What is the significance of national income accounting or social accounting?

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(1) The inflationary or deflationary pressure in an economy can be measured on the basis of national income accounting. The gap may likely to arise because of the discrepancies between aggregate output and aggregate expenditure. The excess of anticipated expenditure over the available output of base prices leads to inflationary gap which may result in price rise.

(2) National income accounting measures the welfare of the citizens of a country. By the help of national income accounting we can compare the standard of living of different countries or of the people of same country of different times. The higher per capita income reflects the higher level of welfare.

(3) Statistics regarding the national income data is highly essential for the successful operation of planning of an economy. National income accounting shows the gross income, output, saving and consumption etc. without being aware of these variables developmental planning becomes a futile. Thus the future economic policy for development depends a lot on the correct estimate of all these factors.

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(4) National Income accounting also helps us to know the contributions of various sectors accounting we can know the respective contribution of agriculture, industry and service sectors to, the national income. By the help of national income accounting we can say whether a country agricultural or industrial

(5) National income accounting throws light on the distribution of national income in an economy. It clearly shows the disparity in incomes of different sections of the society.

(6) It shapes the budgetary policy of the Govt, makes the borrowing and tax policy in order to neutralize the fluctuations of income and employment. Govt takes to deficit or surplus budget to arrest depression or inflation in an economy.

(7) National income statistics given a clear picture of how the national expenditure is divided between consumption and investment.

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(8) It also helps us to know the relative rolls of public and private sectors in an economy.

(9) National income statistics also helps us to know about the economic problems of underdeveloped countries.

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