Important Notes on National Income (Part-II)

National Income (N.I.)

WHERE,
NFIA: Net Factor Income from Abroad,
 D: Depreciation,
 ID: Indirect Taxes,
Sub: Subsidies,
UP: Undistributed Profit,
NIH: Net Interest Payments by Households,
CT: Corporate Taxes,
TrH: Transfers received by Household,
PTP: Personal Tax Payments,
NP: Non-Tax Payments.
Gross Domestic Product 

It is the sum of the Monetary value of all final goods and services produced in the country per year.
Domestic – It mean Territorial criteria. 
GDP – Gross domestic product. 
Value addition concept is used in GDP.
Includes – Entities of India though in other countries like ships, airlines and Indian Embassy in other countries. 
Excludes  Embassies of other countries in India. 
Two important things that always keep in consideration.

1. At market price
2. At factor cost  

Market Price – It is showroom price it includes Transportation, Indirect taxes, The salary of the worker, Showroom of maintenance cost and some amount of marginal profit


Factor Cost-It is an input cost that is also called Production Cost it includes Raw Material cost, Salary of the worker, Machine cost and other things etc
 Net Domestic product

It is the net value of GDP after deducting depreciation (wear and Tear). 
Every asset except human beings goes for depreciation in the process of their uses. 
In India, Ministry of commerce and Industry decides and announces the rates by which assets depreciate. 
has to be always lower then GDP for the same year 
Developments such as “Ball-bearing” “Lubricants” etc. all innovated to Minimise the levels of deprecation. 

GNP-Gross National product 
It is the Monetary value of all final goods and services produced by residents of a country in a year. 
National product = Domestic product (+/-) NFIAD (NFIAD – Net factor income from abroad) 
National product will be lesser that domestic product if the income of Indian Nationals abroad is lesser than that of Income of foreigners in India and viceversa.

National disposable income = Net National product at market prices+other current transfer from rest of world

the idea behind National disposable income is that it gives an idea of what is the maximum amount of good and domestic economy has its disposal. Current transfer from rest  of the world include items such as gifts, aids etc

Private income = Factor income from net domestic product accruing to the private sector +national debt interest +net factor income from the abroad + current transfer from the government +other net transfers from the rest of the world

GDP DEFLATOR =  GDP/gdp
Where GDP stands for nominal GDP and gdp stands for real GDP
Sometimes Deflator is also denoted in percentage terms. In such case Deflator=GDP/gdp×100


                                                                      TO READ: PART-I


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