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Uses of National Income Estimates

(i) State of a Nation’s economy:

The national income estimate serves as an indicator of the state of affairs of a country. It shows very clearly the overall performance of a nation. It tells whether the economy is progressing, static or declining by studying the national income statistics over a period of time.

(ii) For sectional performance and comparison:

It helps to indicate the growth and contribution of each of the sectors to the overall economic development of the country. It also shows the sectors that are lagging behind others.

(iii) For economic planning:

The national income estimates help the government to draw up effective economic plans. It aids in making good economic policies, in that attention will be paid to the sectors that are lagging behind. Hence. appropriate short and long term plans can be made to suit the needs of these sectors.

(iv) It is used to determine the standard of living of a country:

The nail~ income of a country when divided by her total population gives the income per head of citizens of that country. This income per head is known as the per ~Pa ~come of a country. This gives a rough estimate of the standard of living in a country. The higher the per capita income, the higher the standard of living and vice versa. The per capita income is also used in comparing the living standard of one country with that of another.

(v) Technical Aids:

International organisations like the World Bank and United Nations give priority to countries with low national income when giving out aids and grants. The data helps them to determine the type and degree of aids and grant to give out.

(vi) Investors’ Assistance:

The information given by the national income data greatly influences foreign investors who are searching for rapidly expanding, or rapidly growing markets to invest in.