Indian Economy Quiz: National Income Accounting | 12 July, 2021

Scottish Enlightenment thinker Adam Smith introduced the concept Invisible hand in several of his writings, but it found this economic interpretation in his book An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.

• The invisible hand is part of laissez-faire, meaning “let do/let go,” approach to the market.

• In other words, the approach holds that the market will find its equilibrium without government or other interventions forcing it into unnatural patterns.
• The invisible hand is a metaphor for the unseen forces that move the free market economy.
• Through individual self-interest and freedom of production as well as consumption, the best interest of society, as a whole, are fulfilled.
• The constant interplay of individual pressures on market supply and demand causes the natural movement of prices and the flow of trade.

Source: TMH Ramesh Singh

Public goods are goods that can be consumed simultaneously by a large number of people without the consumption by one imposing an opportunity cost on others.

The characteristics of a public good:

• Non excludability i.e., the citizens can enjoy its benefits at no explicit financial cost.
• Non rival consumption i.e., the marginal cost of supplying this public good to an extra citizen is zero.
• Non-Rejectable i.e., collective supply for all citizens means that it cannot be rejected.

Source: NCERT XII Macro Economics

Annual Survey of Industries (ASI) is conducted by National Sample Survey Office (NSSO). ASI is principal source of industrial statistics in India. It does not cover unorganized or unregistered or informal sector enterprises.

• ASI, an annual event, not only facilitates suitable data collection based on appropriate sampling techniques but also ensures timely dissemination of statistical information to asses and evaluates the dynamics in composition, growth and structure of organized manufacturing sector.
• The structure and function of the industrial sector is an important perspective of Indian Economy. It is imperative for industries to grow both qualitatively and quantitatively to boost the economy.
• The well-being of the industries depends truly on the formulation and promotion of industrial policies framed by the policy makers.
• To frame suitable industrial policies the policy makers, need to be aware about the quantified aspect of the existing scenarios in the industries in the country.

• This is where the Annual Survey of Industries (ASI) is conducted by National Sample Survey Office, Government of India.

Source: TMH Ramesh Singh

ISAR is the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting, the United Nations focal point on accounting and corporate governance matters.

• It was established in 1982 by the United Nations Economic and Social Council (ECOSOC).
• Through its Division on Investment and Enterprise, the United Nations Conference on Trade and Development (UNCTAD) serves as ISAR’s secretariat, providing substantive and administrative inputs to its activities.

Source: The Hindu

Gross Domestic Product (GDP) is the value of the all-final goods and services produced within the boundary of a nation during one year period.

It is also calculated by adding national private consumption, gross investment, government spending and trade balance (exports-minus-imports).

Source: TMH Ramesh Singh

Every asset (except human beings) goes for depreciation in the process of their uses, which means they ‘wear and tear’.

The governments of the economies decide and announce the rates by which assets depreciate (done in India by the Ministry of Commerce and Industry) and a list is published, which is used by different sections of the economy to determine the real levels of depreciations in different assets.

Source: TMH Ramesh Singh

Gross National Product (GNP) is the GDP of a country added with its ‘income from abroad’. Here, the trans-boundary economic activities of an economy are also taken into account. The items which are counted in the segment ‘Income from Abroad’ is:

• Private Remittances
• Interest on external loans
• External grants

Source: TMH Ramesh Singh

The Central Statistics Office (CSO), in January 2015, released the new and revised data of National Accounts, effecting two changes:

• The Base Year was revised from 2004–05 to 2011–12. This was done in accordance with the recommendation of the National Statistical Commission (NSC), which had advised to revise the base year of all economic indices every five years.
• This time, the methodology of calculating the National Accounts has also been revised in line with the requirements of the System of National Accounts (SNA)-2008, an internationally accepted standard.

Source: TMH Ramesh Singh

Basically, ‘factor cost’ is the ‘input cost’ the producer has to incur in the process of producing something (such as cost of capital, i.e., interest on loans, raw materials, labour, rent, power, etc.).

• This is also termed as ‘factory price’ or ‘production cost/price’. This is nothing but ‘price’ of the commodity from the producer’s side.

• While the ‘market cost’ is derived after adding the indirect taxes to the factor cost of the product, it means the cost at which the goods reach the market, i.e., showrooms (these are the cenvat/central excise and the CST which are paid by the producers to the central government in India).

Source: TMH Ramesh Singh

The chequered history of evolution, developments, transformations and coming of age of the Directorate General of Commercial Intelligence and Statistics (Ministry of Commerce and Industry) has been a mammoth exercise spread over a span of one hundred and forty years and carried out under the stewardship of capable and pragmatic visionaries.

• The Organization traces its origin to a statistical branch established in the Finance Department of the Government of India way back in 1862.
• Sir William W. Hunter was the first DG of the DGCI & S or the Director General of Statistics as he was designated, back in 1871.
• The DGCI&S compiles and releases monthly export & import data on merchandise trade.

• It also compiles and releases yearly data on inter-state movement of goods in India by river, rail & air; customs & excise revenue collections of the Indian union, inland coasting trade consignments of India and foreign coastal cargo movements of India.

Source: The Hindu