Important points related to National Income
National Income measures the value of commodities and services turned out during a given period counted without duplication. It also includes Net Earned Foreign Income. It is a flow value not a stock value.
Following points describe Important facts about National Income in India.
1. Dada Bhai Naoroji was the first person who estimated National Income and per capita income in the year 1867-68. According to Dada Bhai Naoroji per capita income in 1868 was Rs. 20. The approach to reach at this result was unscientific.
2. Dr. V.K.R.V. Rao was the first person who adopted a scientific procedure for the estimation of National Income in the year 1931. He divided Indian economy into 2 parts.
i) Agriculture sector
ii) Corporate sector
3. After independence the Government of India in 1949 appointed National Income Samiti under the chairmanship of P.C. Mahalanobis. The committee presented the first report in 1951. According to the first report National Income of India was Rs. 8710 and Per capita income was Rs 225 in financial year 1948-49
4. Since 1955 the National Income Estimate are being prepared by CSO ( Central Statistical Office)
Concept of National Income ( GDP )
1. Gross Domestic Product (GDP) – The total money value of all final goods and services produced within the geographical boundaries of the country during the given period of time.
2. Net Domestic Product (NDP) when depreciation is deducted from GDP , the remaining value is known as NDP.
3. Gross National Product (GNP) – It refers to the money value of total output or production of final goods and services produced by the National of the country during the given period of time.
GNP = GDP + X – M
Where;
X = Income earned and received by Nationals within the boundaries of foreign countries.
M = Income received by foreign Nationals within the country.
4. Net National Product ( NNP ) is obtained by subtracting depreciation value from GNP
NNP = GNP – Depreciation
NNP can be calculated in 2 different ways.
i) At market price of goods and services ( Current Price )
ii) At factor cost – When NNP is obtained at factor cost, it is known as National Income.
NNP (at factor cost) / National Income = NNP (at market price) – Indirect tax + Subsidies.
Other Important terms;
Personal Income – It is that income which is obtained by individuals or Nationals.
Private Income – That income which is obtained by private firms , organisation, corporation etc.
PerCapita income – PCI means Per Head Capital. It is numerically ratio of Total income to Total Population.
Disposable Personal Income – When Person al direct tax is deducted from Personal Income, the obtained value is called DPI
DPI = Personal Income – Direct Tax.
