NATIONAL INCOME

National income is the aggregate money value of all incomes earned by individuals and enterprises.
National income refers to the aggregate of factor income earned by the normal residents of a nation during a given period as a result of their productive services. Along with every flow of factor income there is equivalent flow of goods and services. So, National income is also referred as national product.

CONCEPTS OF NATIONAL INCOME

1)      GDPMP (Gross Domestic Product at Market price) – GDPMP is market value of the final goods and services produced by an economy during an accounting year year.
GDPMP = P X Q 
(Where, P = Market Price, Q = Final Goods and Services Produced)

2)      GNPMP (Gross National Product at Market Price) – GNP is a broader concept than GDP. GDP is sum of GDP and net factor income from abroad.
GNPMP = GDPMP + Net Factor Income From Abroad
3)      NNPMP (Net National Product at Market Price) – NNPMP is the market value of the net output of final goods and services produced by an economy during an accounting year and net factor income from abroad.
NNPMP = GNPMP – Depreciation

4)      NDPMP (Net Domestic Product at Market Price) – NDPMP is difference between NNPMP and net factor income from abroad.
NDPMP = NNPMP - Net Factor Income From Abroad
OR
NDPMP = GDPMP – Depreciation

5)      NDPFC (Net Domestic Product at Factor Cost) – NDPFC is sum total of factor incomes (rent + profit + wages + interest) generated by an economy during an accounting year.
NDPFC = NDPMP – Indirect Taxes + Subsidies
OR
NDPFC = NDPMP – Net Indirect Taxes

6)      GDPFC (Gross Domestic Product at Factor Cost) – GDPFC includes all the elements of NDPFC and also consumption of fixed capital.
GDPFC = NDPFC + Depreciation

7)      NNPFC (Net National Product at Factor Cost) or National Income – NNPFC is equal to sum total of net domestic product at factor cost and net factor income from abroad.
NNPFC = NDPFC +Net Factor Income From Abroad

8)      GNPFC (Gross National Product at Factor Cost) or Gross National Income- GNPFC is that amount which is obtained by adding depreciation to net national product at factor cost.
GNPFC = NNPFC + Depreciation

9)      National Disposable Income- National Disposable income is the income from all sources available to residents of a country for consumption expenditure or for saving during a year.

10)   Factor Income from NDP Accruing to Private Sector- Factor Income from NDP Accruing to Private Sector is that part of factor cost of NDP generated in the form of compensation to employees, operating surplus and mixed income which is accrued to the private sector.

11)   Private Income- Private Income is the total of factor income from all sources and current transfers from the government and rest of the world accruing to private sector.

12)   Personal Income- Personal income is the income actually received by persons from all sources in the form of current transfer payments and factor income.

13)   Personal Disposable Income – Disposable income is the income available to persons from all sources and remaining with them after deduction of all taxes levied against their income and property by the government.
MEASUREMENT OF NATIONAL INCOME

There are three methods of estimating national income-
1) Income Method                                                                              
2) Value Added or Product Method                                                                      
3) Expenditure Method

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