NATIONAL INCOME

Class -9
national income - introduction

stock/flow - NI is a flow, not a stock

factors of production = land-rent, labour-salary, capital-interest, entrpreneurship-profit

capital goods, intermediate goods, tax, subsidies, payments(pensions.. etc)

definitions

*AC pigu = in country + foeign income

*marshal = work+invest

*kujnuts = production sources to consumers net value

*samulson = flow of value of good and service in a year in a country

*UN = value of end goods and services in a year

*1951 - Nationa iNcome committe = not 2 times calculate - end net value

*JM keens & CSO = national production value

*prof. JR Hicks = net income in society is equal to income of all people

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class - 10

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national income - differnet concepts

*gross domestic product - GDP

GDP = GVA

GVA = total output - total input

GDP = price of goods + price of services

@factor cost

FC = rent + salary + interest + profit

GDP.CSO calculation = Market Price - Indirect Taxes + Subsidies

@market price

GDP.mp = GDPfc + Indirect Taxes - Subsidies

note = if subsidies are more than indirect taxes then, GDPfc > GDPmp

@current prices

shows more GDP if the prices are high due to inflation

@base prices

2011-12 prices are base prices - cuz finance was stable

previously = 2004-05, 1948-49

new proposition = 2017-18

*net domestic product (we don't use it in calculations)

only difference = Depresiation

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NDP = GDP - depreciation

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class - 11
if importance to where it is prduced - GDP (in India)

to who is prdocing it - GNP (by Indians)

*Gross national product

by only Normal Residents

GNP = GDP + (Exports[receipts] - Imports[payments])

GNP = GDP + (R-P)

R-P is considered as Net Factor Income from Abroad

GNP = GDP +/- NFIA

if exports more -- GNP > GDP

if imports more - GNP < GDP

in closed economy -- GNP = GDP

*Net national product (mostly considerd for National Income)

NNP = GNP - depreciation

NNPfc = GNPmp - IndTx + Sub - Dep

NNPmp = GNPfc + IndTx - Sub - Dep

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*Per Capita Income

PCI = NNP / Population

PCIreal = NNPfc / population --------- (@base price)

PCInominal = NNPmp / population -- (@current price)

data::

2014-15

PCIInd = Rs. 86,647

PCIts = Rs. 1,24,104

2022-23

PCIInd = Rs. 1,70,620

PCIts = Rs. 3,14,115

*Private Income

Private Income = NDPfc - Govt Income - social security (welfare schemes)+ NFIA +
National Debt Interest + Current Transfers from Government + Net Current Transfers from Rest
of the World

*personal disposable income = personal income - direct taxes - non taxable (ex.challans)

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class - 12
Methods to calculate national income - 3 methods

1) based on production - Net Ouput Method - Industry Origin Method - Product Method - Value

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Added Method

Simon Kuznuts = "product service method"

mostly used in primary sector, registered industries, urban construction

calculated with help of GVA

GVA = GVoutout - Inputs

---main con = duplication

-- do not include [unfinished goods, domestic consumption/production, second hand goods,

2) basd on income - factor payment method - income paid method - distributed share method

GDP = domestic factor incomes DFI (value paid for domestic goods and services)

GDP = rent + salary + interest + profit + mixed income

or

GDP = compensation to employees + operating surplus + mixed income

GDP = DFI

NDP = DFI - depreciation

GNP = DFI + NFIA

NNP = DFI + NFIA - depreciation

do not include - subsidy money, wind fall income, illegal income, second hand goods

3) based on consumpiton - income disposed method - consumption investment method

by JM keens

GDP = Consumption + Investment + Govt + X-M

GNP = C + I + G + X -M + NFAI

expenses in 4 sectors = house, business, govt, foreign trade

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class - 13
difficulties with calculations

difficulties = statistical

duplication

barter systemduction

no scientific method to calculate agri-production

un organised sector

no certaining on employability

black money, tax avation

showing less production in organised sector

CSO - no experts, skiled workers

= conceptual

difficulties in concepts of economy

domestic goods and services value not included

base year -confirming - conflicts (if base year changes GDP increases)

purchasing power parity not calculating

unfinished good - uncertian value

no value for govt activities

depreciation value calculation conflicts

environment depletion - not included

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* GDP deflator

to decrease the effects of prices hike

nominal to real converting

GDPreal = GDP current market price/ price index

price index = current / base year price

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class - 14
National income in India - Data

first time - dadabai nauroji in 1876

- "poverty and unbritish rule in india" - mentiones national income, poverty, drain
theory

-national income = 340 crore (1867-68)

population = 17 crores

per capita = 20 rupees

1898 - 99 = William Digbe

NI = 428 crores

PCI = 19 rupees

1911, 1921, 1931 = findley sirras

1921 - Prof.Shah and Combatta

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 - "wealth and taxable capacity of india"

NI = 2364 crores

PCI = 74 rupees

first time scietifically = Dr. VKRV rao

2 sector = agri(production meths) and manufacturing(income method)

2 books = 1925-26 = "an essay on national income"

1931-32 = "british india's national income"

NI = 1689 crores

PCI = 62 rupees

1931-40 - RC Desai

NI based on family expenditure - first person

NI = 1200 crores

1945-46 - COmmerce Minsitry

NI = 6234 crores

PCI = 198 rupees

*National Income Commission

PC mahalanobis

high powered experts committe

first tiem officialy scientifically

base year = 1948-49

reports = 1st - 1951 last - 1959

NI = 8710 crores, PCI = 225 rupees

more than half from agri-allied

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 1/6th from industries

*Central Statistics Office - 1951

white paper

under ministry of statistic and program implementaiton

*national statsisc comminso

rangarajan recommendation

first commissioner = tendulkar

to supervise CSO, NSSO

*NSO = CSO + NSSO - 2019 may 23

Growth rate in independent India

period NI growth% PCI growth%

1950-51 to 80-81 3.5 1.4

1980-81 to 00-01 5.6 3.2

2000-01 to 04-05 6.4 4.7

2004-05 to 13-14 7.3 5.8

*Hindu growth rate

Prof.Raj Krishna = 1950-80 = 3.5% only

crossed hindu growth rate in 6th five year plan

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NI, PCI increased due to ecconomic reforms

highest = 1988-89 = 10.2

lowest = 2020-21 = -6.6 (6 times negatively in India)

over the years from 2014-15 to 2022-23

agri - ts overcame india along the road

indistry - both lowering, ts lower than india

service - both increasding, ts higher than india

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