CHAPTER 33

FACTOR INCOMES

33.1 The value of output created out of production of factor income from 1980-81 to 1989-90
process is distributed to three factors of separately for public sector, organized sector
production, namely, labour, capital and and unorganized sector, cross-classified by
intermediate consumption. However, if we industry of origin. The detailed methodology
exclude the intermediate consumption on adopted for compiling the estimates of factor
both sides, the value added (value of output, incomes was also included in the brochure.
minus, intermediate consumption) is created Subsequently, the estimates of factor
by two factors of production, namely, labour incomes are regularly included in the CSO’s
and capital. These two factors of production annual publication "National Accounts
have claim to the income generated out of Statistics".
the production process, and are accordingly
compensated respectively by compensation Conceptual Basis of Estimates
of employees and operating surplus in the 33.5 First, SNA makes a distinction between
case of organized sector and mixed income in commodities and industries. This is significant
the case of self employed/unincorporated because cost structure usually relates to
enterprises. industries. Further, to minimise the role of
assumptions to the extent feasible, SNA has
33.2 The estimates of factor incomes are required recommended grouping of establishments
for studying the relative shares of factors of rather than enterprises to form industries.
production in the value added from different According to SNA 'In those countries which
industries of the economy. The SNA do not have the practice of setting up
recommends presentation of domestic factor enterprises for specific purposes, it can be
incomes according to kind of economic observed that the output of an
activity and by institutions. The basic establishment is almost always more
concept recommended in the SNA originates homogeneous than the output of the
from the production account of industries in enterprise of which it forms a part'. In India
which factor incomes appear under the data collection system has been developed
distribution of domestic product. In the SNA in such a manner that the production of
1993, the generation of income account gives characteristic products (i.e. commodities)
operating surplus/mixed income as the is being estimated along with cost
balancing item, with value added as structure, in respect of certain economic
resources on the right side and compensation activities (such as agriculture, livestock,
of employees payable to workers employed in fishing). Thus the estimates for the economy
the production process as uses of value as a whole are related to the
added (other than taxes and subsidies) on commodities originating according to
the right side. industrial classification, in these activities.
However, the estimates of public sector and
33.3 In the national accounts statistics, the official private corporate sector are based on
estimates of factor incomes at current prices enterprise approach and thus relate to
were introduced in the year 1976. Estimates product mix of the enterprise and not a
giving distribution of Net Domestic Product single characteristic product (commodity).
were published in various issues of National Thus it may happen that in a statement on
Accounts Statistics (NAS) during 1976 to public sector by industry of origin, an
1987 in the following disaggregation: industry in public sector might show a
higher estimate than in the total economy
(a) factor incomes by industry of origin; where the output of a industry is only the
(b) factor incomes by organised and characteristic product (commodity).
unorganised sectors (aggregated, not
cross classified by industry of origin); 33.6 Second, the SNA has recommended use of
and International Standard and Industrial
(c) factor incomes by public and private Classification (ISIC) of all Economic Activities
organised sectors. for classifying industries. However, for the
purpose of national accounts, category for
33.4 The methodology for preparing these the activity of owner-occupied dwellings has
estimates was included in National Accounts been added. ISIC Division 70: Real estate
Statistics: Sources & Methods (April, 1980). activities and Division 71: renting of
After the introduction of NAS 1980-81 series, machinery and equipment without operator
a separate brochure on factor income was and of personal and household goods, include
brought out by the CSO, giving the estimates activities of renting commercial building and

National Accounts Statistics-Sources and Methods, 2007 Î 306

 CHAPTER 33

renting & leasing of machinery and c) Household and private unincorporated

equipment. The contribution of services of enterprises
ownership of dwelling is included under, “real
estate, ownership of dwellings and business 33.11 The data base for covering above sectors is
services”. derived from a variety of sources such as
budget documents, reports of non-
33.7 Third, in India because of the existence of departmental enterprises, Reserve Bank of
unincorporated enterprises and household India Bulletin, Publications of National Bank
industries which either do not maintain for Agriculture and Rural Development
accounts or are wholly managed by self (NABARD) and various reports of sample
employed workers (own account enterprises) surveys conducted by Central Statistical
the factor incomes generated cannot always Organisation (CSO) and National Sample
be separated between income from labour Survey Organisation (NSSO) along with
and entrepreneurship. It has, therefore, ancillary sector/activity specific information
become necessary in such cases to introduce from various sources.
the additional item of 'mixed income of self
employed' to take complete account of the Public Sector
factor incomes generated. The mixed 33.12 A detailed discussion on public sector giving
income of self employed covers sources of data, concepts used for economic
compensation of employees of own analysis of the data is included in the Chapter
account workers as well as profit/loss on public sector. Going through the details it
generated in the unincorporated enterprises. can be seen that the budget documents are
In the NAS, the mixed income was being generally available for Ministries. Reports of
separately shown even before the 1993 SNA. non departmental enterprises are for each
However, following the 1993 SNA enterprise covering all establishments under
recommendation to show mixed income the enterprise. Thus while analysing the
separately, the Indian national accounts are budget documents to a large extent, effort
in line with the 1993 SNA recommendation, has been made to reclassify each budget
as far as mixed income is concerned. document according to kind of economic
activity of individual departments under
33.8 In view of the foregoing discussions the each Ministry. But due to non-availability
estimates of factor incomes have been of establishment-wise data in the annual
presented in the categories given below, in reports, no such activity-wise reclassification
the NAS: could be made for non-departmental
enterprises. Because of these limitations the
1. Compensation of employees estimates of public sector cannot be merged
2. Operating surplus at individual sector level as such, yet for the
3. Mixed income of self employed economy as a whole breakup by public and
4. Net value added (1+2+3). private sector is possible.

