National Income Accounting

1
 National Income Accounting

 
 
 
GDP
 
= (C + I + G + NX)

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 National Income Accounting

(X - M) + (R - P)

GNP = GDP+
 
 
 
GDP

[(X-M)+(R-P)]
 
= (C + I + G)

 
 
 
 
  3
 National Income Accounting

 
 
 
 
GDP
= (C + I + G + NX)

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 National Income Accounting

  
 (X - M)  + (R - P) Loss of GDP
as debt-servicing
  
 
GDP GNP = GDP
= (C + I + G ) +
[(X - M) + (R - P)]

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 National Income Accounting

BoP contributes to GDP BoP predates on GDP

X - M) + (R - P)
( Loss of GDP
 (X - M) + (R - P) as DEBT SERVICING

 GDP  GNP = GNP =

= (C + I + G) C+I+G+ GDP C+I+G+
= (C + I + G)
X - M) + (R - P)]
[( [(X - M) + (R - P)]

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 National Income Accounting

BoP contributes to GDP BoP predates on GDP

 GNP = C + I + G
+
[(X - M) + (R - P)] GNP = C + I + G
+
[(X - M) + (R - P)]

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 National Income Accounting

[(X-M) + (R-P)]
(200-450) + (120-
(D – A)
190) = -320 (170 – 200) = -30

 GNP

1870 -320
= 1550
 
 GDP = 1870
NNPMP
C = 120
I = 1000 = GNP – (D – A)
G =750
1550 – (-30) = 1580

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 National Income Accounting

(X - M)
+
(R - P)
(D – A)  

∑ Rent

 National Income = NNPFC ∑ Wages

GNP
NNPFC = NNPMP minus
GDP
 NNPMP
(Indirect Taxes – Subsidies) ∑ Interest
1580
(550 – 350)
NNP(FC) = 1580 –(550-350)=
1380 ∑ Profits

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 National Income Accounting

NI Triplet: 𝐍𝐈 =𝐍𝐄
  =𝐍𝐏

𝐍𝐈 =𝐍𝐄 : 𝐅𝐢𝐥𝐢𝐩 𝐬𝐢𝐝𝐞𝐬

  𝐨𝐟 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐜𝐨𝐢𝐧

= Incomes earned by  all involved factors

𝐇𝐞𝐧𝐜𝐞 , 𝐍𝐈
  =𝐍𝐏 𝐎𝐑
  𝐇𝐞𝐧𝐜𝐞 , 𝐍𝐄=𝐍𝐏
 

𝐓𝐡𝐞𝐫𝐞𝐟𝐨𝐫𝐞 : 𝐍𝐈
  =𝐍𝐄 =𝐍𝐏

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 National Income Accounting

Final Good Method or Value-Added Method

Multiple
Counting: Rs. 100 + Rs. 250 + Rs. 450 + Rs. 750 + Rs 1000 = Rs 2550
Processes: Cotton + Ginning + Spinning
+ Weaving + Dyeing = CLOTH
Value- added
Counting: Rs. 100 + Rs. 150 + Rs. 200 + Rs. 300 + Rs 250 = Rs 1000

Factor Cost = 1000 : Correct Price

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 National Income Accounting

Factor Cost = 1000 : Correct Price

Market Price = 1000 + GST Market Price = 1000 - Subsidy
Thus, Market Price either increases or decreases the FC Price

PROCESS FOR CONVERTING NNPMP INTO NNPFC

NNPMP = NNPFC + Indirect

Tax
- Subsidy

Indirect Indirect
NNPFC
+ Tax - Subsidy - Tax + Subsidy

NNPFC = NATIONAL INCOME

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 National Income Accounting TECHNICALITIES

1. 

2. 

𝐏𝐈 =𝐍𝐈
  −Undistributed Profits
 
Net Interest payments by HHs

  Taxes
Corporate

 
Transfers received by HHs
 National Income Accounting TECHNICALITIES

1. 

2. 
  𝟒𝟕𝟗𝟖𝟑𝟐
𝟒𝟓𝟔𝟗𝟑𝟐    
𝟎 . 𝟐 𝐱 𝟓𝟎𝟎𝟎𝟎
 
𝐏𝐈 =𝐍𝐈 −Undistributed Profits
𝟓𝟎𝟎𝟎  
−𝟐𝟎𝟎𝟎
 
Net Interest payments by HHs
𝟎 .
  Taxes
Corporate
𝟐𝟐 𝐱𝟓𝟎𝟎𝟎𝟎
 

 
Transfers received by HHs

𝟒𝟎𝟎   𝟕𝟎𝟎
 
 National Income Accounting TECHNICALITIES

𝟑 . 𝐏𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐃𝐢𝐬𝐩𝐨𝐬𝐚𝐛𝐥𝐞
  𝐈𝐧𝐜𝐨𝐦𝐞
𝟑𝟖𝟎𝟔𝟔𝟏
  𝟒𝟓𝟔𝟗𝟑𝟐 𝟓𝟓𝟐𝟕𝟏;𝟏𝟎𝟎𝟎
    𝟐𝟎𝟎𝟎𝟎
 
𝐏𝐃𝐈=𝐏𝐈
  − Personal Tax  
Non-Tax
Payments Payments

4. 

𝐍𝐚𝐭𝐢𝐨𝐧𝐚𝐥
  𝟒𝟕𝟗𝟖𝟑𝟐
𝐈𝐧𝐜𝐨𝐦𝐞  
𝟐 .  𝟏𝟖
𝐏𝐂𝐈 =
𝟐𝟐𝟎𝟎𝟎𝟕
𝐏𝐨𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝐒𝐢𝐳𝐞  

 
Mahbub ul Haq for UNDP

15
 (Mahbub ul Haq)
  (UNDP)

HDI CALCULATIONS

Goal Posts for HDI Calculations

Indices Min. Value Max. Value

Life Expectancy Index 25 Yrs. 85 Yrs.

Education Attainment
0% 100 %
Index

PCGDP Index 100 USDs 40000 USDs

 HDI CALCULATIONS contd.

Score Calculations per Index

( 𝑳𝑬𝑰 + 𝑬𝑨𝑰 + 𝑷𝑪 𝑮𝑫𝑷𝑰 ) 𝟑

𝑯𝑫𝑰 =   𝑯𝑫𝑰= √(𝑳𝑬𝑰 )(𝑬𝑨𝑰
  )(𝑷𝑪 𝑮𝑫𝑷𝑰 )
𝟑

LEI Information EAI Information PCGDP Information Arithmetic Geometric

Country Mean Mean
Real Score Real Score Real Score Score Ranks Score Ranks
Country 45 yrs 0.33 87% 0.87 10000USDs 0.25 0.48 2nd 0.42 2nd
1 15000 0.54 1st
62 yrs 0.62 72% 0.72 0.37 0.57 1st
Country USDs
50 yrs 0.42 40% 0.40 0.30 0.37 3rd 0.37 3rd
2 12000
Country USDs
3

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