Académique Documents
Professionnel Documents
Culture Documents
ECONOMICS - III
Project on
Page | 1
Acknowledgement
I have put my sincere efforts in this project. However, it would not have been possible
without the kind support and help of many individuals and organizations. I would like to
extend my sincere thanks to all of them.
I am highly indebted to Prof. Akash Kumar for their guidance and constant
supervision as well as for providing necessary information regarding the project & also
for their support in completing the project.
I would like to express my gratitude towards my parents, seniors and my classmates for
their kind co-operation and encouragement which help me in completion of this project.
My thanks and appreciations also go to my colleague in developing the project and
people who have willingly helped me out with their abilities.
Page | 2
Index
1. Acknowledgement
no: 02
2.
Introduction
3.
Page
Page no: 04
Page no: 05
Page
5.
Page no: 06
6.
Page no: 07
7.
08
Page no:
8.
08
Page no:
9. Bibliography
no: 10
Page | 3
Page
1. INTRODUCTIONIt is defined as the aggregate factor income (earning of labour and land) which arises
from the current production of goods and services by the nations economy.
1.1 Definitions
The names of the measures consist of one of the words "Gross" or "Net", followed by one
of the words "National" or "Domestic", followed by one of the words "Product",
"Income", or "Expenditure". All of these terms can be explained separately.
"Gross" means total product, regardless of the use to which it is subsequently put.
"Net" means "Gross" minus the amount that must be used to offset depreciation ie.,
wear-and-tear or obsolescence of the nation's fixed capital assets. "Net" gives an
indication of how much product is actually available for consumption or new investment.
"Domestic" means the boundary is geographical: we are counting all goods and services
produced within the country's borders, regardless of by whom.
"National" means the boundary is defined by citizenship (nationality). We count all goods
and services produced by the nationals of the country (or businesses owned by them)
regardless of where that production physically takes place.
The output of a French-owned cotton factory in Senegal counts as part of the Domestic
figures for Senegal, but the National figures of France.
Page | 4
Page | 6
4) National Income at Factor Cost: National Income at factor cost means the sum of all
incomes earned by resources suppliers for their contribution of land, labour, capital and
entrepreneurial ability which go into the years net production. In other words, it shows
how much it costs society in terms of economic resources to produce net product.
National Income at Factor Cost = NNP Indirect Taxes + Subsidies.
5) Personal Income (P.I): Personal Income is the sum of all incomes actually received
by all individuals or households during a given year.
Personal Income = National Income - Social Security Contribution -Corporate
Income Taxes - Undistributed Corporate Profits + Transfer Payments.
6) Disposal Income (D.I): After a good part of personal income is paid to government in
the form of personal taxes like income tax, personal property tax, etc., what remains of
personal income is called disposable income.
Disposable Income = Personal Income Personal Taxes.
Welfare is NOT Measured: GDP only measures the market activity and does not take
welfare into account. The economic activity of a country could rise, while welfare could
Page | 8
possibly have fallen. Different situations may occur that have a negative impact on the
people which cause them to increase spending, therefore increasing the GDP.
There are some problems which crop up when measuring national income of a country,
some are as below1) Problems of Definition: Ideally we should include all goods and services produced in
the course of the year; but there are some parts of the total which defy measurement. The
services of housewives, for example, are not included on the ground that there is no
means of assessing their market value.
2) Calculation of Depreciation: The question of calculation of depreciation on capital
consumption presents another formidable difficulty. Unless from the gross national
income correct deductions are made for depreciation, the estimate of net national income
is bound to go wrong. The main problem is that both the amount and the composition of
capital are changing all the time.
3) Value of Inventories: It is not easy to calculate the value of inventories, i.e., raw
materials, semi-finished and finished goods in the custody of the producers.
4) The Treatment of Government: Another difficulty arises with regard to the treatment
of Government in national income accounts. On this point, the general viewpoint is that
as regards the administrative functions of the government like justice, administration and
defence, they should be treated as giving rise to final consumption of such services by the
community as a whole, so that the contribution of general government activities will be
equal to the amount of wages and salaries paid by the government.
5) Income by Foreign Firms: Another major problem arises with regard to the treatment
of income arising out of activities of the foreign firms in a country. On this point, The
IMF viewpoint is that production and income arising from an enterprise should be
Page | 9
ascribed to the territory in which production takes place. However, profits earned by
foreign branches and subsidiaries are credited to the parent concern.
8. BIBLIOGRAPHY:
1.
www.indiastat.com
2.
http://dqw3fn8dnd.487/trh
3.
www.worldbank.org /Data
4.
www.economywatch.com
5.
http://business.mapsofindia.com
6.
http://www.Economictimes.com
7.
http://www.Businesstimes.com
Page | 10