33.9 However, in this connection it may be Private corporate sector

mentioned that in the NAS no imputation for Joint Stock Companies
rent has been made for using own building, 33.13 Private corporate sector includes the joint
machinery and equipments except for stock companies registered under the
residential buildings. Companies Act 1956. The sector covers a
large number of companies. Data giving
Data Base and General Issues important aggregates for preparing national
33.10 The estimates of factor incomes are accounts aggregates, covering the entire
prepared by institutional sectors and by sector are not available from any source.
industry of origin. The institutional sectors, The only source for the data is the Company
which are considered for preparation of Finance Studies released by Reserve Bank of
estimates, are: India. For the purpose of the study only a
sample of private/public limited companies
a) Public sector comprising administrative are considered. Although the sample is not
departments of the government, based on any scientific sampling scheme,
departmental enterprises and non yet it is seen that the coverage in terms of
departmental enterprises; paid-up capital is some what
b) Private Corporate sector covering the representative. The estimates of entire
joint stock companies in the private population are obtained by blowing up the
sector; and estimates from the sample study on the
basis of coverage in terms of total paid up

National Accounts Statistics-Sources and Methods, 2007 Î 307

 CHAPTER 33

capital. Apart from the reservation from cover the non household units but it could
many sources about the appropriateness of not provide reliable and coordinated data.
blowing factor, a comparable series of paid However, of late, data on unorganized
up capital of all companies is not available segments of various economic activities are
from Ministry of Company Affairs. For want becoming available regularly.
of comprehensive data, distribution of factor
shares in the private corporate sector are Organised Sector
not included in the NAS. However, 33.16 The coverage of the organised sector in
wherever private corporate sector data is National Accounts Statistics is described
being used for preparing estimates of value below:
added, the distribution of factor share
derived from RBI studies on company finance 1) Agriculture
are used for preparing the estimates. This ¾ government irrigation system, non-
component is merged in the private departmental enterprises and crop
organised sector. production in plantation crops of tea,
coffee and rubber covered in private
Cooperative Societies corporate sector
33.14 The cooperative societies are broadly covered 2) Forestry
under two groups viz. Cooperative credit ¾ recorded production of industrial and
societies and non credit societies. Data for fuel wood, as reported by the State
this institutional sector are released by Forest Departments
NABARD (earlier, until early 80’s, by RBI). 3) Fishing
The cooperative credit societies are ¾ non departmental enterprises (public
financial institutions registered under undertakings)
Cooperative Societies Act enforced at the 4) Mining & quarrying
State level, functioning within the purview of ¾ major minerals, as reported by the
Banking Regulation Act. These include Indian Bureau of Mines
State Cooperative Banks, Central 5) Manufacturing
Cooperative Banks, Industrial Cooperative ¾ registered factories covered under
Banks, Primary Agricultural Credit Societies, Factory Act
Primary non-agricultural Credit Societies, 6) Electricity, gas and water supply
Land Development Banks, Grain Banks, ¾ total activity of electricity, public
Primary Cooperative Banks etc. On the non- sector part of gas and water supply
credit side these societies cover various 7) Construction
activities of manufacturing, trading and ¾ construction works in the public
agriculture (including livestock, dairying, sector and private corporate sector
poultry etc.). Data on Income and (Joint Stock Companies)
Expenditure of these societies are published 8) Trade, hotels & restaurants
in two volumes, one relating to credit ¾ public and private corporate sector
societies and other relating to non-credit and cooperatives
societies. The time-lag in the availability of 9) Railways
data on cooperative societies is, however, ¾ entire sector
quite high. 10) Transport by other means
¾ public sector, private shipping
Households and Private companies, private airlines and road
Unincorporated Enterprises transport covered under the
33.15 The household sector including private private corporate sector
unincorporated enterprises is the unorganised 11) Storage
segment of the economy. The non- ¾ warehousing corporation in public
agricultural part of this segment has been sector, cold storage covered under
covered in the Indian economy through Factory Act
various surveys organised in the regular 12) Communication
programmes of National Sample Survey ¾ public sector and companies covered
Organisation and follow up surveys of under the private corporate sector
Economic Census organised/coordinated by 13) Banking and insurance
CSO. The work on estimation of various ¾ total activity except the commission
socio- economic characteristics is being done agents attached to life Insurance
through national sample surveys since early Corporation of India and unorganised
fifties but the coverage of these surveys was non banking financial undertakings
restricted to household enterprises only. In including professional moneylenders
the year 1974-75, an effort was made to and pawn brokers

