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National income of India
Presented by::->
1.Radhey Raman ---A10
2.Thangjam Kishorchand Singh --- A13
3.Yogesh Panwar ---A2...
Introduction :
 National income is the single most important macro
variable ( i.e. aggregate consumption, saving and
inve...
Contd.
 India is now the world 3th largest economy in the world in
terms of real prices and purchasing power .
 For nati...
Contd.
 B – electricity, railways, air transport water and organized transport
and communication , banking and insurance,...
Concepts in National Income:
 Gross domestic product (GDP)
 Gross domestic product at constant price and at current pric...
METHODS OF NATIONAL INCOME:
Methods of measuring National Income:
Income Method
Expenditure Method
Product method or Inventory Method or
Value Adde...
Income Method
Steps of calculating national income through income method:
 1 Identification of various producing sector o...
Product methods:
 Steps of calculating national income through product method:
1 classification of various sector :
a) pr...
Expenditure Method:
 Steps of calculating national income through expenditure method:
1 Identification of economics goods...
Importance
and
limitation:
Significance:
 Indicates Economic Growth: -- it indicates performance and the level
of economic growth in an economy.
--T...
 Helpful in Making Comparisons- it helps us in comparing national
income and per capita income of our country with those ...
 Helpful in economic planning:- National income accounting is helpful in
economic planning. The planning commission comes...
PRECAUTION:
PRECAUTION OF INCOME METHOD
 Income from illegal activities like smuggling gambling & theft etc.
should not be included i...
EXPENDITURE METHOD
 Final expenditure is to be taken into account to avoid
error of double counting.
 Intermediate expen...
PRODUCT METHOD
 The value of the sale & purchase of second hand goods is not taken into
account in value added method. Be...
CONCLUSION :
Summary of case study:
Growth of Indian economy:
 1975-76: 9.5% Growth
 1988-89: 11% Growth
 2005-06: 9.0% Growth
 200...
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National income of india

