National Income

It is the total value of goods and services that a nation produces in a set time frame, generally a year.

They are:

a. Income method

b. Product method

c. Expenditure method

Depreciation is removed from the calculation as to account for the usage and wear and tear of assets in an economy.

It is calculated as- National Income/ Population

Agriculture is also known as primary sector and 50% of India’s population is engaged in this sector.

All the products and services produced in the economy is accounted for, it also includes profits and dividends earned from abroad.

It is the sum total of expenditure made by public on goods, services and investments

It is the sum total of income and payment received by people

Per-capita Income is very important indicator because it shows the living standard of people and other socio-economic aspect like equality and freedom.

Primary sector is also known as agricultural sector which engages more than 50 of work force in India with contribution of just 15.8% in the GDP.

It is the total amount of money earned by an economy. It is the sum total of all the value of goods and services produced in an economy over a period of time. It is usually calculated per year.

Net National Product is arrived at by after deducting depreciation from the Gross National Product (GNP). It is done to account for normal usage and resulting wear and tear in the national assets. (GNP- Depreciation)

Income method is a technique used to calculate national income of an economy. It accounts for all the payments and income received by people in an economy.

It is the output per person in an economy in monetary value. It is indicator of living standard of people and is obtained as following: National Income/ population.

Need to study national income includes:

a. To estimate size of an economy and its level of performance

b. To measure value of goods and services produced in an economy

c. Compare performance and growth of any economy with that of previous years or with other countries

d. Aid government in forming beneficiary policies and programs

Tertiary sector includes industries and services in the following area: Hotel, Tourism, Finance and Insurance, transportation and warehousing

To ensure growth in economy and efficient performance the government must protect its people from internal and external threats by maintaining law and order. This can ensure smooth functioning of various income generating stakeholders in an economy.

It means free market or an economy with no intervention of government;

it was a state of action adopted by government in olden days. But now to ensure that the economy functions at optimum level it performs various functions

Gross Domestic Product is the value of all goods (car, food-grains, electronics etc.) and services (doctors, engineers, CA etc.) produced within the boundaries of an economy in a particular time period, generally a year. It includes depreciation

Net Domestic Product is similar to GDP, but it does not include depreciation. GDP- Depreciation= NDP

The two Components of National Income are:

a. Gross Domestic Product is the value of all goods (car, food-grains, electronics etc.) and services (doctors, engineers, CA etc.) produced within the boundaries of an economy in a particular time period, generally a year. It includes depreciation

b. Net National Product is arrived at by after deducting depreciation from the Gross National Product (GNP). It is done to account for normal usage and resulting wear and tear in the national assets. (GNP- Depreciation)

Need to study national income includes:

a. To estimate size of an economy and its level of performance

b. To measure value of goods and services produced in an economy

c. Compare performance and growth of any economy with that of previous years or with other countries

d. Aid government in forming beneficiary policies and programs

Following are the Methods of Calculating National Income:

a. Income method is a technique used to calculate national income of an economy. It accounts for all the payments and income received by people in an economy.

b. Expenditure method, it calculates the total expense of people on goods, services and investments.

c. Product method, it is the total value of goods and services produced in the geographical boundary of an economy.

In India, product and income method is widely used.

Following are the functions:

a. Protective Function: To ensure growth in economy and efficient performance the government must protect its people from internal and external threats by maintaining law and order. This can ensure smooth functioning of various income generating stakeholders in an economy.

b. Administrative Function: Government must fulfil its Judiciary, executive and legislative duties. E.g.: To watch over malpractices by companies and be vigilant against fraudulent activities

c. Social Security Functions: Providing aid to the needy people in an economy and looking after their welfare. E.g.: Providing subsidised Education loan, shelter to poor etc.

d. Economic Function: To indulge in activities that provide and result in greater economic and income growth. E.g.: Loan waivers to farmers, Special Economic Zones for industries etc.

The Per Capita Income of Tamil Nadu is 2,300 USD (115,700 Rs.)