National Accounts Statistics-Sources and Methods, 2007 Î 308

 CHAPTER 33

14) Real estate, ownership of recognised educational institutions, fully

dwellings and business services funded by government, have been included
¾ real estate and business services under the organised sector. Apart from this,
companies in the private corporate some other activities were also excluded due
sector and public sector to difficulties in collection of data.
15) Public administration and defence
¾ entire sector Estimates of factor incomes
16) Other services 33.19 The estimates of factor incomes are prepared
¾ public and private corporate sector by distributing the estimates of net domestic
medical, sanitary services, TV and product (NDP) in various economic activities.
radio broadcasting and other Broadly this process is done by dividing the
services and public and recognised sectors into three groups according to
educational institutions in the availability of data. The first group relates
private sector to components where regular data for
preparing production account are available.
33.17 From the above description it can be noted This group apart from public sector includes
that the concept of organised sector followed registered manufacturing; private shipping
so far is somewhat different from the companies etc. and poses no problem. In the
concept taken in the follow up surveys of second group those activities are included for
the Economic Census. Although, the follow- which reliable estimates of net domestic
up enterprise surveys cover private corporate product are available from recognised
sector and cooperative societies (thus sources e.g. plantation, major minerals etc.
constitute unorganized sector as per the and it is presumed that the activity is mainly
concept of surveys), these segments are concentrated in public or private corporate
covered under organized sector in the sector. In such cases fairly reliable
national accounts. The factor incomes of estimates can be prepared by distributing
these are prepared using the data available NDP according to distribution of factor
from the RBI. incomes of public and/or private corporate
sector for relevant activity. In the third
Unorganised Sector group the estimates of NDP are prepared
33.18 In order to fill the vital data gaps for using data available from various sample
planning, policy formulation and the surveys & ancillary sources for the bench
estimation of national income, a central mark year and carried forward to other years
scheme called "Economic Census and using various quantity and price indicators.
Surveys" was launched by the Government of The distribution of factor incomes for the
India during the Fifth Five Year Plan period. bench mark year are available from the
The scheme envisaged organising original source. Individual component of
periodically, a countrywide census of all factor incomes are carried forward to other
economic activities (excluding those engaged years by suitable indicators. The major
in crop production and plantation) followed source of these estimates is based on data
by detailed sample surveys of mainly provided by Economic Census and
unorganised segments of different sectors follow up surveys. A brief background on
of non agricultural economy in a phased Economic Censuses and surveys on
manner. For the purpose of collection of unorganized segments of economic activities
data, the unorganised segment of any is given below.
sector of the economy in India is defined to
comprise those operating units whose 33.20 The Indian Statistical System has been
activity is not regulated under any legal making efforts to fill-up these data gaps right
provision so that the required data are from the beginning of the Five Year Plans.
available in a regular fashion. Thus, the The first National Sample Survey (NSS)
surveys under the Economic Census covered Round (1950-51) covered non-agricultural
the private non-agricultural sector in the household enterprises as one of its subject
manner that all factory units not registered themes. Such enterprises were covered
under the Factories Act constitute regularly up to 1955. Subsequently, selected
unorganised segment of manufacturing. In activities were taken up for survey
the sectors of trade, transport, hotels & intermittently in different Rounds of the NSS.
restaurants, storage & warehousing and These efforts, however, were partial and
services all non public operating units sporadic. Since the NSS Rounds were mostly
constitute the unorganised segment on the centered on household concepts, the
consideration of non availability of regular unorganized economic activities in the non-
accounts of their activity. However, household units were sparsely captured.

National Accounts Statistics-Sources and Methods, 2007 Î 309

 CHAPTER 33

Thus, a complete directory of establishments covered, except those engaged in crop

in the unorganized sector of the economy to production and plantation. All States/UTs
serve sampling frame for carrying out were covered with the sole exception of
detailed surveys subsequently was not Assam, where population census, 1981 was
available at any point of time up-till 1976. not conducted. The information on location
The High level Evaluation Committee set up of enterprise, description of economic activity
by the Government of India to review the carried on, nature of operation, type of
work of Central Statistical Organisation had ownership, social group of owner, use of
stated that it was through Economic Census power/fuel, total number of workers usually
and Follow-up Surveys only, that the detailed engaged with its hired component and break-
requirements of data for the unorganized up of male and female workers was collected.
sectors of the economy could be met. In a The items, on which information was
developing country like ours, Economic collected in second economic census, were
Census is the only answer to reach the more or less the same as those collected in
unorganized sectors. In order to meet the the first economic census. However, based on
long felt need for the availability of data in experience gained in the first economic
respect of unorganized non-agricultural census certain items viz. years of activity,
sectors of the economy, a scheme of value of annual output/turnover/receipt,
Economic Census and Surveys was launched mixed activity or not, registered/
by the Central Statistical Organisation in licensed/recognised and act or authority, if
1976. Since then, four economic censuses registered were dropped. The field work was
have been conducted by the Central done by the field staff consisting of
Statistical Organisation, in the years 1977, enumerators and supervisors employed in the
1980, 1990, the last being in 1998. Directorate of Census Operations of each
State/UT. The State Directorates of
33.21 The main purpose of conducting economic Economics & Statistics (DES) were also
census is to generate an updated frame of associated in the supervision of fieldwork.
enterprises for detailed follow-up surveys. It Data processing and preparation of State
yields essential data on number and level reports of economic census and their
distribution of enterprises engaged in publication were carried out by the DES.
different types of economic activities which
forms the basis, mainly, for the detailed 33.24 The third economic census was synchronised
follow-up surveys. The result of these with the house-listing operation of the
censuses also provides basic entrepreneurial Population Census 1991 on the same pattern
data relating to different sectors of the as of EC [Link] coverage was similar to
economy for the purpose of planning, that of EC 1980. All States/UTs except
development and research etc. specifically for Jammu & Kashmir, where population census
unorganized sector of the economy. 1991 was not undertaken, were covered.

