Functional Distribution of National Income in Indian Economy

An attempt has been made in this study to estimate the functional distribution of national income in Indian economy during the period 1960-61 to 1990-91. The study presents the estimates of the factor shares of labour, land and capital (including enterprise) not only for the economy as a whole but also for the public sector as well as the private sector within each of the broad sectoral categories of primary, secondary and tertiary sectors. The main conclusion emerging from the analysis of functional distribution of India’s national income is that the Indian experience does not corroborate the hypothesis of historical constancy of factor shares. The aggregate factor shares as well as the sector-specific factor shares have shown significant changes during the last three decades. The process of structural change in Indian economy has also contributed significantly to the observed changes in factor shares. On the whole, the share of labour has increased, while the share of land has decreased significantly and the share of capital has declined marginally during the period 1960-61 to 1990-91.