This analysis gives us the deeper insights on how the composition of a
countrys national income impacts its economic growth. We have used the
secondary data available on various websites from RBI, WorldBank, IMF etc
to prepare this report.
Indian economy is classified in three sectors Agriculture and allied,
Industry and Services.
Agriculture sector includes
1) Agriculture (Agriculture proper & Livestock)
2) Forestry & Logging
3) Fishing and related activities
Industry includes
1) Manufacturing (Registered & Unregistered)
2) Electricity
3) Gas
4) Water supply
5) Construction.
Services sector includes
1) Trade
2) Repair
3) Hotels and restaurants
4) Transport
5) Storage
6) Communication & services related to broadcasting
7) Financial
8) Real estate services
9) Community
10) Social & Pers. Services
Services sector is the largest sector of India. Gross Value Added (GVA) at
current prices for Services sector is estimated at 61.18 lakh crore INR in
2014-15. Services sector accounts for 52.97% of total India's GVA of 115.50
lakh crore INR. With GVA of Rs. 34.67 lakh crore, Industry sector contributes
30.02%. While, Agriculture and allied sector shares 17.01% and GVA is
around of 19.65 lakh crore INR. At 2011-12 prices, composition of Agriculture
& allied, Industry, and Services sector are 16.11%, 31.37%, and 52.52%,
respectively.India is 2nd larger producer of agriculture product. India
accounts for 7.68 percent of total global agricultural output. GDP of Industry
sector is $495.62 billion and world rank is 12.In Services sector, India world
rank is 11 and GDP is $1185.79 billion. Contribution of Agriculture sector in
Indian economy is much higher than world's average (6.1%). Contribution of
Industry and Services sector is lower than world's average 30.5% for Industry
sector and 63.5% for Services sector.At previous methodology, composition
of Agriculture & allied, Industry, and Services sector was 51.81%, 14.16%,
and 33.25%, respectively at current prices in 1950-51. Share of Agriculture &
allied sector has declined at 18.20% in 2013-14. Share of Services sector has
improved to 57.03%. Share of Industry sector has also increased to 24.77%
a)Trends in sectoral composition of income in India and China

China and India is the two emerging economy of the world. China and India is
2nd and 9thlargest country of the world, respectively in nominal basis. On
PPP basis, China is at 1st and India is at 3rd place in 2014. Both countries
together share 16.08% and 23.16% of total global wealth in nominal and PPP
terms, respectively. Among Asian countries, China and India together
account for 52.77% (PPP) and 48.99% (Nominal) of total Asia's GDP.
GDP of China is 5.06 and 2.39 times more than India at nominal and ppp
terms, respectively. China crossed $1 trillion mark in 1998 while India in 2007
at exchange rate basis. Now in 2014, India crossed 2 trillion mark and China
crossed 10 trillion. In 1980, size of economy of China and India was $309 and
$181, respectively.
GDP of China at ppp terms is 1.7 times more than compare to nominal basis.
This ratio of India is 3.60.
According to sector wise GDP composition of India in 2014 are as follows :
Agriculture (17.9%), Industry (24.2%) and Services (57.9%). Sector wise GDP
composition of China in 2014 are : Agriculture (9.7%), Industry (43.9%) and
Services (46.4%).
In nominal terms, per capita gdp of China is $7,589, 80th position in world
and 19th in Asia. India's gdp per capita is around $1,627. India's rank in
world and Asia is 145 and 33, respectively. On PPP basis, gdp per capita of
China is $12,880 and of India is $5,855. China is 4.66 times richer than India
in nominal method and 2.20 times richer in ppp method.
Growth rate of China is estimated at 7.38% in 2014. India's growth rate is
estimated at 7.17% in 2014. During period 1980-2014, Average GDP growth
of China was 9.8% compare to India's 6.23% in same period. China attains
maximum growth of 15.20% in year 1984 and minimum 3.80% in 1990. Out
of 35 years from 1980 to 2014, China grew by more than 10% in 16 years
while India in only one. India reached an all time high of 10.26% in 2010 and
a record low of 1.06% in 1991. India's growth rate was 9-10% in 4 years,
while China in 7 years.
Indian rupee was at 4.23 INR per Chinese yuan (CNY) on 2 Jan 1996. Value of
Indian rupees has fallen to 10.18 INR per 1 CNY in 1 Jan 2015.
Yea
r
Nominal GDP
(billions $)
PPP GDP (billions

