1. What is National Income? According to National Planning Committee A national income estimate measures the volume of commodities and services turned out, during the given period counted without duplication

2. Concepts of National Income Gross national product (GNP) Gross domestic product(GDP) Net national product (NNP) Personal income (PI) Disposable income (DI) 3. Gross national product is defined as the total market value of all final goods & services produced in a year. Gross National Product (GNP) 4. Gross Domestic Product (GDP) Gross domestic product = GNPMP Net factor income from abroad 5. Net National Product (NNP) Net national product = Gross national product - Depreciation 6. Personal Income (PI) Personal income = National income- social security contribution- corporate income taxes- undistributed corporate profits+ transfer payments 7. Disposable Income (DI) Disposable income = personal income Personal taxes Disposable income = Consumption + saving 8. Methods of measuring National Income Value Added Method Income Method Expenditure method 9. Value Added Method Classify the industry into various industrial sectors Find the value output by an enterprise Subtract the intermediate consumption, depreciation and net indirect taxes from it, we will get the NVAFC by all enterprises of an industry Add them all and we will get the NVAFC by each industry. Then add NVAFC by every industry, we get NDPFC Now, add the net factor income from abroad to it and NATIONAL INCOME is obtained 10. Income method Classify the economy into various industrial sectors Classify the factor payments To measure the factor payments Adding the factor payment by various enterprises Summing up the incomes paid by various industries, we get NDP at factor cost Finally adding net factor income earned from abroad to NDPFC, we get NATIONAL INCOME 11. Expenditure Method Add various expenditures like final private consumption expenditure (C), governments final consumption expenditure(G), gross domestic investment(I) and net exports (X-M) We get GDMP, deduct the depreciations from it and we will get the NDPMP. Now subtract net indirect taxes, we get NDPFC Lastly by adding net factor income from abroad to NDPFC we will get the NATIONAL INCOME. 12. Methodology of Estimating National Income In India it has not been possible to measure national income by each of the method separately. For the purpose of calculating national income, Indian economy is divided into 14 broad sectors 13. Use of Value added method Agriculture & allied activities Forestry & logging Fishing Mining Registered manufacturing 14. Income method is used for:- Unregistered manufacturing Gas, electricity & water Banking & insurance Transport & communication Real estate Trade Defence Other services 15. INDIA US Business efficiency 59.053 Ranked 33rd. 100 Ranked 1st Economic importance 2.1 Ranked 25th 197.9 Ranked 1st GDP $4,164,000,000,000.00Ranked 5th in 2006. $13,060,000,000,000.00 Ranked 2nd in 2006 GDP (Per Capita) $3,751.99 per capita Ranked 121st in 2006 $43,680.67 per capita Ranked 3rd in 2006. Gross National income $477,000,000,000.00 Ranked 12th. $9,780,000,000,000.00 Ranked 1st. Human Development Index 0.602 Ranked 128th. 0.944 Ranked 10th. Income distribution > Poorest 10% 3.5% Ranked 22nd. 1.8% Ranked 85th. Income distribution > Richest 10% 33.5% Ranked 38th. 30.5% Ranked 54th. 16. top 10 countries (most recent) Unitsinbilliondollars Countries 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 US JAPAN GERMANY UK FRANCE CHINA ITALY CANADA SPAIN MEXICO 17. Problems in the estimation of National IncomeConceptual Problems Coverage of services Administrative services Statistical Problems Presence of subsistence sector Absence of accounting records No proper classification of economic activities Gaps in statistics Regional disparities 18. Significance of National Income estimates The inflation and deflationary pressure Standard of living can be compared Helps to know the contribution of various sectors. Shows the inequalities. Helps to know the roles.