national income introduction

When we multiply the total output produced in one year by their market prices prevalent during that year in a country, we get the Gross National Product at market prices. Under this comes the expenditure incurred by private enterprise on new investment and on replacement of old capital. National income data are of great importance for the economy of a country. In their case, it is very difficult to find out the different inputs provided by the owner himself. To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. 3.50. Third, goods and services rendered free of charge are not included in the GNP, because it is not possible to have a correct estimate of their market price. This concept also refers to the measurement of income at current prices and at constant prices. To avoid double counting, therefore, only the final products and not the intermediary goods should be taken into account. It is also called National Income.

80 crores (Rs. Under this head are included all forms of wages and salaries earned through productive activities by workers and entrepreneurs.
60 crores as the net value added at factor cost which is equivalent to net domestic product at factor cost.

Therefore, the difference of value between exports (X) and imports (M), whether positive or negative, is included in the GNP. Third, it is again not possible to have a correct estimation of national income because many of the commodities produced are not marketed and the producer either keeps the produce for self-consumption or exchanges it for other commodities. It has proved to be more practical also. 100 as national income during one year, whereas Marshall and Pigou will include Rs. The additions include transfer payments such as pensions, unemployment allowances, sickness and other social security benefits, gifts and remittances from abroad, windfall gains from lotteries or from horse racing, and interest on public debt. The problem arises about the inclusion of their services in national income since they do not produce tangible commodities.

Another problem arises with regard to wages and salaries paid in kind to the employees in the form of free food, lodging, dress and other amenities.
For instance, in order to find out the per capita income for 2001, at current prices, the national income of a country is divided by the population of the country in that year. When a teacher teaches his own children, his work is also not included in national income. from the employer and spent the same in paying for food, lodging, etc.

There are a number of concepts pertaining to national income and methods of measurement relating to them.

Personal income differs from private income in that it is less than the latter because it excludes undistributed corporate profits. For example, if the price of a house or a piece of land increases due to inflation, the profit earned by selling it will not be a part of GNP. According to Fisher, “The National dividend or income consists solely of services as received by ultimate consumers, whether from their material or from the human environments. On the contrary, with the fall in the price level, the national income also falls, though the national production might have increased.

So NNP = GNP—Depreciation.

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