ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Estimating Unaccounted Income in India

Using Transport as a Universal Input

Sacchidananda Mukherjee (sachs.mse@gmail.com) and R Kavita Rao (kavita.rao@nipfp.org.in) teach at National Institute of Public Finance and Policy, New Delhi. 

An alternative methodology to measure the scale of unaccounted income in India (shadow economy) using transport as the universal input is developed. Based on input –output tables and National Accounts Statistics, annual demand for road freight transport is estimated. Correspondingly, annual supply of road freight transport is obtained based on availability of diesel for road freight transport, stock of goods carriages, average freight transport capacity per vehicle, average annual distance travel, and average fuel efficiency per vehicle. The mismatch of supply and demand is broadly considered the unaccounted for portion of the gross domestic product. The methodology is tested for two successive input–output tables and three consecutive financial years. Since the analysis is based on assumptions, a comparative static analysis is carried out to check the sensitivity of estimates to changes in the assumptions. 

We are grateful to the anonymous reviewer for giving useful comments and suggestions on an earlier draft of this paper. The usual disclaimer applies.

Updated On : 8th Nov, 2017

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