Measurement of National Income :-
The National Income of a country is measured by GDP, GNP, GND, NNI, NNP and per ca pita income. The standard methods of calculation of National Income are GNP and per Ca pita Income, while in India GDP is used as the standard method for calculating National Income. Since all these methods do not include poverty, literacy, public health, equality and other factors of standard living, hence these are not considered as good methods to calculation of economic development.
Calculation Methods of National Income :-
- Gross Domestic Product (GDP) :- Gross Domestic Product is the money value of the production of goods and services of a country during a financial year. GDP is not considered as a good measure of National Income because it does not include the income of non residents of the country in foreign countries and it includes the income earned by foreign nationals living in the country. [GDP = C + I + G + (X-M)] {Where, C = Total Consumption Expenditure, I = Total Investment Expenditure, G = Total Government Expenditure, X = Export, M = Import}
- Net Domestic Product (NDP) :- It is the value of the GDP after deduction of the money value of the depreciation of machinery and fixed assets of production. [GNP = GDP- Depreciation]
- Gross National Product (GNP) :- It is the net value of goods and services of a country produced by residents in a country. [GNP = GDP + Net Factor Income From Abroad]
- Net National Product (NNP) :- It is the value of GNP after deducting depreciation of machinery and fixed assets from it. [NNP = GNP - Depreciation]
- National Income (NI) :- In India net national income is calculated by deducting Indirect Taxes and adding subsidies into NNP. [NI = NNP - Indirect Taxes + Subsidies.