What is National Income? Definition, aggregate, calculation formula and mathods|| India's National income

 

 National income is an uncertain term which is used interchangeably with national output, national expenditure and national devidend. On the basis of national income accounting records the leel of activity in account such as total revenue earned by domestic corporation, income tax by corporation, wages paid to foreign works....etc

1. What is national income?

National income is defined as total net earnings from the production of goods and services in country over a period of time, usually one year consisting essentially of wages, salaries,rent, profits and intrest.

* National income formula*

For the calculation of national income specific formula use is...

National income= C+I+G+(X-M)

National income is considered as NNP at factors coast.

Where, 

 C= Total consumption expenditure

 I=Total investment expenditure

G= Total government expenditure

X= Export 

M= Import

2. How can national income measure?

National income can be measured or estimated by.....

  - Gross National product ( GNP) 

  - Gross Domestic product ( GDP )

  - Gross National Income ( GNI )

  - Net National product ( NNP )

  - Net National Income ( NNI )

  -  Per- Capita Income ( PCI )

3.National income and its aggregates.

 Various national income aggregates are estimated either at factor costs or at market price.

Factor cost( FC )

Factor cost refers to cost of factors of production viz., rent of land intrest of land, interest of capital wages for compensation of employees for labour and profit for entrepreneurship

FC = MP- Indirect taxes + subsidies

Market price ( MP )

Market price is the price that customer actually pay. It includes the component of indirect taxes and of subsidies. When  indirect taxes are dedicated and subsidies added to the market price, we get value of National income at  factors cost

MP = FC + indirect taxes - subsidies

GDP ( Gross Domestic Product )

 It is the monetary value of all final goods and services produce with country's border in a specific time. 

GDP= C+ I + G + NX

Where...

C =  Consumption

I =  Investment

G= Government expenditure

NX = Net Export

Nominal GDP

It is Market value ( money value) of all final goods and services produced within the country.

Real GDP

The adjustment transform the nominal GDP into an index for quantity of total output. It is measurement of the value of output economy, adjusted for price changes.

GNP ( Gross National Product )

It is the market value of all product and services produced in one year of a country ( i.e. bye labour and property) 

 GNP = GDP + X - M

National Net Product ( NNP )

 It is the value of GNP after deducting depreciation of plant and machinery.

NNP = GNP - Depreciation

National income ( NI )= NNP - Indirect taxes + Subsidies

4. Calculating Methods of National income

According to Simon kuznets, National income can be calculated by three mathods are follows.

( i) Product Method in this method, net value of final goods and services produced in a country, during a year is obtained, which is called Total Final Product.

( ii)Income Method  in this method, a total of net income earned by working people in different sector and commercial enterprises is obtained. By this method, NI is obtained by adding receipts as total rent, total wages, rota intrest and  total profit.

(iii) Consumption method  it is also called Expenditure Method. Income is either spent on Consumption or served. Hence NI is the additional of total consumption and total savings.

5. Problem in calculating of National income

-  Black money ( illegal activities like smuggling, unreported income due to tax evasion..)

- non - monetised economy

- Growing service sector ( like BPO ,  Health service, financial and business...)

- double counting 

6.National income of India

 India is developing economy  it is world 5th largest economy in world by nominal GDP and  third largest by purchasing parity (PPP). According to IMF on  Per  Capita income basis  India ranked 139th by GDP ( nominal ) and  118th by GDP ( PPP ) in 2018.

India's National income source from Google.

* Conclusion* 

 At end of  this blog I explained what National income? and it's realated all basic information also explain about India's National income and it's statistics I hope you like it and if you have query and any questions related this post please comment in box and stay with this blog website I shared more information related economic and all government exam topics thank you....