Solving the Income Data Puzzle

We have included this article in the BW White Book because we felt that this academic detour could form the necessary lens with which to look at the rest of the data in this book.

SECTION 1: THE MACRO NUMBERS OF INDIA'S INCOME

Table 1. Components of National Income at Current Prices,2003-04

Economic Indicators (Refer Box 1 for definition)	Total			Per Capita			Annualized Growth Rate between 1993-94 and 2003-04
	Rs. Billion	US$ Billion	$ PPP terms	Rs.	US$	$ PPP terms
Gross Domestic Product	27,600	599	3,036	25,356	550	2,789	6.18
National Income	22,520	489	2,477	20,690	449	2,276	6.41
Net National Disposable Income	25,971	563	2,856	23,860	518	2,624	6.55
Private Income	25,296	549	2,782	23,240	504	2,556	6.73
Personal Income	24,219	525	2,664	22,250	483	2,447	6.59
Personal Disposable Income	23,585	512	2,594	21,667	470	2,383	6.57
Domestic Saving of Household Sector	5,799	126	638	5,328	116	586	9.77

Box 1: Definitions

•	Gross Domestic Product: Total value of goods and services produced by a nation.
•	Net National Disposable Income: (Net value of all goods and services produced in a nation's economy, including goods and services produced abroad at market prices) + (Other net current transfers from rest of the world)
•	Private Income: (Income accruing to private sector from domestic product) + (Interest on public debt) + (Current transfers from govt. administrative departments) + (Other net current transfers from rest of the world) + (Net factor income from abroad)
•	Personal Income: (Private income) - (Saving of private corporate sector net of retained earnings of foreign companies) - (Corporation tax)
•	Personal Disposable Income: (Personal Income) - (Direct taxes paid by households and miscellaneous receipts of govt. administrative departments)
•	Domestic Saving of the household Sector: Financial saving and saving in fixed assets by the household sector.

Even though India's total household income and saving can be known from National Accounts Statistics, it does not provide the same information across economic groups. Therefore, the pattern of distribution of total income and saving across households with different economic status is not known. Thus, "What share of India's total personal disposable income comes from the richest 10% of the households?" or "Do the poorest 10% of the households save anything at all?" - these questions remain unanswered. Moreover, per household income or saving for households with different economic status is also not known. This paper tries to find out how India's total personal income and saving differs across different economic groups.

SURVEY BASED INCOME DATA
Overview of surveys
There are three surveys that, between them form the holy grail of income / affluence data, with different users consistencies being partial to one of these. These are the NSSO expenditure survey (National Sample Survey Organisation) of the Government of India; the NCAER (National Council for Applied Economic Research) household survey called MISH and the marketing world's favourite, the IRS (originally christened the Indian Readership Survey), conducted by Hansa Research for the Media Research User's Council.

In 2004-05, we added another interesting survey called the National Data Survey on Savings Patterns of Indians (NDSSP), conducted for the Ministry of Finance, overseen by lowest India Economic Foundation and conducted by AC Nielsen.

All these surveys have an all India sample - details of which are available on the individual websites. The IRS covers 240 000 households 120,000 in each half of any year with the data reported on a rolling basis. It however has a straight and simple income elicitation measure using a show card with different income categories written on them. The NSSO covers a thick sample of 120,000 households and a thin sample of 40,000 each year; it is an expenditure survey but also collects data on income and wages but does not include self employed and businessmen. The NCAER MISH covers about 300 000 households and also asked the respondent his or her perceived income the way the IRS does.

In our knowledge the NDSSP is the only all India survey in recent times that has a specific method for ascertaining the incomes of the respondents. Incomes for wage earners are easy enough to ascertain; however, for self-employed, entrepreneurs, farmers, fisherman, etc. simply asking a question on income can yield poor results as respondents may confuse revenues with incomes. For non-wage earners of all types, the survey tool specifically queried respondents on the revenues from their business and expenditures related to business. The income was then specifically derived. This measurement of income is sharper than the IRS, which asks respondents to indicate which income category their household falls into, thus measuring household income as belonging to an income band, rather than eliciting a specific number.