National income is defined as the value of all final

goods and services produced by the normal residents of a country,

whether operating within the domestic territory of the country or outside, in

a year.

NATIONAL INCOME

7.4%

9%9.2%8.4%

6.2%

8.3%

4.3%

TRENDS IN NATIONAL INCOMEOF

INDIA

PER CAPITA INCOME

This refers to an individual's share of the national income. It is calculated to understand the economic growth and development of a country.

• India has one of the largest economies in the world in terms of its gross domestic product (GDP).

• However, India has such a large population that we have has an extremely low per capita GDP.

• This figure is determined by dividing a nation's GDP by its population.

• As a result of its low per capita GDP, India is considered a developing country

IMPORTANCE OF NATIONAL INCOME

METHODS FOR CALCULATINGTHE

NATIONAL INCOME

2. INCOME METHOD

1. PRODUCTION METHOD

3. EXPENDITURE METHOD

IN PRODUCTION METHOD,WE CALCULATE THE VALUE OF FINAL GOOD PRODUCED IN A COUNTRY IN PARTICULAR YEAR.

EXAMPLE: AGRICULTURE,FISHERIES,ETC.

FORMULA IS GIVEN BY O=C+I ‘O’ STAND FOR OUTPUT ‘C’ STANDS FOR CONSUMPTION ‘I’ STANDS FOR INVESTMENT DONE FOR PURCHASING THE PRODUCT.

IN INCOME METHOD Net incomes of individuals and business houses during a

year are added to know the national income

EXAMPLES : Rents, wages or salaries, interest and profit

The formula is Y = C + S

Here Y stands for Total IncomeC stands for consumption and S stands for Savings

IN EXPENDITURE METHODnational income can be arrived at by adding the total expenditure of individual and business firms during a year

FOR EXAMPLE:Expenditure by consumers on goods and servicesExpenditure by entrepreneurs on capital or investment goodsExpenditure by government on consumption and capital goods

The formula for this method is

Y = C + I

Here Y stands for total expenditureC stands for consumption expenditure , I stands for investment expenditure

Black Money : It has created a parallel economy - unreported economy which is equivalent to the size of officially estimated size of the economy

Non-Monetization : In most of the rural economy, considerable portion of transactions occurs informally

Growing Service Sector : growing faster than Agricultural and Industrial sectors… value addition in legal consultancy, health service ,financial and business services is not based on accurate reporting

PROBLEMS IN CALCULATING NATIONAL INCOME

Indian working in US ask, what about my Income?

Korean working in Bangalore questions, why my income is part of your National Income?

To adjust this, we need to knowNet Factor Income from Abroad = Factor income sent to the domestic economy by the citizens of the country working abroad

MinusFactor income sent abroad by the foreigners working in the domestic economy

By adjusting Net Factor Income from Abroad, we get another unit of National Income, i.e. Gross National Product

THEN TELL ME…

4 CHINA

COMPARATIVE GDP OF

INDIAWITH

OTHER COUNTRIES

THANK YOU