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National income of india

  1. 1. National income of India Presented by::-> 1.Radhey Raman ---A10 2.Thangjam Kishorchand Singh --- A13 3.Yogesh Panwar ---A23 4.Amritpal ---A22 5. Anuranjan lakra—a12
  2. 2. Introduction :  National income is the single most important macro variable ( i.e. aggregate consumption, saving and investment, employment and price levels)that represents the ‘economy as a whole’.  National income is the money value of all the final goods & services which produced by a country during one year.
  3. 3. Contd.  India is now the world 3th largest economy in the world in terms of real prices and purchasing power .  For national income , the Indian economy is divided into 14 broad sector which are grouped into 3 main category :  then category are  A- agriculture , forestry and logging , fishing , mining and quarrying ,registered manufacturing and construction are included
  4. 4. Contd.  B – electricity, railways, air transport water and organized transport and communication , banking and insurance, real estate, public administration and defense are included.  C – gases and water supply , unorganized road and water transport , storage ,trade ,hotels and restaurants, ownership of dwelling and other services are included.
  5. 5. Concepts in National Income:  Gross domestic product (GDP)  Gross domestic product at constant price and at current price.  Gross domestic product at factor cost and at market price (GDPFP and GDPMP)  Net domestic product (NDP)  Gross national product(GNP)  Net national product(NNP)  Net national product at factor cost or national income(NNPFC)
  6. 6. METHODS OF NATIONAL INCOME:
  7. 7. Methods of measuring National Income: Income Method Expenditure Method Product method or Inventory Method or Value Added Method
  8. 8. Income Method Steps of calculating national income through income method:  1 Identification of various producing sector of the economy: a)Primary sector b)secondary sector. c)Tertiary sector 2 classification of factor income: a)Compensation Of Employees. b)Operating surplus(OS). c)Mixed income(MI). 3 ) Net factor income abroad(NFIA). NFIA =earning of resident outside the country – earning of foreigner inside the country 4) Estimation of national income --NNPFC = 1+2+3+4
  9. 9. Product methods:  Steps of calculating national income through product method: 1 classification of various sector : a) primary sector. b)Secondary sector. c)tertiary sector. 2 Estimation of Gross value added or GDP: GVA=value of output – intermediate consumption value of output =[ sales + change in stock] –intermediate consumption 3 Estimation of national income (1+2+3)-Depreciation-NIT+NFIA=NNPFC
  10. 10. Expenditure Method:  Steps of calculating national income through expenditure method: 1 Identification of economics goods incurring expenditure: a)household sector. b)producer sector. c)government sector. d)Rest of the world. 2 Classification of final expenditure 1. Final consumption expenditure a)private final consumption. b)Govt. final consumption. 2. Final investment expenditure a)government fixed capital formation. b)change in stock. c)Net exports.
  11. 11. Importance and limitation:
  12. 12. Significance:  Indicates Economic Growth: -- it indicates performance and the level of economic growth in an economy. --The data on national income and per capita display the true picture of the health of an economy. If both are increasing continuously, it surely reflects an increase in economic welfare, otherwise not.  Helps in Policy Formulation:-- Statistical data on national income not only helps in making economic analysis but also helps in policy formulation. --Moreover it not only helps in formulating fiscal policy, monetary policy, foreign trade policy but also helps in making modifications and amendments wherever necessary.
  13. 13.  Helpful in Making Comparisons- it helps us in comparing national income and per capita income of our country with those of other countries. This may lead us to make suitable changes in our plans and approach to achieve rapid economic development of our country.  Helpful to Trade Unions- National accounts throw light on distribution of factor incomes which is very helpful to trade unions and other labor organizations in making rational analysis of the remuneration the laborers are getting.  Distribution of income-:- National income accounting describes distribution of national income in terms of factors like interest, rent, profit & wages. It also shows the relative significance of the factors of production in the economy.
  14. 14.  Helpful in economic planning:- National income accounting is helpful in economic planning. The planning commission comes to know about the resources available for economic planning.  Structural changes in the economy:- National income accounting is helpful in providing knowledge of structural changes in the economy. We are able to know that decrease or increase in share of agriculture and industry in national income.  Facilitates forecasting:- National income accounting is helpful in forecasting the effect of economic policies on the level of production & employment.
  15. 15. PRECAUTION:
  16. 16. PRECAUTION OF INCOME METHOD  Income from illegal activities like smuggling gambling & theft etc. should not be included in national income.  Windfall gains e.g. lotteries & capital gains should not be included.  The sales proceeds of shares & bonds are not included in national income.  Imputed rent of owner occupied house is included in national income.  Indirect taxes like sales tax, excise duty etc. increase the market price of goods & services. These are included in the estimation of national income at market price and not included while estimating national income at factor cost.
  17. 17. EXPENDITURE METHOD  Final expenditure is to be taken into account to avoid error of double counting.  Intermediate expenditure is not included in the calculation of national income.  Expenditure on second hand goods is not included.  Expenditure on shares & debentures is not included.  Expenditure on transfer payments by the govt. is not included in total expenditure.
  18. 18. PRODUCT METHOD  The value of the sale & purchase of second hand goods is not taken into account in value added method. Because value of second hand goods is already taken into account.  Value of intermediate goods is not included in the value addition. Because value of intermediate goods is already shown in value of final goods.  Imputed value of production for self consumption is taken into account.  Commission earned on account of sale and purchase of second hand goods is included in the estimation of value added as commission is reward for services rendered.
  19. 19. CONCLUSION :
  20. 20. Summary of case study: Growth of Indian economy:  1975-76: 9.5% Growth  1988-89: 11% Growth  2005-06: 9.0% Growth  2006-07: 9.6% Growth  2007-08: 6.7% Growth  2010 : 8.9% Growth
  21. 21. Thank you

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