Int. $)
Nominal GDP
capita ($)
PPP GDP capita

(Int. $)
Growth
(%)
India
China
India
China
India
China
India
China
Indi
a
Chin
a
202
0
3,639.804
16,157.105
12,708.36
3
28,229.14
4
2,671.50
0
11,449.15
7
9,327.53
2
20,003.57
7
7.75
6.33
201
9
3,311.747
14,968.590
11,565.73
5
26,033.62
4
2,462.69
5
10,662.30
3
8,600.55
9
18,544.05
8
7.70
6.33
201
8
3,012.896
13,876.111
10,528.77
5
24,004.71
4
2,269.93
7
9,935.691
7,932.45
4
17,188.06
0
7.65
6.10
201
7
2,755.830
12,864.400
9,574.550
22,148.58
8
2,103.57
7
9,259.340
7,308.43
4
15,941.77
1
7.55
6.00
201
6
2,510.599
11,968.412
8,722.546
20,473.50
4
1,941.59
9
8,659.388
6,745.67
6
14,812.99
5
7.47
6.30
201
5
2,308.018
11,211.928
7,996.623
18,975.87
1
1,808.41
3
8,154.384
6,265.63
5
13,801.06
5
7.46
6.76
201
4
2,049.501
10,380.380
7,375.898
17,617.32
1
1,626.98
2
7,588.996
5,855.30
6
12,879.85
3
7.17
7.36
201
3
1,875.157
9,469.125
6,783.655
16,173.27
2
1,508.16
4
6,958.908
5,456.00
5
11,885.81
9
6.90
7.75
201
2
1,835.821
8,386.678
6,252.671
14,789.51
7
1,495.95
2
6,193.818
5,095.10
1
10,922.51
1
5.08
7.76
201
1
1,843.018
7,314.482
5,845.361
13,482.08
0
1,521.92
2
5,428.791
4,826.96
5
10,006.36
8
6.64
9.30
201
0
1,708.460
5,949.648
5,370.619
12,085.45
1
1,430.12
6
4,437.023
4,495.66
2
9,012.873
10.2
6
10.41
200
9
1,365.373
5,105.769
4,812.076
10,813.81
4
1,158.93
2
3,825.979
4,084.50
0
8,103.270
8.48
9.21
200
8
1,224.096
4,547.716
4,402.484
9,826.847
1,053.43
9
3,424.433
3,788.71
2
7,399.623
3.89
9.64
200
7
1,238.700
3,504.605
4,156.076
8,790.822
1,080.89
0
2,652.412
3,626.59
3
6,653.212
9.80
14.20
200
6
949.118
2,793.159
3,686.976
7,498.219
839.927
2,124.916
3,262.81
1
5,704.324
9.26
12.68
200
5
834.218
2,287.258
3,273.776
6,456.258
748.850
1,749.256
2,938.75
8
4,937.638
9.29
11.30
200
4
721.589
1,944.674
2,902.265
5,619.960
657.522
1,496.041
2,644.58
4
4,323.445
7.85
10.10
200
3
618.369
1,650.514
2,619.025
4,967.804
572.299
1,277.220
2,423.90
1
3,844.246
7.94
10.01
200
2
523.768
1,455.560
2,378.849
4,42
200
1
493.934
1,317.236
2,254.777
3,99
200
0
476.636
1,192.854
2,100.670
3,60
199
9
466.841
1,100.775
1,975.414
3,25
199
8
428.767
1,045.200
1,793.828
2,97
199
7
423.189
985.044
1,671.218
2,73
199
6
399.791
892.010
1,579.135
2,45
199
5
366.600
756.964
1,441.967
2,19
199
4
333.014
582.673
1,313.050
1,93
199
3
284.194
641.064
1,205.418
1,67
199
2
293.262
499.859
1,124.013
1,43
199
1
274.842
424.116
1,041.841
1,23
199
0
326.608
404.495
997.737
1,09
Observation
s
Economy overview
China
India
Since the late 1970s China

has moved from a closed,
centrally planned system to
a more market-oriented one
that plays a major global
role - in 2010 China became
the world's largest exporter.
Reforms began with the
phasing out of collectivized
agriculture, and expanded to
include the gradual
liberalization of prices, fiscal
decentralization, increased
autonomy for state
India is developing into an

