National Income of India
⇒ National Income is the money value of all the final goods & services which produced by a country during one year.
⇒ India is now the world’s 3rd largest economy in terms of real prices and purchasing power.
⇒ For national income, the Indian economy is divided into 14 broad sectors which are grouped into 3 main categories.
|Primary Sector||Agriculture and Allied|
|Mining & Quarrying|
|Secondary Sector or Industrial sector||Manufacturing|
|Electricity, Gas and Water Supply|
|Tertiary Sector or Service Sector||Trade, Hotels and Restaurants|
|Financing, (Banking Insurance)|
|Real Estate and Business Services|
|Community, Social, Personal and other Services|
Measures/Concepts of National Income
1. Gross Domestic Product (GDP): GDP is the total money value of all final goods & services produced within the geographical boundaries of the country (produced by resident citizens +foreign nationals) during a given period of time, generally one year.
GDP = Q × P
Q = Total quantity of final goods & services.
P = Price of final goods & services.
2. Gross National Product (GNP): GNP is the money value of total output or production of final goods & services produced by the nationals of a country during a given period of time, generally a year. In this case, the income of all the resident & non-resident citizens of a country is included whereas the in-come of foreign nationals who reside within the geographical boundary of the country is excluded.
GNP = GDP + (X – M)
X = Export of goods & services
M = Import of goods & services
X – M = Net Factor Income from Abroad (NFIA)
So, GNP = GDP + NFIA
3. Net National Product (NNP):
⇒ Net National Product (NNP) can be calculated in 2 ways:-
(i) NNP at market price:
NNP = GNP – Depreciation
Depreciation means wear & tear of goods produced. NNP at market price includes In-direct taxes and excludes subsidies.
(ii) NNP at factor cost:
⇒ NNP at factor cost calculates National Income only on the basis of cost incurred to produce the goods & services. This cost is the payment made to the factors of production.
NNPfc = NNPmp – Indirect Taxes + Subsidy
⇒ When NNP is obtained at factor cost, it is known as National Income.
⇒ Likewise, GDP at factor cost also can be calculated.
GDPfc = GDPmp – Indirect Taxes + Subsidy
4. Personal Income :
⇒ It is that income which is actually obtained by nationals in one year.
⇒ P.I. = National Income – Undistributed Proits of Corporation – Payments for Social Security Provisions – Corporate Taxes + Government Transfer payments + Business Transfer payments + Net Interest paid by government.
⇒ SOCIAL SECURITY PROVISIONS = Payments made by employees towards pension & provident fund.
⇒ TRANSFER PAYMENTS = Payments made not against any productive activity. eg. – old age pension, unemployment compensation, disaster relief payment, etc
5. DISPOSAL PERSONAL INCOME (DPI): Income that is available to individuals that can be disposed at their will.
DPI = Personal Income – Direct Taxes.
6. National Income at constant price & current price.
⇒ NI CONSTANT PRICE = Total quantity of all final goods & services produced in a particular year × Price of base year.
⇒ Base year of National Income accounts is the year chosen to enable inter – year comparisons. The new series changes the base to 2011–12 from 2004–05.