Gross Domestic Product etc - 26

Income accruing approach

3.6 The income accruing approach relates to the income accruing to the
normal residents of a state. In other words, it is the income received by the
residents of a region, even though some of it might have accrued outside the
region. Since this measures the income that becomes available to the
residents of a state, it provides a better measure of the welfare of the
residents of the region. However, for compiling the State Domestic Product
(SDP) estimates by income accruing approach one needs data on flows of
factor incomes to/from the boundaries of state i.e. on inter-state flows as well
as flows to/from abroad. But in an open economy like that of a state in this
country, it is very doubtful whether such an estimate can be prepared unless
special effort is made for the collection of this data.[Reproduced from CSO Publication]