Methods for measuring national income

Included Of course the accounting is more complicated than this when we recognize that the U. Those payments must be excluded from GDP since they represent the contribution of production factors owned by foreigners.

Methods for measuring national income

Definition National Income Committee defines national income as "the value of commodities and services produced in an economy during a given period, counted without duplication. Pre-Independence Estimates of National Income: Since there was no official body in India to prepare National Income estimate before Indian Independence, the same was prepared by some eminent personalities in their personal capacity.

He prepared the first estimates of National income in He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as non-agricultural production. However, such method can only been called as a non-scientific method.

The first person to adopt a scientific procedure in estimating the national income was Dr. VKRV Rao in He divided the Indian Economy into two parts Agricultural Sector which included agriculture, forests, fishing and hunting. Corporate Sector which included industries, construction, business, transport and public services.

Two different methods were used for estimating the income in the two sectors. Product method was used for estimating income in agricultural sector and income method was used for estimating income in the corporate sector. Finally, Net Factor Income earned from abroad was added to the sum of the above two to obtain national income.

The committee was chaired by Prof. Mahalanobis and had Prof D. The first report of the committee was presented in According to the first report, the National Income of India for was Rs. Since the national income estimates are being prepared by Central Statistical Organisation.

The Central Statistical Organisation has divided Indian economy into three basic sector for the purpose of evaluation of various data. They are Primary sector comprising agriculture, forestry, fishing, mining and quarrying. Secondary sector comprising manufacturing, power generation, gas and water supply and Tertiary sector comprising transport, communication and trade, banking insurance, computer software, public administration, defence and external trade.

National Income may be calculated on current prices or at constant prices.

Definition of National Income

Currently, the base year for measuring national income and per capita income at constant prices is - 05, introduced in Jan National Income does not include data from the following activities Income from illegal activities like smuggling, gambling etc. Income from work done without remuneration like domestic work by housewives.

Who estimated the National Income for the first time in India?National income accounting, a set of principles and methods used to measure the income and production of a country.

There are basically two ways of measuring national economic activity: as the money value of the total production of goods and services during a given period (usually a year) or as the. Note: This content has been preserved from the legacy srmvision.com site. Links have been updated to point to their archival location.

IB Economics/Macroeconomics/Measuring National Income - Wikibooks, open books for an open world

Future articles in this series may be presented and organized in a different manner. Measures of National Income For the purpose of measurement and analysis, national income can be viewed as an aggregate of various component flows. The most comprehensive measure of aggregate income which is widely known is Gross National Product at market prices.

Methods for measuring national income

Measuring National Income – Three Methods of Measuring National Income and Output National income can be defined as the part of the objective income of the community including income derived from abroad which can be measured in money i.e the money value of goods and services which is produced and made available for consumption in an economy.

ADVERTISEMENTS: The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method. 1. Product Method: ADVERTISEMENTS: In this method, national income is measured as a flow of goods and services.

A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), net national income (NNI), and adjusted national income also called as NNI at factor cost (NNI* adjusted for natural resource depletion).

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OECD Income Distribution Database (IDD): Gini, poverty, income, Methods and Concepts - OECD