33.22 The first economic census was conducted 33.25 With a view to meeting the demand of
through out the country, except Lakshdweep, various user departments for the data on
during 1977 in collaboration with the unorganised sectors of the economy and
Directorate of Economics & Statistics (DES) in considering the nature of large number of
the States/Union Territories (UTs). The small units which are subjected to high rates
coverage was restricted to only non- of mobility and mortality, it was felt that the
agricultural enterprises employing at least economic census must be brought back to its
one hired worker on a fairly regular basis. quinquennial nature so that an up-to-date
Data on items such as description of activity, and complete frame can be made available
number of persons usually working, type of once in five years for conducting the follow
ownership etc. were collected. up surveys. It was also felt necessary to
assess the impact of economic liberalisation
33.23 The second economic census was conducted process on entrepreneurial activities of the
in 1980 along with the house-listing country and to monitor the sectoral changes,
operations of 1981 Population Census. This particularly the emergence of the service
was done with a view to economise sector. Keeping these aspects in view, fourth
resources, manpower, time and money. The economic census was launched in 1998. The
scope and coverage was enlarged during this overall responsibility for organisation and
economic census. This time all enterprises conduct of the economic census rested with
engaged in economic activities - both the Central Statistical Organisation (CSO).
agricultural and non-agricultural whether The DESs of respective States/UTs were
employing any hired worker or not - were made responsible for conducting the field

National Accounts Statistics-Sources and Methods, 2007 Î 310

 CHAPTER 33

work and preparing the report. In the fourth services including Health, Education,
economic census a complete enumeration of Communication, Real Estate/
all agricultural (except crop production & Business/ Legal/ Personal service and
plantation) and non-agricultural construction (Proprietary and
entrepreneurial activities was carried out Partnership enterprises only for all
through out the country. activities): 1999-2000.
(xvii) Survey on Unorganised
33.26 In order to study the changes in the Manufacturing: 2000-01.
unorganized sectors of the economy, (xviii) Survey on Unorganised Services:
identifying regional disparities among 2001-02.
unorganized sectors in respect of different
economic activities, the following follow-up
surveys have been conducted based on the Adjustment for imputed banking
frame given by the four economic censuses. charges
The NSSO also conducted a number of 33.27 In the case of banks and similar financial
surveys on unorganized segments, initially intermediaries, actual service charges
for the enterprises and establishments other account for a small proportion of their
than those covered under the follow-up income. The activities of these institutions
surveys, and subsequently (after 2001-02) are largely financed by the excess of property
for all the enterprises/establishments. income they receive over the property
income they pay out. The property income
(i) Unorganised Manufacturing Survey: involved consists essentially of interest. The
1978-79. gross value added from banking activity
(ii) Survey on Trade, Hotels, includes income derived by banks in the
Restaurants, Transport, Storage & form of interest on loans and dividend on
Warehousing & Services: 1979-80. other investments which are generated as
(iii) Enterprise Survey on Hotels, factor income outside the banking sector.
Restaurant, Transport, Storage & In the National Accounts Statistics such
warehousing & Service Sector: 1983- banking service charges are imputed to the
84. depositors and to the institutions to which the
(iv) Survey on Unorganized loans are disbursed. The imputed banking
Manufacturing: 1984-85. charges (IBC) are estimated as the excess
(v) Survey on Trade: 1985-86. of the interest/dividend received over the
(vi) Survey on Hotels, Restaurants and interest paid and are taken as imputed
Transport: 1988-89. income of banking activity. The sum total of
(vii) Survey on Unorganized such imputed income and actual income is
Manufacturing: 1989-90. considered as the output originating in the
(viii) Survey on Trade: 1990-91. banking sector. The imputed income is
(ix) Survey on Service Sector: 1991-92. considered as charges paid by different
(x) Enterprise Survey on Mining, sectors to banking sector. To determine the
Quarrying and Storage & service charges for each of the sectors, the
Warehousing Sector: 1992-93. imputed income is allocated to the relevant
(xi) Enterprise Survey on Hotels, activities on the basis of institution-wise
Restaurants & Transport Sector: deposits with the banks and the institution-
1993-94. wise loan disbursement by the banks. The
(xii) Survey on Unorganized Manufacture: imputed service charges thus determined,
1994-95. have been allocated to various sectors as
(xiii) Directory Trade Establishment (DTE) their intermediate consumption and thereby
Survey: 1996-97. reducing the value added of the sector by
(xiv) Survey on Own-Account and Non- that amount. This way the duplication
Directory Trade Survey: 1997. which would have occurred if the value added
(xv) Special Enterprise survey on from the banking sector was taken into
Manufacture, Trade, Hotels, account without any adjustment, has been
Restaurants, Transport and other avoided.
services including Health, Education,
Communication, Real Estate/ 33.28 In the NAS while presenting disaggregated
Business/ Legal/ Personal service: statements, the IBC (FISIM) is shown
1998-99. explicitly in whichever sector they have been
(xvi) Special Enterprise survey on taken into account. In fact the domestic
Manufacture, Trade, Hotels, product of a sector is arrived at by
Restaurants, Transport and other subtracting the IBC allocated to that sector

