Difficulties in Estimating National Income

Conceptual Difficulties:

• No practicable methods exists for inclusion of some items in National Income (NI), such as — services for which no remuneration is paid, goods that are marketed sold at a price but are used for self-consumption etc.

• It is not always possible to make a clear distinction between primary, intermediate and final goods.

• The price that should be chosen to determine the money value of National product is a difficult question.

• Debate regarding inclusion of income of foreign companies in National Income estimates since, a large part of such income is remitted out of the country.

Statistical Difficulties

• Changes in the price level involve the use of Index Numbers which have their inherent difficulties.

• Official statistics are not always accurate as it is based on guess work and sample survey.

• Methods of computing NI are not the same in all countries.

• The statistical data are often not available.

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