open-market economy, yet
traces of its past autarkic
policies remain. Economic
liberalization measures,
including industrial
deregulation, privatization of
state-owned enterprises,
and reduced controls on
foreign trade and
investment, began in the
early 1990s and served to
accelerate the country's
growth, which averaged
enterprises, growth of the

private sector, development
of stock markets and a
modern banking system,
and opening to foreign trade
and investment. China has
implemented reforms in a
gradualist fashion. In recent
years, China has renewed its
support for state-owned
enterprises in sectors
considered important to
"economic security,"
explicitly looking to foster
globally competitive
industries. After keeping its
currency tightly linked to the
US dollar for years, in July
2005 China moved to an
exchange rate system that
references a basket of
currencies. From mid 2005
to late 2008 cumulative
appreciation of the renminbi
against the US dollar was
more than 20%, but the
exchange rate remained
virtually pegged to the dollar
from the onset of the global
financial crisis until June
2010, when Beijing allowed
resumption of a gradual
appreciation and expanded
the daily trading band within
which the RMB is permitted
to fluctuate. The
restructuring of the
economy and resulting
efficiency gains have
contributed to a more than
tenfold increase in GDP
since 1978. Measured on a
under 7% per year from

1997 to 2011. India's diverse
economy encompasses
traditional village farming,
modern agriculture,
handicrafts, a wide range of
modern industries, and a
multitude of services.
Slightly less than half of the
work force is in agriculture,
but, services are the major
source of economic growth,
accounting for nearly twothirds of India's output with
less than one-third of its
labor force. India has
capitalized on its large
educated English-speaking
population to become a
major exporter of
information technology
services, business
outsourcing services, and
software workers. India's
economic growth began
slowing in 2011 because of a
decline in investment,
caused by high interest
rates, rising inflation, and
investor pessimism about
the government's
commitment to further
economic reforms and about
the global situation. In late
2012, the Indian
Government announced
additional reforms and
deficit reduction measures,
including allowing higher
levels of foreign
participation in direct
investment in the economy.
purchasing power parity

(PPP) basis that adjusts for
price differences, China in
2013 stood as the secondlargest economy in the world
after the US, having
surpassed Japan in 2001.
The dollar values of China's
agricultural and industrial
output each exceed those of
the US; China is second to
the US in the value of
services it produces. Still,
per capita income is below
the world average. The
Chinese government faces
numerous economic
challenges, including: (a)
reducing its high domestic
savings rate and
correspondingly low
domestic consumption; (b)
facilitating higher-wage job
opportunities for the
aspiring middle class,
including rural migrants and
increasing numbers of
college graduates; (c)
reducing corruption and
other economic crimes; and
(d) containing environmental
damage and social strife
related to the economy's
rapid transformation.
Economic development has
progressed further in coastal
provinces than in the
interior, and by 2011 more
than 250 million migrant
workers and their
dependents had relocated to
urban areas to find work.
The outlook for India's longterm growth is moderately

positive due to a young
population and
corresponding low
dependency ratio, healthy
savings and investment
rates, and increasing
integration into the global
economy. However, India
has many challenges that it
has yet to fully address,
including poverty,
corruption, violence and
discrimination against
women and girls, an
inefficient power generation
and distribution system,
ineffective enforcement of
intellectual property rights,
decades-long civil litigation
dockets, inadequate
transport and agricultural
infrastructure, limited nonagricultural employment
opportunities, high spending
and poorly-targeted
subsidies, inadequate
availability of quality basic
and higher education, and
accommodating rural-tourban migration. Growth in
2013 fell to a decade low, as
India's economic leaders
struggled to improve the
country's wide fiscal and
current account deficits.
Rising macroeconomic
imbalances in India and
improving economic
conditions in Western
countries, led investors to
One consequence of
population control policy is
that China is now one of the
most rapidly aging countries
in the world. Deterioration in
the environment - notably
air pollution, soil erosion,
and the steady fall of the
water table, especially in the
North - is another long-term
problem. China continues to
lose arable land because of
erosion and economic
development. The Chinese
government is seeking to
add energy production
capacity from sources other
than coal and oil, focusing
on nuclear and alternative
energy development.
Several factors are
converging to slow China's
growth, including debt
overhang from its creditfueled stimulus program,
industrial overcapacity,
inefficient allocation of
capital by state-owned
banks, and the slow
recovery of China's trading
partners. The government's
12th Five-Year Plan, adopted
in March 2011 and reiterated
at the Communist Party's
"Third Plenum" meeting in
November 2013,
emphasizes continued
economic reforms and the
need to increase domestic
consumption in order to
make the economy less
dependent in the future on
shift capital away from India,

