INTRODUCTION
In a layman word, ‘national income 'is the
total value of goods and services produced
annually in a country.
According to the national Income committee,
“A national income estimate measure the
volume of commodities and services turned
how to during given period counted Without
duplication.
A total of national income measures the flow
of goods and services in an economy.
National income is a flow and not a stock.
ESTIMATION OF NATIONAL INCOME
The first estimate of national income was done by Daddabhai
Naurojee, for the year 1867-68 in his book" Poverty and
UnBritish rule in India".
Trends of using national income Aggregates by 'Simon
kuznets', a Nobel prize winner in the year 1971.
First scientific estimation of national income was done by
V.R.V.Rao in 1931-32.
The central statistical organization(CSO) was established in
the year 1956.
The national income and various other aggreates, e.g GDP,
GNP and per captia income are estimated by the central
statistical organisation.
The CSO publishes annually, national income and related
aggregates in a document 'national accounts statistics'(NAS).
For the year 2006,the year 1999-2000 has been taken into
consideration as a'Base year',in the year 1999,the base year
was 1993-1994.
CONCEPT RELATED TO
NATIONAL INCOME
Percaptia Income
Gross Domestic Product (GDP).
Net Domestic Product (NDP).
Gross National Product (GNP).
Net National Product (NNP).
Net National Product At Factor Cost or ‘
National Income’.
Personal Income.
Personal Disposable Income.
NET DOMESTIC PRODUCT (NDP)
The net Domestic product at market price is
the sum total of all the final goods and
services produced within Geographical
boundary of a country during a given period
of time.
It is estimated as the ruling price of all switch
goods and services minus consumption of
fixed capital.
NDP=GDP-DEPRECIATION (consumption of
fixed capital)
GROSS NATIONAL PRODUCT (GNP)
GNP=GDP+(X-M)
Where x=profit earned by an Indian outside India.
m=profit earned by a foreigner in India.
NET NATIONAL PRODUCT (NNP)
NNP=GNP-Depreciation
PERCAPITA INCOME
Total national income divided by total
population
GROSS DOMESTIC PRODUCT (GDP)
It’s the money value of all the final goods
and services produced within the
geographical boundary of a country in a year.
Money value is to be calculated at the
market price.
PERSONAL INCOME
Personal income is that income which is actually
received by the individuals or house holds Within
geographical boundary of a country during an
accounting year.
PERSONAL DISPOSABLE INCOME
Personal Disposable Income is the income which is
available for consumption and savings.
In India, GDP is calculated on the
basis of factor cost of NNP.
Price of a product on the basis of
products is known as "factor price".
Factor price + tax= market price.
Therfore,Market price is always is
more than factor price.
MEASUREMENT OF NATIONAL
INCOME
i. PRODUCT METHOD OR, VALUE ADDED
METHOD.
ii. INCOME METHOD.
iii. EXPENDITURE METHOD.
PRODUCT METHOD OR, VALUE
ADDED METHOD
Calculating the net value of the final goods
and services produced in an economy during
a year .Is known as the product method or
value added method.
It includes
a) Consumer goods.
b) Gross domestic private investment.
C) Production in government sector,and
d) Net Export (exports-imports).
INCOME METHOD
The sum total of net income earned by working people
in different sectors and commercial enterprises is the
national income under the Income Method.
National income =
Total Rent + Total Interest + Total Wages + Total Profit.
EXPENDITURE METHOD
The Expenditure Method is also popularly known
as the “Consumption method”. It is the sum of
Total consumption and the total savings.
PROBLEMS IN NATIONAL INCOME
ACCOUNTING
The output of non-monetised sector.
Lack of differentiation in economic functions.
Unreported Black Money.
Lack of reliable statistical information.
Lack of data about the income of small
producers.
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