NATIONAL INCOME 

The first attempt to calculate national income of India was made by Dadabhai Naoroji. He estimated a National Income of Rs. 340 crore and per capita income of Rs. 20 in 1867-68.

First time Scientific estimation of National income was done by Prof. V.K.R.V RAO in the year 1931 -1932 .

In 1949, soon after the establishment of independent India, the National Income Committee (NIC) was formed to compile statistics and estimate national income. The committee was headed by P.C. Mahalanobis and included D.R. Gadgil and V.K.R.V. Rao.

On  recommendation of National Income Committee the preparation of National income was given to Central Statistical Organization (CSO) 

The Central Statistics Office is a governmental agency in India under the Ministry of Statistics and Programme Implementation.

 

National income 

National income means the value of goods and services produced by a country during a financial year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.

National income  includes the aggregate of earnings from a nation's current production including compensation of employees, interest, rental income, and profits of business after taxes.

Gross domestic product

Gross domestic product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. As such, it also measures the income earned from that production, or the total amount spent on final goods and services 

Gross national product

GNP measures the value of goods and services produced by only a country's citizens but both domestically and abroad. 

NDP: - NET DOMESTIC PRODUCT  

NDP = GDP-DEPRECIATION 

 

DEPRECIATION:

 

It refers to the fall in value of production over the period of time .

It refers to how much value of an asset has been used .

 

PERSONAL INCOME :-

Personal income is the amount of money collectively received by the inhabitants of a country. Sources of personal income include money earned from employment, dividends and distributions paid by investments, rents derived from property ownership, and profit sharing from businesses.

 

PERSONAL INCOME = NATIONAL INCOME +TRANSFER PAYMENT - (CORPORATE TAX +INCOME TAX + SOCIAL SECURITY TAX).

 

Transfer payment :-

Transfer payment is a redistribution of income and wealth by means of the government making a payment, without goods or services being received in return. 

Eg: -Oldage Pension , Scholarship, Widow Pension  etc.

 

Personal Disposable income :-

It is money left with individuals after paying personal taxes such as income tax , property tax etc .

 

FACTOR COST & MARKET PRICE 

Factor cost is the total amount which the manufacturer had to invest in production of a good or commodity. It doesn't include any taxes imposed on the final product. But, the market price is the final cost at which the manufacturer sells the goods to customers. And these are inclusive of all the applicable taxes.

GDP - GROSS DOMESTIC PRODUCT 

Gross domestic product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. As such, it also measures the income earned from that production, or the total amount spent on final goods and services (less imports).

Method of Calculation of GDP.

PRODUCTION METHOD :-

The production, or value added, approach consists of summing the gross value added of all industries (resident sectors). For each industry, this involves first determining its output and then subtracting the goods and services that were used up in the process of generating that output.

INCOME METHOD :-

The income approach to measuring the gross domestic product (GDP) is based on the accounting reality that all expenditures in an economy should equal the total income generated by the production of all economic goods and services.

Expenditure method 

The expenditure method is a system for calculating gross domestic product (GDP) that combines consumption, investment, government spending, and net exports. It is the most common way to estimate GDP.

FORMULA= C+I+G+ (X-M)

Y=GDP

I=INVESTMENT

C=CONSUMPTION

G=GOVT EXPENDITURE 

X=EXPORT

M=IMPORT