National Accounts Statistics-Sources and Methods, 2007 Î 311

 CHAPTER 33

from the domestic product unadjusted for released by Central Statistical Organisation
imputed banking charges. Thus, the net and Ministry of Human Resource
domestic product of a sector is the sum total Development respectively. The methodology
of its compensation of employees, operating and data base are described below:
surplus and mixed income where the
operating surplus in turn is the sum total of Agriculture
property incomes (rent and interest) and 33.32 The estimates of factor incomes for the
residual (profit/loss) less IBC. In the agriculture sector are prepared by classifying
NAS, therefore, in the statements, where first the net value added in the public sector
property payments (rent and interest) have and private sector. The public sector consists
been shown, the IBC has also been shown of operation of government irrigation system.
separately. Factor income components for this are
derived from the data contained in budget
Estimates of property incomes documents and the annual reports of the
33.29 In the estimates of factor incomes published Non-departmental Commercial Undertakings.
earlier by the CSO, the components of The output of private sector has been divided
property incomes, namely, rent and into three categories viz. plantation crops,
interest, which are contained in the crop production excluding plantation crops
operating surplus, were shown to the and animal husbandry. This output is
extent feasible, separately. To facilitate subsequently converted to net value added
comparability, separate statements are using data available from Tea, Coffee, Rubber
included presenting the estimates of Boards, Cost of cultivation studies and NSS
property incomes and imputed banking reports. As the procedure of growing
charges (IBC) by different institutional plantation crops is significantly different
sectors cross classified by industry of from other crops and the activity is largely
origin. identical to work being done in the private
corporate sector, these crops are considered
33.30 Data base for the estimation of property to be under the private organized part. The
incomes is the same as that for factor distribution of factor incomes and property
incomes spelt out above. However another incomes for the plantation crops is derived
important point in this regard is that the rent from the Company Finance Studies conducted
in the surveys related to rent of by the Reserve Bank of India (RBI) and the
commercial building and equipment rented annual reports of these Boards. The value of
by establishment and no imputation has been output of all other crops and the livestock
done for owned assets. Further, no sector are taken to be in the unorganized
separate estimates are available for building. sector.

Methodology and Sources of Data 33.33 The estimates of factor incomes for crop
33.31 The estimates of factor incomes for production (excluding plantation) and
public/private corporate sector and animal husbandry are prepared by
cooperative societies are based on regular estimating compensation of employees and
data as discussed earlier. The data base for rent for crop production using data
the estimates of factor incomes and property contained in the cost of cultivation studies;
incomes for the economy as a whole by and compensation of employees for animal
industry of origin, coverage of individual husbandry sub sector using data contained
sectors is same as given in the domestic in NSS reports. Further estimates of
product. For preparing the estimates, sectoral interest payments are based on All India
net domestic product has first been divided Debt and Investment Survey AIDIS.
into organised and unorganised segments as Assuming that there is no rent component in
per concept given above. The estimates of the animal husbandry sub sector these
factor incomes from government irrigation, components have been subtracted from total
electricity, railways, communication, public net value added to get the mixed income of
administration & defence, education, health self-employed.
& sanitary services are directly derived from
data available from budget documents and 33.34 The cost of cultivation studies are being
annual reports of non-departmental conducted regularly by Directorate of
undertakings. Similarly the estimates for Economics & Statistics, Ministry of
registered manufacturing sector and Agriculture (DESAg) and are released in
recognized educational institutions in the the Publication entitled 'Cost of Cultivation
private sector are derived from Annual of principal crops in India'. The publication
Survey of Industries and Education in India gives cost of Human Labour (casual, attached

National Accounts Statistics-Sources and Methods, 2007 Î 312

 CHAPTER 33

and Family) and rent paid for leased in land also determined irrespective of the use to
per hectare. The coverage of the cost of which they are put. In the 30th Round survey
cultivation studies (CCS) varies from state to only those households were considered to
state and year to year. These data are have dairy enterprise if on the date of listing,
available for 19 states covering about 27 it possessed five or more adult cows and she-
crops. The procedure adopted for computing buffaloes taken together. The rates and
factor incomes and property incomes from ratios available from these surveys are used
CCS is given below. to segregate the net value added in livestock
sector between compensation of employees
(i) Extract data on Human Labour and operating surplus. However, recently,
(casual+ attached, Family), bullock few states are conducting type studies on this
labour, mechanised labour, seed, industry, and the factor incomes will be
manure, fertilizer, insecticides, computed on the basis of the results of these
irrigation charges, rent paid for studies. The steps for obtaining estimates of
leased land, rental value of owned compensation of employees in this sub sector
land, depreciation on implements & are given below:
farm buildings, main products,
by products per hectare from CCS (i) Estimate the livestock population, by
for different crops and states. categories of livestock from the
(ii) Obtain net value added (main previous two livestock censuses
products + by products - seed - through projections;
manure - fertilizer - insecticides - (ii) Convert the livestock population in
irrigation charges - bullock labour - the number of cattle equivalents and
machine labour -depreciation), divide them between agriculture,
compensation of employees (for livestock and transport; and
casual + attached labour), family (iii) The cattle equivalent population in
labour, rental value of owned land the livestock sector is multiplied with
and rent paid for leased land per average compensation of employees
hectare by crops & states. per cattle obtained from the NSS
(iii) Obtain weighted sum of aggregates data, after bringing them the current
derived in step (ii) using area under year’s prices.
the crop in the state for the crops
covered in the study. Forestry and Logging
(iv) Obtain ratio of compensation of 33.36 The organised part of the sector comprises of
employees, family labour, rental net value added corresponding to recorded
value of owned land and rent to net production of timber and fuel-wood. Since
value added for each year. major share of forest is with the government
(v) Obtain net value added for crop and no information other than contained in
production using output to net value budget documents is available, the net value
added ratio from CCS and NAS for added for recorded production of timber and
each year. fuel wood has been distributed according to
(vi) Product of steps (iv) and (v) gives distribution of factor incomes available from
estimates of compensation of the budget documents. The remaining part
employees, family labour, rental of this sector, balance net value added, is
value of owned land and rent for crop treated as mixed income of self employed in
production. the unorganised sector.