prompting a sharp
depreciation of the rupee.
However, investors'
perceptions of India
improved in early 2014, due
to a reduction of the current
account deficit and
expectations of post-election
economic reform, resulting
in a surge of inbound capital
flows and stabilization of the
rupee.
GDP
(purchasing
power parity)
GDP - real
growth rate
GDP - per
capita (PPP)
GDP composition
by sector
Population
below
poverty line
Household
income or
consumption
by
percentage
share
fixed investments, exports,

and heavy industry.
However, China has made
only marginal progress
toward these rebalancing
goals. The new government
of President XI Jinping has
signaled a greater
willingness to undertake
reforms that focus on
China's long-term economic
health, including giving the
market a more decisive role
in allocating resources.
$13.39 trillion (2013 est.)
note: data are in 2013 US
dollars
7.7% (2013 est.)
7.7% (2012 est.)
9.3% (2011 est.)
$9,800 (2013 est.)
$9,100 (2012 est.)
$8,300 (2011 est.)
dollars
agriculture: 10%
industry: 43.9%
services: 46.1%
(2013 est.)
6.1%
note: in 2011, China set a
new poverty line at RMB
2300 (approximately US
$3,630)
(2013)
lowest 10%: 1.7%
highest 10%: 30%
note: data are for urban
households only (2009)

dollars
3.2% (2013 est.)
5.1% (2012 est.)
7.5% (2011 est.)
$4,000 (2013 est.)
$3,900 (2012 est.)
$3,800 (2011 est.)
dollars
agriculture: 17.4%
industry: 25.8%
services: 56.9% (2013 est.)
29.8% (2010 est.)
lowest 10%: 3.6%

highest 10%: 31.1% (2005)
Inflation rate
(consumer
prices)
Labor force
Labor force by
occupation
Unemployme
nt rate
Distribution
of family
income - Gini
index
Budget
Industries
2.6% (2013 est.)

2.6% (2012 est.)
9.6% (2013 est.)

9.7% (2012 est.)
797.6 million
note: by the end of 2012,
China's population at
working age (15-64 years)
was 1.0040 billion (2013
est.)
agriculture: 33.6%
industry: 30.3%
services: 36.1%
(2012 est.)
4.1% (2013 est.)
4.1% (2012 est.)
note: data are for registered
urban unemployment, which
excludes private enterprises
and migrants
47.3 (2013)
47.4 (2012)
487.3 million (2013 est.)
revenues: $2.118 trillion

expenditures: $2.292
trillion (2013 est.)
world leader in gross value
of industrial output; mining
and ore processing, iron,
steel, aluminum, and other
metals, coal; machine
building; armaments;
textiles and apparel;
petroleum; cement;
chemicals; fertilizers;
consumer products
(including footwear, toys,
and electronics); food
processing; transportation
equipment, including
automobiles, rail cars and
locomotives, ships, aircraft;
telecommunications
revenues: $181.3 billion

expenditures: $281.6
billion (2013 est.)
textiles, chemicals, food
processing, steel,
transportation equipment,
cement, mining, petroleum,
machinery, software,
pharmaceuticals
agriculture: 49%
industry: 20%
services: 31% (2012 est.)
8.8% (2013 est.)
8.5% (2012 est.)
36.8 (2004)
37.8 (1997)
Industrial
production
growth rate
Agriculture products
Exports
Exports commodities
Exports partners
Imports
Imports commodities
Imports partners
Debt external
Exchange
rates
equipment, commercial
space launch vehicles,
satellites
7.6% (2013 est.)
world leader in gross value

