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Friday, May 16

TNPSC Indian Economy Study Materials Part 1 - National Income

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National Income:
In simple words, National Income is the total value of all goods and services produced by a country in a particular year.

The National income can be derived from a number of measures like GDP, NDP, GNP, NNP which are explained below.

GDP (Gross Domestic Product)
  • Total value of all goods and services produced within the Boundary of a country (Including foreigner's Production within the country).
  • Usually goods once produced under goes wear and tear and hence depreciation occurs.
  • When calculating the Net Value  the depreciation value will be deducted.

NDP (Net Domestic Product)
  • NDP is value of GDP after the Depreciation reduction.
NDP = GDP - Depreciation
Net Factor Income: Difference between the Exports and Imports

GNP (Gross National Product)
GNP = GDP + Net factor Income

NNP (Net National Product)
  • NNP is value of GNP after the Depreciation reduction.
NNP = GNP - Depreciation
The above mentioned measures can be calculated at factor cost and market cost.

Factor Cost: It is the production cost, it includes subsidies and excludes indirect taxes.
Market Cost: It is the market price of a product, it excludes subsidies and includes indirect taxes.

National Income
  • NNP at factor cost is said to be National Income.
National Income = NNP at factor cost

Personal Income and Disposable Personal Income
  • Personal Income includes sum of all the incomes received by a person.
  • Disposable income is the amount available which can be spent at his will. 
Disposable Income = Personal Income - Direct Taxes

Per Capita Income
  • Amount of Money earned per person.
  • It can be calculated as follows
Per Capita Income = National Income / Population

Methods of Computing National Income
  • Product Method
  • Income Method
  • Expenditure Method

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1 comment:

  1. Very nicely explained for beginner's. Thankyou


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