33.35 In the animal husbandry sub sector, the Fishing

NSSO conducted two studies. First pertains 33.37 The contribution of non-departmental
to the year August 1956-January, 1957 (11th enterprises has been taken in the organised
Round, Report No. 65: Tables with notes on segment of the sector and rest of the activity
Animal Husbandry) and the second relates to under unorganised sector. The estimate of
the year July 1975-June 1976 (30th Round compensation of employees for the
draft report on "The Survey of livestock unorganized sector is based on the
number, product and enterprises"). The first information contained in the two reports
report contains the data on rates at which entitled Inland fish marketing in India and
hired labour was paid per day on account of Marine Fish Marketing in India published by
services like herding, attending, medical, Indian Institute of Management (IIM)
pedicure and other services per Ahmedabad. These publications present
agricultural household. Number and value of cost structure for different type of activities
livestock possessed by the household were such as pond fishing, filtration farms,

National Accounts Statistics-Sources and Methods, 2007 Î 313

 CHAPTER 33

brackish water culture, fishing in estuaries, rent in Annual Survey of Industries (ASI)
lakes and swamps, marine fishing for and interest with the help of the index of
representative states, but in the absence of outstanding credit of scheduled commercial
any weighting pattern available, simple banks at the end of the year to the small
average of factor incomes distribution has scale industries obtained from the RBI
been superimposed on the net value added. publication on banking statistics.
However, recently, few states are conducting
type studies on this industry, and the factor Electricity, gas & Water Supply
incomes will be computed on the basis of the 33.41 Electricity: The activities covered in this
results of these studies. industry are organised in nature. The
estimates of factor incomes and property
Mining and Quarrying incomes of electricity industry are based
33.38 The activity relating to extraction of major on the basis of analysis of annual accounts
minerals has been included in the organised of electricity undertakings. The activities
segment, whereas minor minerals have been undertaken departmentally are covered
included in the unorganised segment. In the through the budgetary information and that
case of this industry, substantial share of of non departmental enterprises and private
major minerals is covered in the public companies covered through their respective
sector. Therefore, use has been made of annual reports. While analysing the reports,
distribution of factor incomes and property care has been taken to exclude value added
incomes derived from non-departmental corresponding to construction activity
enterprises engaged in this activity. In the undertaken by the NDCUs.
case of minor minerals, the estimates of
factor incomes are based on the latest results
of enterprise surveys. 33.42 Gas: The factor incomes and property
incomes from liquefied petroleum gas (LPG)
Manufacturing: Registered are estimated on the basis of the
33.39 The data on factor incomes and property components, compensation of employees,
incomes are available from the results of rent & interest as available for the industry
Annual Survey of Industries (ASI). The group of petroleum refineries of Annual
compensation of employees comprises total Survey of Industries. In the case of Gas
emoluments and Employers’ Contribution to Authority of India Limited, factor income and
provident and other funds. The proportional property income estimates are based on the
composition of factor incomes as worked out results of the analysis of annual reports. In
in case of units covered under ASI is applied the case of Gobar Gas, the components of
on the total NDP of the registered value added is assumed to be mixed income
manufacturing sector. of the self employed as the whole activity is
in the unorganised sector.
Manufacturing: Unregistered
33.40 The components of factor incomes and 33.43 Water Supply: The value added in water
property incomes for this sector which is supply activity is arrived at by estimating the
taken as unorganised are based on results of compensation of employees and operating
NSS 56th Round (2000-01) survey on surplus, separately for public and private
unorganized manufacturing. The benchmark segments. The estimates of compensation of
estimate of compensation of employees, rent employees are built up on the basis of
and interest prepared for the year 2000-01 information available in the budget
are subtracted from the net value added to documents of the public sector. The
get the estimates of mixed income of self estimates of factor incomes in the private
employed. The bench mark estimate of unorganised sector is in the form of mixed
compensation of employees is moved income of self employed as no details are
backward and forward with the help of available. Therefore, the entire NDP in
composite index of working force and index respect of unorganized sector is taken as
of wages. The index of wages is also a mixed income.
combined index number of wages of rural
skilled worker and index of wages of factory Construction
workers in urban areas drawing less than 33.44 The estimates of factor incomes and property
Rs.1000/- per month, weight being the incomes in construction are prepared
working force for rural and urban areas given separately for the organised and unorganized
by the population census. The component of segments. The organised segment comprises
rent in the bench mark year have been public sector and private organised sectors
moved to other years using the estimate of (including plantations). The unorganised