of agricultural output; rice,
wheat, potatoes, corn,
peanuts, tea, millet, barley,
apples, cotton, oilseed; pork;
fish
electrical and other
machinery, including data
processing equipment,
apparel, radio telephone
handsets, textiles,
integrated circuits
Hong Kong 17.4%, US
16.7%, Japan 6.8%, South
Korea 4.1% (2013 est.)
electrical and other
machinery, oil and mineral
fuels; nuclear reactor, boiler,
and machinery components;
optical and medical
equipment, metal ores,
motor vehicles; soybeans
South Korea 9.4%, Japan
8.3%, Taiwan 8%, United
States 7.8%, Australia 5%,
Germany 4.8% (2013 est.)
$863.2 billion (31 December
2013 est.)
$737 billion (31 December
2012 est.)
Renminbiyuan (RMB) per US
dollar 6.2 (2013 est.)
0.9% (2013 est.)
rice, wheat, oilseed, cotton,

jute, tea, sugarcane, lentils,
onions, potatoes; dairy
products, sheep, goats,
poultry; fish
$313.2 billion (2013 est.)
$296.8 billion (2012 est.)
petroleum products,
precious stones, machinery,
iron and steel, chemicals,
vehicles, apparel
UAE 12.3%, US 12.2%, China

5%, Singapore 4.9%, Hong
Kong 4.1% (2012)
$467.5 billion (2013 est.)
$488.9 billion (2012 est.)
crude oil, precious stones,
machinery, fertilizer, iron
and steel, chemicals
China 10.7%, UAE 7.8%,

Saudi Arabia 6.8%,
Switzerland 6.2%, US 5.1%
(2012)
2013 est.)
2012 est.)
Indian rupees (INR) per US
dollar 58.68 (2013 est.)
Fiscal year
Public debt
Reserves of
foreign
exchange
and gold
Current
Account
Balance
GDP (official
exchange
rate)
6.3123 (2012 est.)

6.7703 (2010 est.)
6.8314 (2009)
6.9385 (2008)
calendar year
22.4% of GDP (2013 est.)
26.1% of GDP (2012)
note: official data; data
cover both central
government debt and local
government debt, which
China's National Audit Office
estimated at RMB 10.72
trillion (approximately
US$1.66 trillion) in 2011;
data exclude policy bank
bonds, Ministry of Railway
debt, China Asset
Management Company debt,
and non-performing loans
$3.821 trillion (31 December

2013 est.)
2012 est.)
$182.8 billion (2013 est.)
$215.4 billion (2012 est.)
$9.33 trillion
note: because China's
exchange rate is determine
by fiat, rather than by
market forces, the official
exchange rate measure of
GDP is not an accurate
measure of China's output;
GDP at the official exchange
53.437 (2012 est.)

45.726 (2010 est.)
48.405 (2009)
43.319 (2008)
1 April - 31 March
51.8% of GDP (2013 est.)
51.7% of GDP (2012 est.)
note: data cover central
government debt, and
exclude debt instruments
issued (or owned) by
government entities other
than the treasury; the data
include treasury debt held
by foreign entities; the data
exclude debt issued by
subnational entities, as well
as intra-governmental debt;
intra-governmental debt
consists of treasury
borrowings from surpluses in
the social funds, such as for
retirement, medical care,
and unemployment; debt
instruments for the social
funds are not sold at public
auctions
2013 est.)
2012 est.)
-$74.79 billion (2013 est.)
-$91.47 billion (2012 est.)
Stock of
direct foreign
investment at home
Stock of
direct foreign
investment abroad
Market value
of publicly
traded shares
Central bank
discount rate
rate substantially
understates the actual level
of China's output vis-a-vis
the rest of the world; in
China's situation, GDP at
purchasing power parity
provides the best measure
for comparing output across
countries (2013 est.)
2012 est.)
2011 est.)
2013 est.)
2012 est.)
2013 est.)
2012)
2011 est.)
2.25% (31 December 2013
est.)
2.25% (31 December 2012
est.)
Commercial
bank prime
lending rate
5.73% (31 December 2013

est.)
6% (31 December 2012 est.)
Stock of
domestic
credit
$11.79 trillion
2013 est.)
$10.02 trillion
2012 est.)
$5.532 trillion
2013 est.)
$4.911 trillion
2012 est.)
$18.15 trillion
Stock of
narrow
money
Stock of
(31 December
(31 December
(31 December
(31 December
(31 December
$310 billion (30 November

