various importance of national income in a country

2. 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.

3. 7.4%
9%9.2%
8.4%
6.2%
8.3%
4.3%

4. PERCAPITA 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

8. IN PRODUCTIONMETHOD,
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.

9. 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 Income
C stands for consumption and S stands for
Savings

10. IN EXPENDITURE METHOD
national 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 services
Expenditure by entrepreneurs on capital or investment goods
Expenditure by government on consumption and capital goods
The formula for this method is
Y = C + I
Here Y stands for total expenditure
C stands for consumption expenditure , I stands for investment
expenditure

11. 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

12. 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 know
Net Factor Income from Abroad = Factor income sent to the
domestic economy by the citizens of the country working abroad
Minus
Factor 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