National Accounts Statistics-Sources and Methods, 2007 Î 314

 CHAPTER 33

segment comprises urban and rural for individual owners and organisations'
residential and non residential buildings in and the 'average amount of finance
the unincorporated enterprises including raised per construction by source of
households. However, the construction work finance' type of structure and nature of
done by public and private corporate sectors construction' again thrown by the same NSS
through contractors, which are part of 44th Round in report No. 377 on Building
unorganised sector, has been included in the Construction. This interest rate is applied on
unorganised sector. For preparing the the amount of borrowings to estimate the
estimates of factor incomes, the net value total interest payments. The value added
added of the sector is divided first between net of interest payments is distributed
the organised and unorganised segments. between compensation of employees and
The value added for the unorganised sector is mixed income of self employed on the basis
derived from value of construction in this of the ratios estimated with the help of the
segment and using method given in the data on average amount of wages per
chapter on construction. The factor income construction for hired labour and household
distribution of net value added in the labour obtained from the above mentioned
organised sector other than NDCUs, public NSS Report. The proportion observed have
authorities and plantations is prepared on the been applied to all the years on net value
basis of the relevant proportions determined added in the unorganised sector.
with the help of the data from the sample
studies on finances of public and private Trade, hotels & restaurants
limited companies conducted by the RBI and 33.46 Trade: The factor incomes and property
the data on total paid up capital received incomes estimates in respect of trade have
from the Ministry of Company Affairs. In the been prepared separately for organised and
case of NDCUs and public authorities unorganised segments. The organised part
engaged in construction, the factor income comprises public & private corporate sector
estimates are obtained directly by analysing and cooperatives. The estimates from public
their annual reports and budget documents, sector are based on actual analysis of annual
respectively. As no data on rent etc., are reports. In the case of cooperatives, the
available in the case of public authorities, the requisite data have been culled out from the
whole of the net value added of such publication 'Statistical Statements Relating to
authorities is treated as compensation of Cooperative Movement in India' by National
employees. In the case of construction Bank for Agriculture and Rural Development
activity connected with plantations, total (NABARD). The estimates for private
value added from this activity is taken as corporate sector are prepared using the data
compensation of employees as these are based on detailed analysis of finances of joint
mainly of labour intensive type. stock companies as supplied by Reserve
Bank of India. In the case of unorganised
33.45 The factor incomes and property incomes in part, factor incomes estimates for 1999-2000
the unorganised sector are estimated in are based on NSS 53rd Round survey results.
terms of compensation of employees, mixed
income of self employed and interest. Due 33.47 Hotels & Restaurants: The estimates are
to non-availability of data, rent payments in prepared in two parts, namely, organised
such construction are assumed to be part and unorganised part. The organised
negligible. The proportion of borrowings to part comprises public and private corporate
total expenditure in construction has been sectors. The estimates for public part are
estimated on the basis of data on 'average based on analysis of the annual reports and
amount of finance raised per construction those for private corporate sector are based
by source of finance and type of structure on the RBI data like those on trade. In the
and nature of construction' given in the case of unorganised part, the estimates of
report No. 377 on building construction, 44th factor incomes and property incomes for
Round (NSSO, 1990), for rural and urban 1999-2000 are based on the results of NSS
areas separately. The total borrowings for 57th Round survey.
each type of construction activity in
unorganised sector has been estimated with Transport, Storage and Communication
the help of this proportion from the total 33.48 Railways: Data on compensation of
construction expenditure based on AIDIS, employees, operating surplus and property
2002-03. The rate of interest used is the incomes for government railways (excluding
weighted average rate of interest derived railway workshops and manufacturing
on the basis of data on ' interest rate of establishments) are available from the
loans contracted by agency giving loans budget documents of the Central Government