2013 est.)
2012 est.)
2013 est.)
2012 est.)
2012 est.)
2011)
2010 est.)
7.75% (31 December 2013
est.)
8% (31 December 2010
est.)
note: this is the Indian
central bank's policy rate the repurchase rate
10.6% (31 December 2013
est.)
10.63% (31 December 2012
est.)
2013 est.)
2012 est.)
2013 est.)
2012 est.)
broad money
Taxes and
other
revenues
Budget
surplus (+) or
deficit (-)
GDP composition,
by end use
Gross
national
saving
2013 est.)
2012 est.)
19.4% of GDP (2013 est.)
2013 est.)
2012 est.)
10.3% of GDP (2013 est.)
-2.1% of GDP (2013 est.)
-5.7% of GDP (2013 est.)
household
consumption: 36.3%
government
consumption: 13.7%
investment in fixed
capital: 46%
investment in
inventories: 1.2%
exports of goods and
services: 25.1%
imports of goods and
services: -22.2%
(2013 est.)
50% of GDP (2013 est.)
51.2% of GDP (2012 est.)
50.1% of GDP (2011 est.)
household
consumption: 56.4%
government
consumption: 12.4%
investment in fixed
capital: 29.6%
investment in
inventories: 8.2%
exports of goods and
services: 25.2%
imports of goods and
services: -31.8%
(2013 est.)
33.7% of GDP (2013 est.)
28.8% of GDP (2012 est.)
30.3% of GDP (2011 est.)
b. Factors affecting sectoral changes in these two countries
c. Comment on overall tends in changing composition Is it a

balanced growth?
Agriculture
Agriculture in India is the major sector of its economy. Almost two-thirds of
the total work-force earns their livelihood though farming and other allied
sectors like forestry, logging and fishing which account 18% of the GDP.
These sectors provide employment to 60% of the countrys total population.
About 43% of the countrys total geographical area is used for agricultural
purposes. After independence additional areas were brought under
cultivation and new methods, practices and techniques of irrigation and
farming were introduced by the government. The Green Revolution and
Operation Flood in the country have made India self-sufficient in producing
food grains and milk. Among other things, the government also tried to
decrease the dependence on monsoons. Better seeds, use of fertilizer,
education of farmers and provision of agricultural credit and subsidies are
reasons
for
increase
in
agricultural
productivity.
Agriculture in India is the responsibility of the states rather than the central
government. The central government formulates policy and provides
financial assistance to the states. States like Punjab, Haryana, Uttar Pradesh,
Andhra Pradesh, Tamil Nadu, Karnataka and West Bengal are major
producers of food grains in India. Himachal Pradesh and Jammu and Kashmir
are famous for fruit production. Tea is produced in the high altitudes of
Assam, Darjeeling in West Bengal, Tripura, Ooty in Tamil Nadu, Himachal
Pradesh and Kerala. Kerala is also the largest producer of natural rubber and
spices in India. Rajasthan is among the major producers of edible oils in India
and second largest producer of oil seeds. Production of non-conventional
items like moong (a type of lentil), soyabeans and peanuts are gradually
gaining
importance.
The steady and significant decline in the share of agriculture in total output,
as a result of its much slower growth, has been one of the singular features
of the process of structural change in India since independence. Amongst the
three broad sectors of the economy, agriculture was the largest contributor
to Indias GDP at the beginning. By now however it is by far the smallest.
Even though there has been a steady decline in its share in the GDP,
agriculture still remains the largest economic sector and plays a crucial role
in the socio-economic development of the country.
Industry and Manufacturing

