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7 National Income
Definitions of National Income :
Following are some of the important
definitions of national income :
1) National Income Committee (NIC) : The
National Income Commitee was appointed
by the Government of India in August 1949
with Prof. P. C. Mahalanobis as Chairman
and Prof. D. R. Gadgil and Dr. V. K. R. V.
Rao as the members.
Fig. 7.1
Introduction :
National Income is one of the important
subject matter of macroeconomics. The national P.C.Mahalanobis V. K. R. V. Rao D. R. Gadgil
economy comprises of all the firms and factories, According to NIC “A national estimate
shops and markets, banks and financial measures the volume of commodities and
institutions, various departments and their offices services turned out during a given period
etc. National income is a composite measure counted without duplication.”
of all economic activities such as production,
distribution, exchange and consumption, but is 2) Prof. A.C. Pigou : “National dividend is
that part of objective income
also an objective indicator of economic welfare of the community including of
of the people in a country.
course income derived from
In India, establishment of the National abroad which can be measured
Income Committee (NIC) in 1949 marked the in money.”
beginning of Government efforts for regular 5) Prof. Irving Fisher : “National dividend
compilation of National Income estimates. At or income consists solely of
present, Central Statistical Organisation (CSO) services as received by ultimate
compiles and publishes data on national income consumers, whether from their
and allied aggregates every year. material or from their human
Meaning : environments.”
Modern economy is a money economy. Features of National Income :
Hence, national income of a country is expressed 1) Macro Economic concept : National
in terms of money. income represents income of the economy
The total income of the nation is called as a whole rather than that of an individual.
national income. Hence it is a macro economic concept.
In real terms, national income is the flow 2) Value of only final goods and services : In
of goods and services produced in an economy order to avoid double counting in national
during a year. income, the value of only final goods and
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