# B.Com Ist Year National Income In India Short Question Answer Notes

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## Short Answer Questions Study Notes

Q.1. Discuss the various important concepts related to national Income.

Ans. Following are the some important concepts of nation income:

(1) Gross National Product (G.N.P.) : The gross nations, product is the total money value of final goods and services producer by the nationals of a country during any given period of time, usually,

(2) Net National Product (N.N.P.): For calculating the net national product, the amount of depreciation is deducted out of the gross national product. In the process of producing goods and services, a part of total stock of capital is used up. This worn out or used up capital is termed as depreciation.Thus, N.N.P. gives the measure of net output available for consumption by the society. In mathematical form NNP=GNP -Depreciation.

(3) National Income: When net national product (N.N.P.) is measured at factor cost, it is called “National Income’. To obtain national income, Indirect taxes are deducted and subsidies are added to the N.N.P.

Thus, National Income=N.N.P.-Indirect taxes + Subsidies.

(4) Personal Income : The income actually received by the people or families of any country in a particular year is known as the personal income. For determining the personal income, the corporate taxes, undistributed profits of the companies, contributions for the provident funds, and social security, are deducted from the national income. Government transfer payments and dividends are added to obtain the personal income. Thus, Personal Income = National Income – Undistributed

profits – Contribution for provident

fund – Corporate taxes + Transfer Payments

(5) Disposable Income : To obtain the disposable personal income, personal direct taxes are deducted from the personal, income. Thus,

Disposable Income = Personal Income – Personal Direct Taxes

Q.2. Discuss the different methods of measuring Nation-al Income in brief.

Ans. See Page 15 and 16.

Q.3. Write short note on the estimate of National Income before Independence.

Or

Write short note on the estimate of National Income

in India.

Ans. Estimates of National Income before Independence: Before Independence virtually no attempts were made by the government to estimate the national income in a systematic manner. Some individual attempts were, however, made in this direction. Under the British Rule Dada Bhai Naurozi gives an estimate of per capita income of Rs. 20. Findley Shiraz estimated per capita income Rs.49 in 1991 and Rs. 116 in the year 1922. Dr. V. KR. V. Rao estimate the per capita income in 1932 at Rs. 65. But due to lack of data, these estimates are not so much realiable.

Estimates of National Income after Independence: After Independence, the National Income Committee was appointed in 1949, with P. C. Mahalanobis as Chairman. Committee estimates the national income during 1948-49 Rs. 8650 crore and per capita income Rs. 246.90. Committ published its last report in 1954. Afterwards Central Statistical Organisation (C.S.O.) estimate the national income per year with revised methodology. The C.S.O.now publishes the annual National Accounts Statistics which contain useful information on various aspects of the country’s national income

Q.4. Discuss the difficulties in the measurement of National Income.

Ans. In the measurement of national income, certain conceptual and statistical difficulties are met with. The main difficulties are as follows:

(1) Incomplete and Unreliable Data: In India, the available statistical data of agriculture and small scale industries are unreliable and incomplete. Information and data regarding consumption, expenditure and cost are also not abundently available in India.

(2) Existence of Non-mentized Sector : A large part of output is not brought to the market for exchange into money, because the producers are consuming directly or exchnging for other goods or services. This is found in rural areas and in particular in the agricultural sector. Therefore, this is not included in national income.

(3) Lack of Accounting Habit : Illiteracy of the people and ence of keeping accounts is the main difficulty arises in the ment of national income. Many producers do not keep s of their production. Some of them produce the goods for consumption only. The estimates of National Income are based areports from those producers. They are not correct estimates

(4) Lack of Proper Classification : A major part of the Indian economy consists of household enterprises which perform simultaneously functions belonging to different occupational categories. Thus, the usual industrial classification cannot be observed.

(5) Problem of Double Counting’: Double counting is a difficulty associated with the output value method. Suppose we calculate the total money value of a book published in a particular year and at the same time we calculate the value of paper used in the printing of books and add both in the national income of the year Now the value of paper has entered into the national income twier The best way to avoid this error is io count only the value added at each subsequent stage of production.

(6) Lack of Uniform Basis : Another difficulty is the absence of a uniform basis which could be used for evaluating commodities and services in term of money. The large unorganised and non-monetised sector of the Indian economy presents the greatest difficulty in national income calculation.