NATIONAL INCOME- SOME BASIC CONCEPT

NATIONAL INCOME :- IT IS THE SUM OF THE FACTOR INCOMES (LIKE WAGES, RENT, INTEREST, PROFIT) GENERATED BY THE NORMAL RESIDENT OF A COUNTRY ALONG WITH NET FACTOR
INCOME FROM ABROAD.  NATIONAL INCOME IS ALSO CALLED NNPFC, WHERE:-
"N" STANDS FOR =NET
"N"     "             "     =NATIONAL
"P"      "             "    =PRODUCT/INCOME
"FC"    "            "     =FACTOR COST

DOMESTIC INCOME:- IT REFERS TO THE INCOME EARNED BY BOTH RESIDENT AND NON RESIDENT WITHIN THE DOMESTIC TERRITORY ONLY IN AN ACCOUNTING YEAR.

NOTE:- INCOME EARNED BY THE NORMAL RESIDENT ONLY, EITHER WITHIN THE COUNTRY OR OUTSIDE THE COUNTRY COUNTED IN THE ESTIMATION OF NATIONAL INCOME(NNPFC). 

BUT INCOME EARNED BY BOTH RESIDENT AND NON RESIDENT WITHIN THE DOMESTIC TERRITORY ONLY COUNTED IN THE DOMESTIC INCOME(NDPFC).

LETS UNDERSTAND SOME BASIC TERMS BEFORE  GOING TO LEARN  THE CALCULATION OF NATIONAL INCOME:-



GROSS:- THE BASIC MEANING OF GROSS IS, WITHOUT TAX OR OTHER CONTRIBUTION HAVING BEEN DEDUCTED. WHILE CALCULATING NATIONAL INCOME
WE HAVE TO DEDUCT THE AMOUNT OF DEPRECIATION AND CONSUMPTION OF FIXED CAPITAL FROM GROSS AMOUNT

NET:-  THE BASIC MEANING OF NET IS THE REMAINING AFTER THE DEDUCTION OF ALL THE CHARGES, OUTLAYS OR LOSS.

DOMESTIC TERRITORY:- IT REFERS THE ECONOMIC TERRITORY OF A COUNTRY WHERE PERSON, GOODS, CAPITAL CAN CIRCULATES FREELY. EXP:- INDIAN SHIPS AND AIRCRAFTS  ARE THE PROPERTY OF INDIA, AND IF IT GOES TO OUTSIDE OF THE COUNTRY IT WILL BE CONSIDER UNDER DOMESTIC TERRITORY OF INDIA. 

VALUE OF FINAL GOODS AND SERVICES:- IT REFERS TO THE VALUE OF ONLY THOSE FINAL GOODS AND SERVICES WHICH DIRECTLY SATISFY THE HUMAN WANTS. IT DOES NOT INCLUDE THE THE VALUE INTERMEDIATE GOODS.

FACTOR COST:- IT IS THE VALUE OF PRODUCTION EXPENSES WHILE MAKING A PRODUCT OR WHILE GIVING ANY SERVICE.

MARKET PRICE:-  IT REFERS TO THE VALUE OF A PRODUCT AFTER ALL THE TAXES AND CHARGES.

VALUE ADDED:- 
IT REFERS TO, VALUE OF OUTPUT - INTERMEDIATE CONSUMPTION

VALUE OF OUTPUT= SALES+ CHANGE IN STOCK

CHANGE IN STOCK= CLOSING STOCK- OPENING STOCK

DEPRECIATION:- IT REFERS TO THE VALUE OF LOSS OF VALUE OF FIXED ASSETS IN    USE IN ACCOUNT OF, NORMAL WEAR AND TEAR, OBSOLESCENCE AND ACCIDENTAL CHARGES.

                               
TRANSFER PAYMENTS:- IT REFERS TO THOSE PAYMENT MADE OR INCOME  RECEIVED IN WHICH NO GOODS OR SERVICES ARE BEING PAID FOR. EXP:- SCHOLARSHIP, SUBSIDY, OLD AGE PENSION. 

NORMAL RESIDENT:- PERSON WHO IS LIVING IN A COUNTRY FOR A YEAR OR MORE THAN A YEAR AND HIS CENTER OF ECONOMIC INTEREST BELONGS TO THAT COUNTRY. 

NET FACTOR INCOME FROM ABROAD:- NET FACTOR INCOME FROM ABROAD THE IS DIFFERENCE BETWEEN NATIONAL INCOME AND DOMESTIC INCOME. ALTERNATIVELY IT IS THE DIFFERENCE BETWEEN FACTOR INCOMES RECEIVED  
FROM ABROAD AND FACTOR INCOME PAID TO ABROAD.

GROSS DOMESTIC PRODUCT AT MARKET PRICE(GDPMP):- GROSS DOMESTIC PRODUCT IS THE MARKET VALUE OF FINAL GOODS AND SERVICES PRODUCED DURING A YEAR WITHIN THE DOMESTIC TERRITORY OF A COUNTRY. 

AGGREGATES OF NATIONAL INCOME:-

* GROSS DOMESTIC PRODUCT AT MARKET PRICE(GDPMP)
* GROSS NATIONAL PRODUCT AT MARKET PRICE(GNPMP)
* NET NATIONAL PRODUCT AT MARKET PRICE(NNPMP)
*NET DOMESTIC PRODUCT AT MARKET PRICE(NDPMP)
*NET DOMESTIC PRODUCT AT FACTOR COST(NDPFC)
*GROSS DOMESTIC PRODUCT FACTOR COST(GDPFC)
*GROSS NATIONAL PRODUCT AT FACTOR COST(GNPFC)
*NATIONAL DISPOSABLE INCOME
*FACTOR INCOME FROM NET DOMESTIC PRODUCT ACCRUING TO PRIVATE SECTOR
* PRIVATE INCOME
*PERSONAL INCOME
*PERSONAL DISPOSABLE INCOME


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