National Income — Quick Revision

A last-week sheet for national income. Prelims tests these identities in statement form; Mains uses them to judge the quality of growth.

The Identities

Aggregate	Formula
GNP	GDP + net factor income from abroad (NFIA)
NDP	GDP − depreciation
NNP	GNP − depreciation
National income	NNP at factor cost = NNP at market prices − (indirect taxes − subsidies)
GVA at basic prices	GVA at factor cost + production taxes − production subsidies
GDP at market prices	GVA at basic prices + product taxes − product subsidies
Expenditure GDP	$C + I + G + (X - M)$
GDP deflator	(Nominal GDP ÷ Real GDP) × 100

Production taxes / subsidies	Product taxes / subsidies
Paid because production happens, regardless of volume	Paid per unit of the product
Land revenue, stamp and registration fees, professional tax	GST, excise duty, customs duty
Input subsidies to farmers, subsidies to village and small industries	Food, fertiliser and petroleum subsidies

In	Out
Imputed rent of owner-occupied housing	Transfer payments (pensions, scholarships, gifts)
Self-consumed farm output	Second-hand goods (except commission)
Paid domestic services	Unpaid household work
Change in inventories	Shares, bonds, other financial transfers
Brokerage and commissions	Intermediate goods, lottery winnings

Method	Adds up
Production (value added)	Output − intermediate consumption, across sectors
Income	Compensation of employees + operating surplus + mixed income
Expenditure	Private and government final consumption + gross capital formation + net exports

High-yield facts

National income in the strict sense = NNP at factor cost.
India’s NFIA is negative, so GNP is slightly below GDP.
Since January 2015 (base 2011-12) India reports sector growth as GVA at basic prices and headline growth as GDP at market prices.
The National Statistical Office (MoSPI) was formed in 2019 by merging the CSO and NSSO.
The GDP deflator covers goods and services, excludes imports, and has no fixed basket.
Annual estimates: advance (January) → provisional (May) → revised estimates in later years; quarterly estimates lag about two months.

Year	Event
1867-68	Dadabhai Naoroji’s per capita income estimate
1931-32	V.K.R.V. Rao’s systematic estimate
1949	National Income Committee (P.C. Mahalanobis)
1951	Central Statistical Organisation set up
1990	First UNDP Human Development Report (HDI)
2015	New series with base year 2011-12
2019	NSO formed under MoSPI

“Basic prices” is not factor cost: production taxes are added.
Remittances from migrants are mostly current transfers, not factor income.
A rising deflator means nominal growth exceeds real growth.
Buying shares is not investment in the national-accounts sense; building a factory is.