NATIONAL INCOME By B.K.

SINGH SIR

GDP = P x Q + P x S

Domestic Territory

• Economic Activities on land.

• Economic Activities in water.

• Economics Activities in air.

• Economics Activities in embassies.

FINANCIAL YEAR
• It is also called the period of an accounting year.

• (1st April- 31st March)

GDPMP
• It is the market value of final goods and services produced within the domestic territory of the
country during the period of an accounting year.

CONCEPTS
1. Gross-DepreciationNet.
2. Domestic+NFIANational.
3. Factor Cost+NITMarket Price.
4. NIT= Indirect taxes - Subsidies.
5. NFIA= Income from R.O.W - Income to R.O.W.

1. NNPFC = GDPMP - Depreciation + NFIA - NIT.

2. NNPMP = GDPMP - Depreciation + NFIA.
3. GNPMP = GDPMP + NFIA.
4. GNPFC = GDPMP + NFIA - NIT.
5. GDPFC = GDPMP - NIT.
6. NDPFC = GDPMP - Depreciation - NIT.
7. NDPMP = GDPMP - Depreciation.

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Measurement of NNPFC
1. Value added method & industry origin method.

2. Income Method.

3. Expenditure Method

Real GDP
• Increases only when there is rise in quantum of output.

• It refers to market value of goods and services estimated at base year & constant price, produced
within the domestic territory of the country.

Nominal GDP
• It refers to market value of goods and services, estimated at current year prices, produced within
the domestic territory of the country.

• It may increase without any increase in the quantum of output in the economy

QUESTION:Normally countries shifted from agriculture to industry and later to services, but India
shifted directly from agriculture to services. What are the reasons for the huge growth of the
services vis-à-vis industry in the country? Can India become a developed country without a strong
industrial base?

Answer Part-1

The proper course of development that an economy follow is a shift from agriculture to
services via industry, but India has shifted from agriculture to services directly without
entering into industrial phase. The Reason behind its direct shift are as follows:

Globalisation and Liberalisation: Both the term influenced India almost at the same time,
which created a base to grow service sector. The globalization opened the shifting of service
sector job while liberalization opened the country’s market by increased investment.
Availability of Skilled man-power: The huge availability of skilled manpower with lower
labour cost provided a solid base for service sector growth.
Internal and external demand: The world-wide demand of services sector with increasing
economy and purchase power has influenced greatly in growth of service sector.

Answer Part-2

India cannot be a developed country without a strong industrial base because of the
following reasons:

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Solid industrial base is required for growth of both agriculture and service sector.
The demand of services and goods cannot be met for such a huge population until a solid
industrial base in country itself.
The Huge working population of the country cannot be vested in service or industrial sector
only.

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