2.
Income from sale of second-hand
goods will not be included: In national
income as their original sale has already
been counted. If they are included again,
it would lead to double counting However,
any brokerage or commission received by
brokers or commission agents on sale of
such goods will be included as it is an
income received for rendering productive
service.
1. Transfer Incomes (like 3. Income from sale of shares, bonds and
scholarships, donations, charity, debentures will not be included: As such
old age pensions, etc.) are not transactions do not contribute to current
flow of foods and services. The financial
included in the National income
assets are mere paper claims and involve
because such receipts are not for change of title only. However any
connected with any productive commission or brokerage on such
activity and there is no value financial assets is included as it is a
addition. productive service.
Precaution
of income
method
4. Windfall gains: Are 6. Payment out of past saving:
not included as there is no (like that duties gift tax interest
productive activity tax etc) are not included in the
connected with them ( like national income because they are
paid out of wealth or past saving
income from lotteries horse and do not add to current flow
race etc). of goods and services.
5. Imputed value of services
provided by owners of production
units will be included: Imputed
value of owner- occupied houses,
interest on own capital, production
for self consumption etc. will be
included as these are productive
activities and add to the flow of
goods and services.
2. Transfer Payments are
not included: as such
payments are not
connected with any
productive activity and
there is no value addition
1. Expenditure on Intermediate 3. Purchase of second-hand goods will
Goods will not be included in the not be included as such expenditure has
national income: as it is already been included when they were
already included in the value of originally purchased. Such goods do not
affect the current flow of goods and
final expenditure. If it is
services. However, any commission or
included again, it will lead to
brokerage on such goods is included as
double counting of expenditures. it is a payment made for productive
service
Precaution of
expenditure
method
4. Purchase of financial assets: (shares, 5. Expenditure on own account
debentures, bonds etc.) will not be production: (like production for
included as such transactions do not self-consumption, imputed value of
contribute to current flow of goods and owner occupied houses, free
services. These financial assets are mere
services from general government
paper claims and involve a change of title
and private non- profit institutions
only. However, any commission or
brokerage on such financial assets is
serving households) will be included
inchaled as it is a productive service. in the national income since these
are productive services.
2. Sale and Purchase of second-
hand goods is not included: as they
were included in the year in which
they were produced and do not add to
1. Intermediate Goods are not to current flow of goods and services. 3. Production of Services for self-
be included in the national However, any commission or consumption (Domestic Services) are not
brokerage on sale or purchase of suck included: Domestic services like services of
income: since such goods are
goods will be meluded in the national a housewife, kitchen gardening, etc are not
already included in the value of included in the national income since it is
income as it is a productive service.
final goods. If they are included difficult to measure their market value.
again, it will lead to double These services are produced and consumed
at home and never enter the market place
counting and are termed as non-market transactions.
Precaution of 5. Imputed value of owner-occupied
4. Production of Goods for
value added
houses should be included: People, who
self-consumption will be live in their own houses, do not pay any
included: in the national rent. But, they enjoy housing services
similar to those people who stay in
income as they contribute to the
method
rented houses. Therefore, value of
current output Their value is to such housing services is estimated
be estimated or imputed as they according to market rent of similar
accommodation. Such an estimated rent
are not sold in the market.
is known as imputed rent.
6. Change in 'Stock of Goods
7. Sale and purchase of shares, bonds and
(Inventory) will be included: Net
debentures (new and old): will not be
increase in the stock of inventories included as such transactions do not
will be included in the national contribute to current flow of goods and
income as it is a part of capital services. These financial assets and mere
formation. *Stock or Inventory is paper claims and involve a change of title
unsold goods, unused raw material or only. however, any commission or
brokerage on such financial assess include
semi-finished goods which a firm
as it is a productive service
carries from one year to the next.
