An example will help our understanding. These three components are excluded from national income because they do reach individuals. It includes all items mentioned above under income method to GNP less indirect taxes. So, to avoid duplication, the value of intermediate products used in manufacturing final products must be subtracted from the value of total output of each industry in the economy. Such durable-use consumers’ goods as scooters, cars, fans, TVs, furniture’s, etc. If depreciation is deducted from the gross value added, we have net value added which comes to Rs. For these are the payments they receive for their productive services during the year. National income is the sum total of the value of all the goods and services manufactured by the residents of the country, in a year., within its domestic boundaries or outside. With a view to removing these personal and regional disequibria, the decisions to levy more taxes and increase public expenditure also rest on national income statistics. First, avoiding double counting, the goods and services which can be measured in money are included in national income. It includes income earned by factors of production through participation in the production process such as wages and salaries, rents, profits, etc. To this is added, the estimated interest on that private capital which is invested and not borrowed by the businessman in his personal business. Therefore, disposable income is divided into consumption expenditure and savings. Such services performed by paid servants are included in national income. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. To avoid double counting, therefore, only the final products and not the intermediary goods should be taken into account. It is only on the basis of these that the government can adopt measures to remove the inequalities in income distribution and to restore regional equilibrium. Similarly, the regional distribution of income is revealed. 8000 crores. For instance, pensions and unemployment allowances are paid to individuals by the government without doing any productive work during the year. Thus the GDP by value added is Rs. 6, 00,000 crores and the price index for this year is 300. By continuing to use our website, you agree to our. 60 crores as the net value added at factor cost which is equivalent to net domestic product at factor cost. Similarly, the income of a US ambassador in New Delhi is included in the US GNP, but it is a part of India’s GDP. Last, the income earned through illegal activities is not included in the GNP. Government makes payments in the form of pensions, unemployment allowance, subsidies, interest on national debt, etc. If disposable income is to be deduced from national income, we deduct indirect taxes plus subsidies, direct taxes on personal and on business, social security payments, undistributed corporate profits or business savings from it and add transfer payments and net income from abroad to it.

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