Features of national income

FEATURES OF NATIONAL INCOME

1) macro concept:
 National income is the income received from all the people of the country, including government in a year. Therefore, it is a micro concept. It includes the income from all the sectors of the economy I.e primary sector, secondary sector and tertiary sector.
2) Flow concept:
National income is the flow of goods and services produced in the country during a year; it differs from year to year. The factor services are supplied by the households and the firms produce goods with these factor services. After the goods are produced they are supplied to the households.
3)National income at current price and constant price:
If the national income is calculated on the basis of the price which prevails during the current year, then it is called national income at current prices. If the national income calculated on the basis of the price which prevails during the base year then it is called national income at constant prices.
4) Gross income and Net income:
If the national income is figured or expressed or calculated without considering depreciation like wear and tear of capital assets, the maintaining charges like white - washing, painting, etc. then it is called Gross national income.
                    GNP= C+I+G+(X-M)
If depreciation is reduced from the Gross value then we get net value of national income.
                    NNP= GNP- D (Depreciation)
5) Money national income and real national income:
If the national income is calculated on the basis of current prices or prices which prevails during the prevailing year then it is called money national income. If the national income calculated on the basis of price which prevailed during base year then it is called national income at constant prices or real national income.
6) All the sectors of economy:
National income is the money value of all the goods and services produced in all the sectors of the economy in a year. It  includes-
a) primary sector
b) secondary sector
c) tertiary sector
a) primary sector:
It includes agricultural , forestry, logging, fishing, hunting, livestock, rearing, mining, quarrying (Stone Industry), etc.
b) secondary sector:
 It includes small scale industry, large scale industry, construction, gas,electricity, etc.
c) Tertiary sector:
It includes transport and communication, banking and finance, real estate, government services, personal services I.e. self employment, etc.
7)National income in closed economy open economy:
Closed economy is the economy in which no foreign trade is taken place. It means includes the goods and services produced within the political boundary of an economy I.e. C+I+G.
In open economy, net foreign investment I.e.  value of exports (X) and value of imports (M) is also taken into consideration. When we express in terms of money it includes Receipt (R) and payment (P). Therefore, in open economy.
               GNP= C+I+G+(X-M)+(R-P)
8)National income estimation in India:
In India, national income has been estimated by central statistical organization (CSO).
9)Final goods and services:
While calculating national income we should consider the value of raw material   because the value of raw material is already Included in the value of final goods.
For e.g.: when we considering the value of cotton cloths produced in the industrial sector, we should not consider the value of cotton produced in agricultural sector. Otherwise, there will be over estimation of national income.
10) Combination of income and product method:

In India, certain items are calculated by output method and certain items are calculated by income method. According, we have conventional series and revised series.