National Income(GDP)

National income is a bookkeeping method that governments use to track the economic activity level in the country through regular time. Here we will discuss in detail about National income which will be helpful in preparations.

So basically, National Income is an indicator of a country’s Economic growth. It is the total value of all goods and services that are produced in a financial year and also the total amount of income earned by the country in the financial year. The resources included in this are wages, interest, and rent.

National income is an interesting topic and it comes under Macroeconomics and it helps the policymakers in preparation of the yearly budgets of the country.

Now coming to National Income as GDP. It is an indicator used across the globe to know the countries’ economic growth. GDP(Gross Domestic Product) is the value of goods and products in a country which is calculated at regular intervals.

The Elements included in GDP are

Wages: Wages are nothing but a payment given for labor or services according to the contract and on hourly, daily, or monthly purposes. There are different types of wages like Minimum wage, a living wage, prevailing wage, tipped wage, and fair wage.

Salaries: Salaries are a fixed amount of money paid to someone for their work every year. A simple of salary is the fixed salary of 10lakhs a year paid to a doctor.

Rent: Rent is a tenant’s payment to the landlord every month for the use of the owner’s property or land. A contract is made between the owner and the tenant on an agreed sum of money paid at fixed intervals.

Interest: Interest is money paid regularly at a particular rate for the use of money taken on a loan. We can also define it as the extra money paid for delaying the repayment of the debt

Mixed-income: Mixed income refers to the income of the self-employed individuals, farming units, and household proprietorships earned from the production process by the enterprises which are incorporated.

Direct tax: Direct tax is something that a person or organization directly pays the tax to the entity that imposed it. Examples of direct tax are income tax, property tax, and personal property tax.

GDP is calculated like this: Consumption+ investment+ Government spending+ Exports- Imports

Important facts about National Income are

• The first rough estimate of National Income was done by Dadabhai Naroji in 1867-68 and it is published in his book Poverty and Unbritish rule in India.
• The first estimate was made by Prof V K R Rao (1931-1932)
• The Indian government estimated the first National Income for the first time in 1948-1949 through the Ministry of Commerce
• Dr. P C Mahalanobis was the chairman of the Indian statistical institute and the National Income committee was set up in 1949.

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