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National Income: Presented By: N.Naveen 09G21E0031

National income is defined as the total value of all goods and services produced in a country during a year. It is an important indicator of the economic development and standard of living of a country. It can be measured using the production method, income method, or expenditure method. The key concepts related to national income are GDP, GNP, NNP, NI, and PCI. The three main sectors that contribute to national income are primary, secondary, and tertiary. Over time, the tertiary sector's contribution to India's GDP has increased while the primary sector's contribution has decreased.

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29 views17 pages

National Income: Presented By: N.Naveen 09G21E0031

National income is defined as the total value of all goods and services produced in a country during a year. It is an important indicator of the economic development and standard of living of a country. It can be measured using the production method, income method, or expenditure method. The key concepts related to national income are GDP, GNP, NNP, NI, and PCI. The three main sectors that contribute to national income are primary, secondary, and tertiary. Over time, the tertiary sector's contribution to India's GDP has increased while the primary sector's contribution has decreased.

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karthy143
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NATIONAL INCOME

Presented by:
N.Naveen
09G21E0031
NATIONAL INCOME
The sum of total of the values of all goods and services produces
in a year..

Definition:
‘A National Income estimated measures the volume of
commodities and services turned out during a given period
without duplication’.

‘National Income is the money value of all goods and services


produced in a country during a year’.
Importance
To assess the developmental objectives

To see the economic development of the country

To know contribution of the various sectors to National Income

It indicates the standard of living

It indicates the per capita income with which we can compare
the levels of development of all the countries

Countries can be classified as ‘developed’ and ‘developing’ and


‘under developed’ based on their per capita income only
METHODS
Production method

Income method

Expenditure method

Production method=Income
method=expenditure income
Sectors
Primary Secondary Tertiary

Agricultural and allied Registered industries Communication


activities

Forest Non registered Banking/insurance


industries

Fishing Electricity Public administration

Mining Trade Health

Manufacturing Education

Other services
National Income concepts
GROSS DOMESTIC PRODUCT[GDP]:

GDP is a measure of a country’s over all output.it is the market


value of all goods and services made with in the boarders of a
country in a year.

GROSS NATIONAL PRODUCT[GNP]:

The GNP= GDP+income earned by domestic residents through


foreign investments-the income earned by foreign investors in
the domestic market.
NET NATIONAL PRODUCT[NNP]:

NNP is the total market value of all final goods and


services produced by citizens of an economy during a
given period of time minus depreciation.

NNP=GNP-DEPRICIATION

NET NATIONAL INCOME:


NNI=NNP-INDIRECT TAXES

NET INCOME:
NI=NNI+SUBSIDIES
PRODUCTION METHOD
This method based on the total production of
a country during a year

The sum total of products produced by the


three sectors in the total output of the nation

The next step is to find out the value of these


products in terms of money

The money sent by Indian citizens working


abroad is also added to this. Now we get GNI.

GNI=GDP+Income from abroad


CONTRIBUTION OF IN THE VARIOUS SECTORS TO GDP
Year Primary Secondary Tertiary Total GDP

1950-51 59 13 28 100

1980-81 42 22 36 100

2002-03 24 24 52 100

2005-06 20 26 54 100

2007-08 17 29 54 100
INCOME METHOD
Factors of production together produce output
and Income

By adding the money sent by the Indian citizens


from abroad to the income of the various factors of
production, we get GNI

GNI=Rent+Wage+Interest+Profit+Income
from abroad
EXPENDITURE METHOD

National Income can also be calculated by adding up


the expenditure incurred for goods and services
• GOVERNMENT
• INDIVIDUALS

GNI=Individuals Expenditure+Government Expenditure


DIFFICULTIES
Most of the data is not from the current year

Even if current data available them values are


under reported

The services of housewives .

Lack of proper criteria for measuring the value


of services.

In backward economics


OTHER INCOMES IN NATIONAL INCOME

PERCAPITA INCOME[PCI]
PCI=National income/Population

PERSONAL INCOME[PI]
PI=Wages+Rent+Interest+Profit+Others
CONCLUSION
From the above discussion, we may easily
concluded that national income plays an integral
role in the development of an economy. It is the
important measure of standard of living of the
people of a count.
Continuous increase in production can
be considered as an index of progress that an
economy has achieved.
Thank You

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