NATIONAL INCOME

Presented by:
N.Naveen
09G21E0031
 NATIONAL INCOME
The sum of total of the values of all goods and services produces
in a year..

Definition:
‘A National Income estimated measures the volume of
commodities and services turned out during a given period
without duplication’.

‘National Income is the money value of all goods and services

produced in a country during a year’.
 Importance
To assess the developmental objectives

To see the economic development of the country

To know contribution of the various sectors to National Income

It indicates the standard of living

It indicates the per capita income with which we can compare
the levels of development of all the countries

Countries can be classified as ‘developed’ and ‘developing’ and

‘under developed’ based on their per capita income only
METHODS
Production method

Income method

Expenditure method

Production method=Income
method=expenditure income
 Sectors
Primary Secondary Tertiary

Agricultural and allied Registered industries Communication

activities

Forest Non registered Banking/insurance

industries

Fishing Electricity Public administration

Mining Trade Health

Manufacturing Education

Other services
 National Income concepts
GROSS DOMESTIC PRODUCT[GDP]:

GDP is a measure of a country’s over all output.it is the market

value of all goods and services made with in the boarders of a
country in a year.

GROSS NATIONAL PRODUCT[GNP]:

The GNP= GDP+income earned by domestic residents through

foreign investments-the income earned by foreign investors in
the domestic market.
NET NATIONAL PRODUCT[NNP]:

NNP is the total market value of all final goods and

services produced by citizens of an economy during a
given period of time minus depreciation.

NNP=GNP-DEPRICIATION

NET NATIONAL INCOME:

NNI=NNP-INDIRECT TAXES

NET INCOME:
NI=NNI+SUBSIDIES
 PRODUCTION METHOD
This method based on the total production of
a country during a year

The sum total of products produced by the

three sectors in the total output of the nation

The next step is to find out the value of these

products in terms of money

The money sent by Indian citizens working

abroad is also added to this. Now we get GNI.

GNI=GDP+Income from abroad

CONTRIBUTION OF IN THE VARIOUS SECTORS TO GDP
Year Primary Secondary Tertiary Total GDP

1950-51 59 13 28 100

1980-81 42 22 36 100

2002-03 24 24 52 100

2005-06 20 26 54 100

2007-08 17 29 54 100
 INCOME METHOD
Factors of production together produce output
and Income

By adding the money sent by the Indian citizens

from abroad to the income of the various factors of
production, we get GNI

GNI=Rent+Wage+Interest+Profit+Income
from abroad
 EXPENDITURE METHOD

National Income can also be calculated by adding up

the expenditure incurred for goods and services
• GOVERNMENT
• INDIVIDUALS

GNI=Individuals Expenditure+Government Expenditure

 DIFFICULTIES
Most of the data is not from the current year

Even if current data available them values are

under reported

The services of housewives .

Lack of proper criteria for measuring the value

of services.

In backward economics

 OTHER INCOMES IN NATIONAL INCOME

PERCAPITA INCOME[PCI]
PCI=National income/Population

PERSONAL INCOME[PI]
PI=Wages+Rent+Interest+Profit+Others
 CONCLUSION
From the above discussion, we may easily
concluded that national income plays an integral
role in the development of an economy. It is the
important measure of standard of living of the
people of a count.
Continuous increase in production can
be considered as an index of progress that an
economy has achieved.
Thank You