National Accounts Statistics-Sources and Methods, 2007 Î 315

 CHAPTER 33

and annual reports of the Indian Railways. corporations/central warehousing

The amount of interest for the entire railway corporations are obtained by analysis of their
sector (given in the budget documents) is annual accounts. Regarding the cold storage,
bifurcated into transportation and the estimates are based on ASI data. In the
manufacturing (including railway workshops) case of warehousing, in the private sector
activities on the basis of the capital-at- and storage not elsewhere classified, the
charge in respect of various railway units estimates are based on the results of
published annually in the Explanatory Enterprise Survey, 1992-93, which has been
Memorandum on Railway Budget. As the super imposed on net value added on all the
value added from non-government railways is years.
negligible, no separate estimates of factor
incomes have been made in respect of non- 33.52 Communication: The estimates of factor
government railways. However, the factor incomes of postal (excluding post office
incomes of NDCUs, Konkan Railways and savings banks and postal life insurance) and
Delhi Metro Rail Corporation are separately departmental telecommunication services are
compiled from their annual reports. obtained through the analysis of data
contained in the Central Government
33.49 Transport by other means: The factor Budget Documents. The factor incomes in
incomes and property incomes estimates in respect of non-departmental undertakings
the organised part of the transport by other and those in the corporate sector, are
means, which consists of passenger and prepared on the basis of data contained in
freight transport by road in public sector; the annual accounts of these undertakings.
sea transport by shipping companies; port The unorganized segment’s estimates of
trusts, ports and pilotages; light houses and factor incomes are compiled using the results
light ships; air transport, flying and gliding of NSS 57th Round survey.
clubs and air ports, are obtained by
analysing the budget documents/annual Financing, Insurance, Real Estate, &
accounts of the public sector Business Services
departments/non-departmental enterprises Banking & Insurance
and private shipping companies. The 33.53 In respect of commercial banks and the
estimates of the road transport for the banking department of RBI, factor incomes
private corporate sector which also forms are estimated from the data contained in
part of the organised sector are based on "Special compilation on income and
the RBI studies on "Finances of Private and expenditure of banks" made available by the
Public Limited Companies". RBI. The factor income estimates in respect
of post office savings banks are prepared on
33.50 In respect of unorganised transport segment, the basis of data contained in the annual
the factor income and property income budget documents of Department of Posts.
estimates for the base year have been The only factor income in respect of this
prepared by using the results of NSS 57th activity is the compensation of employees,
Round survey. The estimates so obtained for which is estimated as a proportion of the
the base year are moved to other years with management expenses. The proportion of
the help of appropriate indicators. The compensation of employees to the
compensation of employees are moved with management expenses as worked out in
the help of combined index of working force respect of commercial banks is applied in
and index of wages. The index of wages is case of post office savings banks also. The
also a combined index of wages of rural estimates in respect of Cooperative Credit
skilled workers and consumer price index Societies are worked out from the data on
number of urban non-manual employees income and expenditure contained in the
using hired workers in rural and urban areas statistical statements received from the
respectively. The indicator for rent is the RBI/NABARD. The factor income estimates in
combined index of working force and implicit respect of public sector non-banking financial
index of rent of dwelling. Interest is moved corporations and companies, including
with the index based on the outstanding Employees’ Provident Fund Organisation
credits of scheduled commercial banks. (EPFO) are prepared from the data contained
Mixed income of self-employed is obtained as in their annual accounts. In respect of
a residual. private financial companies, the estimates
are based on the sample studies of the RBI
33.51 Storage: The estimates of factor incomes and on "Performance of financial and investment
property incomes of the organised part of companies". However, in this case, rent is
the storage, namely state warehousing estimated as a proportion of other expenses.

National Accounts Statistics-Sources and Methods, 2007 Î 316

 CHAPTER 33

The proportion as observed in the case of paid up capital of the companies covered
public sector financial corporations and under analysis. The entire NVA of
companies is applied on private non-banking unorganised sector has been treated as factor
financial companies also. The entire income incomes in form of mixed income of self
generated by the activities of money lenders, employed.
pawn brokers, etc. is taken as the mixed
income of self employed which is estimated 33.57 Ownership of Dwellings: The entire NVA of
as one third of the net value added of the unorganised sector has been treated as factor
public sector and private sector non-banking incomes in the form of mixed income of self
financial companies. employed.

33.54 Factor incomes in respect of Life Insurance Community, social & personal services
Corporation of India (LIC), General Insurance 33.58 Public Administration and Defence: The only
Corporation (GIC) and its subsidiaries are factor income of this sector is the
worked out from the data contained in their compensation of employees which is
annual accounts. However, in respect of estimated by analysing the data contained in
General Insurance Corporation and its the budget documents of the Central and
subsidiaries, the 'rent' is included under State Governments and the local authorities.
'expenses of management'. The details of Compensation of employees in respect of the
'expenses of management' are collected Issue Department of the RBI, which is
directly from the GIC and its subsidiaries, treated as an administrative department,
which are analysed to work out the factor are also added to it. However, compensation
incomes as well as the rent component. In of employees in respect of the EPFO, which is
case of Postal Life Insurance, the factor treated as an administrative department, are
incomes are estimated on the basis of data in not included to it, but shown separately
respect of this activity contained in the under banking and insurance.
budget documents of the Department of
Posts. The commission paid to the agents by 33.59 Other Services: The estimates have been
the LIC, GIC and its subsidiaries is treated as prepared separately for organised and
mixed income of self employed. unorganised sectors. The organised sector
comprises of public and private corporate
Real estate, ownership of dwellings & sector medical, sanitary services, TV and
business services radio broadcasting and other services and
33.55 The estimates of factor incomes and property public and recognised educational institutions
incomes are prepared separately for in the private sector. The remaining services
organised and unorganised segments. The are considered in the unorganised sector.
organised part comprises of Real Estate and For all the organised activities (excepting T.V.
business services comprises units under & Radio), in the public sector, the factor
private corporate sector and public sector. incomes consist of compensation of
Remaining part is treated as unorganised. employees only. For T.V. and Radio, it
The organised sector has been further broken comprises both compensation of employees
up into public & private corporate sectors. and operating surplus. However, the
The methodology used for preparing the components of rent and interest are not there
estimates of factor incomes is given below: in this case. The factor incomes in respect of
private corporate segment are prepared on
33.56 Real Estate and business services: Organised the basis of RBI data on company finance
activities here originate in public and private studies, as well as, the information available
joint stock companies. The estimates of this from the results of NSS 57th Round survey.
sub sector are prepared by analysing the For the unorganized segment of these
reports of the companies. These estimates economic activities, the factor are prepared
are blown up by the ratio of the total paid up using the results of NSS 57th Round survey.
capital of all real estate companies to the

***

National Accounts Statistics-Sources and Methods, 2007 Î 317