Basic National Income Aggregates



A collection of guidelines and methods for determining a nation's output are referred to as the Basic National Income Aggregates. The GDP, GVA, and NNP are just a few of the macroeconomic identities that are used to determine national income. The national income accounts divide GDP into four main expenditure categories: consumption, investment, government purchases, and net exports. 
Basic National Income Aggregates

Basic National Income Aggregates 

National income is the net cash value of all the finished goods and services generated within and outside the country's boundaries during a certain accounting year.
The national income accounts divide GDP into four main expenditure categories: consumption, investment, government purchases, and net exports.
The national income-related aggregates are:
Gross Domestic Product (GDP) (market price and factor cost).
Gross National Product (GNP).
Gross National Product at the Market price (GNPMP).
Net National Product (NNP).
National Income (Net National Income at Factor Cost).
Net Domestic Product at Market Price (NDPMP).
Net Domestic Product at FC or (NDPFC).
Gross National Product at FC (GNPFC).

Gross Domestic Product (GDP)

•    Gross Domestic Product (GDP) is the market value of all finished products and services produced inside a nation during a specific time period.
•    The word "domestic" in the Gross Domestic Product (GDP) indicates that only domestically produced goods and services are included in the GDP.
•    Only 'final' goods and services are taken into account when calculating GDP.
•    The phrase "final products and services" refers to goods and offerings that are meant for end usage (for the final consumer). It is distinct from intermediate products and services, which are used to create final products and services.
•    It counts the quantity of products and services produced over a specific time frame, usually a year. In India, the GDP is determined on a regular and yearly basis.
•    Gross Domestic Product at Market Prices, or GDPMP, is the total gross market value of all finished goods and services produced within a nation's domestic territory within a specific accounting year.
•    GDPMP is calculated as follows: NDPFC (Net Domestic Product at FC) + Depreciation + NIT.
•    The total monetary value of goods and services produced within a country's domestic territory within a single accounting year, excluding net indirect taxes, is known as the gross domestic product at factor cost, or GDPFC.
•    GDPMP minus Net Indirect Tax equals GDPFC.

Gross National Product (GNP)

•    Another measure of a nation's national income is its GNP.
•    The market value of all finished goods and services produced domestically is determined when calculating GDP.
•    However, it's conceivable for Indians to find employment and make money abroad. However, temporary and seasonal immigrant labor may contribute to some of the productivity within a nation.
•    GDP plus 'Net' factor income from overseas equals Gross National Product (GNP).
•    Net Factor income from abroad is equal to the difference between the earnings of domestic producers who use foreign labor in the rest of the world and the earnings of foreign producers who use domestic labor in the rest of the world.
Basic National Income Aggregates

Gross National Product at Market Price (GNPMP)

•    GNPM Gross National Product at Market Price (GNPMP) is the sum of factor incomes received by common individuals during a fiscal year, taking into account depreciation and net indirect taxes.
•    NNPFC plus Dep + Net Indirect Tax = GNPMP.

NNP: Net National Product

•    Production components experience wear and tear. This deterioration is referred to as depreciation. A percentage of the capital that is not used to produce goods and services is spent on wear and tear.
•    NNP is the result of deducting depreciation from GNP.
•    Gross National Product - Depreciation equals Net National Product (Market Price).
•    NNP (Market Price) - Taxes + Subsidies equals NNP (Factor Cost).

Net National Income at Factor Cost 

•    The Net National Product at Factor Cost is known as National Income.
•    NNP (Factor Cost) = National Income - Taxes + Subsidies = NNP (Market Price).

Net Domestic Product at Market Price (NDPMP)

•    The NDPMP stands for Net Domestic Product at Market Price.
•    It is the final value of all finished products produced on a nation's domestic market within a specific accounting year, minus depreciation.
•    GDPMP - depreciation equals NDPMP.

NDPFC, or Net Domestic Product at FC

•    Without accounting for depreciation and net indirect tax, it is the entire cost of all final goods and services.
•    It therefore represents the total of all factor incomes (including employee remuneration, rent, interest, profit, and mixed self-employment income) produced within the domestic area of the nation.
•    NDPFC is equal to GDP at MP minus depreciation, indirect tax, and subsidy.

GNPFC, or gross national product at FC

•    It is the total of factor incomes received by common citizens of a country during a certain accounting year plus depreciation.
•    NNPFC plus depreciation equals GNPFC.

Other Aggregates

Personal Income

•    A component of the national income known as personal income is distributed to households.
•    Personal income (PI) = NI + Undistributed profits + Households' net interest payments - Corporate tax + Transfer payments from the government and businesses to households.
•    Profits that are not given to families are known as "undistributed profits."
•    Another tax that does not benefit individuals is corporate tax.

Personal Disposable Income

•    The amount of money available to households to spend however they see fit is known as Personal Disposable Income (PDI).
•    The total amount of a person's personal income is not available to them. They are required to pay both taxes (such as income tax) and non-tax obligations (such as fines).
•    Personal Disposable Income (PDI) is calculated as follows: PI – Personal Tax Payments – Non-Tax Payments (such Penalties, etc.).
•    Therefore, the portion of total revenue that belongs to households is known as personal disposable income. They might decide to keep the rest and only consume a piece of it.
Basic National Income Aggregates

National Disposable Income

•    The greatest value of products and services that can be purchased by the domestic economy is referred to as "National Disposable Income".
•    Net National Product at market prices plus other current transfers from the rest of the globe equals National Disposable Income.
•    Currently, there are transfers coming from other countries that include gifts, assistance, and other things.

Private Income

•    Private Income = Factor income from net domestic product accruing to the private sector + National debt interest + Net factor income from abroad + Current transfers from government + Other net transfers from the rest of the world Private Income = Revenue received by an individual that is not in the form of a salary, wage, or commission and is obtained by a private individual or family.


The term "national income" refers to the entire value of goods and services produced by a nation during its fiscal year. Thus, it is the end consequence of all economic activity that occurs in a nation throughout a given year. It is valued financially. The total amount of money a nation makes during a year from diverse economic activity is, in a nutshell, its national income. It is helpful in assessing the development of the nation.

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