Concept of
National Income
What does
National Income means?
Meaning of National Income: National
income is the measurement of flow of services and goods in economic system. The
national wealth is the measurement of present assets available on a given time
while the National income is the measurement of the production of economic
system in a given time period.
The
figures of National income are based on the financial year (i.e. from 1st
April to 31st March). The base of one year is taken for calculating
National income which is called base year, as all the seasons come in a year.
The data of estimation of India’s National income are issued by Central
Statistical Organization (CSO)
The important
concepts of national income are:
Methods of Measuring National Income -
There are various means and methods through which national income can be measured. These methods of measuring national income are:
There are various means and methods through which national income can be measured. These methods of measuring national income are:
1.
Gross Domestic Product (GDP)
2.
Gross National Product (GNP)
3.
Net National Product (NNP) at Market Prices
4.
Net National Product (NNP) at Factor Cost or
National Income
5.
Personal Income
6.
Disposable Income
Define
Gross Domestic Product (GDP), Gross National Product (GNP), Net National
Product (NNP) at Market Prices, Net National Product (NNP) at Factor Cost or
National Income, Personal Income and Disposable Income?
1. Meaning and definition of Gross Domestic
Product (GDP): GDP is the total market value of all final
goods and services currently produced within the domestic territory of a
country in a year.
2. Meaning and definition of Gross National
Product (GNP): Gross National Product is the total market
value of all final good and services produced in a year. GNP includes net
factor income from abroad whereas GDP does not.
3. Meaning and definition of Net National
Product (NNP) at Market Price: NNP is the market value of
all final goods and services after providing for depreciation. That is, when
charges for depreciation are deducted from the GNP we get NNP at market Price.
4. Meaning and definition of Net national
product (NNP) at factor cost (national income): NNP
at factor cost or national income is the sum of wages, rent, interest and
profits paid to factors for their contribution to the production of goods and
services in a year.
5. Meaning and definition of Personal
Income: Personal income is the sum of all incomes actually
received b all individuals or households during a given year.
6. Meaning and definition of Disposable
Income: From personal income if we deduct personal taxes like
income taxes, personal property taxes etc. What remains ins called disposable
income
Disposable income = consumption + saving
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