PRESENTED BY - Dr. R. S. Dhankaria Course Director & Principal K.V. Khatkhati. On 27th September 2010 at KV Dimapur related with three days workshop for PGT Economics.

National Income Accounts

National income accounts The three methods of national income accounting

The circular flow of national income and expenditure

The circular flow of national income and expenditure (1) Production (2) Incomes (3) Expenditure

The circular flow of income Firms Factor payments Consumption of domestically produced goods and services (Cd) Households

The circular flow of income Export expenditure (X) INJECTIONS Government expenditure (G) Investment (I) Consumption of domestically produced goods and services (Cd) BANKS, etc Net saving (S) ABROAD Import expenditure (M) Factor payments GOV. Net taxes (T) WITHDRAWALS

The circular flow of income Export expenditure (X) INJECTIONS Government expenditure (G) Investment (I) Consumption of domestically produced goods and services (Cd) BANKS, etc Net saving (S) ABROAD Import expenditure (M) Factor payments GOV. Net taxes (T) WITHDRAWALS

The Circular Flow of Income Withdrawals net saving net taxes import expenditure Injections investment government expenditure export expenditure

Different Concepts/Aggregates of Domestic and National Income GDP@MP NDP@MP GDP@FC NDP@FC DOMESTIC INCOME GNP@MP NNP@MP GNP@FC NNP@FC NATIONAL INCOME

National income accounts Methods of national income accounting (a) The product approach /Value Added Method

Domestic and National Income Value Added Method Sales + Change in Stock = Gross Value of output (-) Intermediate Consumption

= G V A@MP ( - ) Depreciation = NVA@MP - Net Indirect Tax(IT - Subsidies) = NVA@FC (NVA@FC of Primary Sector + NVA@FC of Secondary Sector + NVA@FC of Territory Sector =NDP@FC) + NFIA = NNP@FC

National income accounts Methods of national income accounting (b) The income approach

Compensation of Employees (Wages and Salaries+ Employers contribution to social security scheme + retirement pension) + Operating Surplus ( Rent + Royalty + Interest +Profit) (Dividends + undistributed profit + Corporate Tax) + Mixed Income of Self Employed = NDP@FC + NFIA =NNP@FC

National income accounts Methods of national income accounting (c) The expenditure approach

Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Fixed Capital Formation + Change in Stock (Closing Stock – Opening Stock) + Net Export (Export – Import)

= GDP@MP (-) Depreciation = NDP@MP (-) Net Indirect Tax = NDP@FC + NFIA = NNP@FC

Private Income Income from Domestic Product Accruing to Private Sector + Interest on National Debt Current Transfer of Government Current Transfer of Rest of the World Net Factor Income from Abroad (NFIA) = Private Income

Personal Income Private Income (-) Corporate Saving / Undistributed Profit Corporate Tax / Corporate Profit Tax = Personal Income

Personal Disposal Income Personal Income (-) Personal Direct Taxes Miscellaneous Government Receipt = Personal Disposal Income = Consumption + Savings

Gross National Disposal Income GNP@MP + Net Current Transfer from Rest of the World = Gross National Disposal Income

Net National Disposal Income NNP @MP + Net Current Transfer from Rest of the World = Net National Disposal Income

THANKS.