The larger process of growth and structural change of the Indian economy
after independence was not a steady process of industrialization.
Indias industrial sector accounts for 27.6% of the GDP and gives
employment to 17% of the total workforce. Though agriculture is the
foremost occupation of the majority of the people, the government had
always laid stress on the industrial development of the country. Thus policies
and strategies were framed to give a boost to Indias industry. The
government aims at achieving self-sufficiency in production and protection
from foreign competition. Since independence, India is marching ahead to
become
a
diverse
industrial
base.
Today India holds some key industries in the sectors like steel, engineering
and machine tools, electronics, petrochemicals, textiles and software.
Importance has also been given to improve the infrastructure of the country.
The government has liberalized its industrial policy thereby attracting huge
foreign direct investment. If on one hand several multinational companies
opened their offices in India, on the other hand many Indian companies
started their operations in foreign countries.
Industry Growth Rate in India GDP has been impressive in the last few years.
The Growth Rate of the Industry in the India GDP has grown due to sustained
manufacturing activity over the years. This has given a major boost to the
Indian economy.
The reasons for the increase of Industry Growth Rate in India GDP are that
huge amounts of investments are being made in this sector and this has
helped the industries to grow. Further the reasons for the rise of the Growth
Rate of the Industrial Sector in India are that the consumption of the
industrial goods has increased a great deal in the country, which in its turn
has boosted the industrial sector. Also the reasons for the increase of
Industry Growth Rate in India GDP are that the industrial goods are being
exported in huge quantities from the country.
Industrial sector- PROBLEMS
o Failure to achieve targets
o Under-utilization of capacity
o Absence of proper infrastructure
o Increasing capital-output ratio
o High cost industrial economy
o Inadequate employment generation
o Poor performance of public sector
o Sectoral imbalances
o Regional imbalances
o Industrial sickness (small scale and cottage industries)
Services
People need more and more services for leading qualitatively better lifestyle.
They need more means of transport, more communication and educational
facilities, more training, more medical facilities, entertainment, technical
facilities,
banking
facilities
etc.
Tertiary sector which mainly comprise of services depends on scientific
research and innovative developments to increases productivity and it
provides engineering and construction consultancy support services for all
projects in all sectors. Developed countries employ more than 80% the
services sector.
India ranks fifteenth in the services output and it provides employment to
around 23% of the total workforce in the country. The various sectors under
the Services Sector in India are construction, trade, hotels, transport,
restaurant, communication and storage, social and personal services,
community, insurance, financing, business services, and real estate.
The Services Sector contributes the most to the Indian GDP. The Sector of
Services in India has the biggest share in the country's GDP for it accounts
for around 53.8% in 2005. The contribution of the Services Sector in India
GDP has increased a lot in the last few years.
During 2009-10 and 2010-11, automobiles, rubber and plastics, fabricated
metal products, machinery and equipment and radio, TV and communication
equipment segments had witnessed double digit growth.
The contribution of the Services Sector has increased very rapidly in the
India GDP for many foreign consumers have shown interest in the country's
service exports. This is due to the fact that India has a large pool of highly
skilled, low cost, and educated workers in the country. This has made sure
that the services that are available in the country are of the best quality. The
foreign companies seeing this have started outsourcing their work to India
especially in the area of business services which includes business process
outsourcing and information technology services. This has given a major
boost to the Services Sector in India, which in its turn has made the sector
contribute more to the India GDP.
Service sector PROBLEMS in general
o Inadequate infrastructure facilities ( power shortage, improper skill
development)
o High growth but low share in providing employment
o Inadequacy in finance
o Improper maintenance in airports, railways, highways, power plants etc
o Service sector cannot grow in isolation
References:
http://statisticstimes.com/economy/sectorwise-gdp-contribution-ofindia.php
https://www.kpmg.com/IN/en/services/Tax/FlashNews/IES-2014-15.pdf
http://www.indexmundi.com/factbook/compare/china.india/economy
https://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=13046#
CIA World Factbook

Composition of National Income

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Composition of National Income

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Trends in Sectoral Composition of Income in both countries

a)Trends in sectoral composition of income in India and China

PPP GDP (billions

PPP GDP capita

Since the late 1970s China

India is developing into an

enterprises, growth of the

under 7% per year from

purchasing power parity

The outlook for India's longterm growth is moderately

shift capital away from India,

fixed investments, exports,

$4.99 trillion (2013 est.)

lowest 10%: 3.6%

2.6% (2013 est.)

9.6% (2013 est.)

487.3 million (2013 est.)

revenues: $2.118 trillion

revenues: $181.3 billion

world leader in gross value

0.9% (2013 est.)

rice, wheat, oilseed, cotton,

UAE 12.3%, US 12.2%, China

China 10.7%, UAE 7.8%,

6.3123 (2012 est.)

$3.821 trillion (31 December

53.437 (2012 est.)

5.73% (31 December 2013

$310 billion (30 November

-2.1% of GDP (2013 est.)

-5.7% of GDP (2013 est.)

b. Factors affecting sectoral changes in these two countries

c. Comment on overall tends in changing composition Is it a

Industry and Manufacturing

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