Indian Economy
National Income & Fiscal Developments
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- National Income & Fiscal Developments
- Indian Economy Report 2024
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- Public Sector in India
- Index of Industrial Production (IIP) India 2024
- Sectoral Developments in India 2024
- PM Gati Shakti 2024
- Indian Trade and Commerce
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National Income & Fiscal Developments
National income is the measurement of the flow of services and goods in an economic system.
Comparison between National Income and National Wealth
The national wealth is the measurement of present assets available at a given time, while the National income is the measurement of the production power of the economic system in a given time period.
Methods of Calculation
NNP at Factor Cost
-
NNP at market prices - Indirect Taxes + Subsidies
NNP at Market Prices
-
GNP at market prices - Indirect Taxes + Subsidies = National Income
Base for Calculation
-
The base of one year is taken for calculating the National income, as all the seasons come in a year.
Source of Data
-
The data on the estimation of India's National income are issued by the Central Statistical Organisation (CSO).
Relationship among Different Forms of National Products
National Product |
Adjustments / Subtractions |
Resulting Product |
---|---|---|
GNP (at MP) |
- Depreciation (D) |
NNP (MP) |
NNP (MP) |
- Depreciation (D) |
NDP (MP) |
GNP (FC) |
- Net Foreign Income (NFI) |
NNP (FC) |
GDP (MP) |
- |
- |
GDP (FC) |
- Net Foreign Income (NFI) |
NDP (FC) |
NDP (FC) |
- Depreciation (D) |
Equation:
GNP (MP) = GDP (MP) + X – M
Where:
-
X: Income earned and received by nationals within the boundaries.
-
M: Income received by foreign nationals within the country.
-
NFI: Net Foreign Income.
-
GNP: Gross National Product
-
NNP: Net National Product
-
NDP: Net Domestic Product
-
GDP: Gross Domestic Product
-
MP: Market Price
-
FC: Factor Cost
-
D: Depreciation
-
INT: Indirect Net Tax
Note: India used to calculate National Income on the basis of Factor Cost since January 2015. The Central Statistics Office of India officially started calculating National Income on the basis of Market Price. Service Tax is an Indirect Tax of the Centre and the States.
National Income in 2021-22 and 2022-23
Second Advance Estimates of National Income and Expenditure Components of GDP, 2023-24 (at 2011-12 Prices)
Domestic Product
Item |
2021-22 (2nd RE) |
2022-23 (1st RE) |
2023-24 (SAE) |
Percentage Change Over Previous Year |
Share in GDP (%) |
---|---|---|---|---|---|
(GFCE) Government Final Consumption Expenditure |
1,38,76,840 |
1,48,04,901 |
1,58,27,708 |
6.7 / 6.9 |
58.1 / 58.0 / 55.6 |
GVA at Basic Prices |
11,45,006 |
1,58,27,708 |
12,66,528 |
10.6 / 15.5 |
- |
Net Taxes on Products |
14,62,573 |
1,50,21,846 |
1,60,71,429 |
7.0 / 7.6 |
- |
Gross Domestic Product (GDP) |
1,72,90,281 |
1,30,66,058 |
1,39,86,798 |
7.0 / 7.7 |
100 |
Expenditure Components
Component |
2021-22 |
2022-23 |
2023-24 |
Share in GDP (%) |
---|---|---|---|---|
Private Final Consumption Expenditure (PFCE) |
87,32,573 |
93,23,825 |
96,05,526 |
58.1 / 58.0 / 55.6 |
Government Final Consumption Expenditure |
14,80,394 |
16,13,726 |
16,62,078 |
9.9 / 10.0 / 9.6 |
Gross Fixed Capital Formation (GFCF) |
50,14,263 |
53,46,423 |
58,93,155 |
33.4 / 33.3 / 34.1 |
Changes in Stocks (CIS) |
1,60,203 |
1,83,464 |
1,92,587 |
1.1 / 1.1 |
Valuables |
2,83,099 |
2,29,167 |
2,60,747 |
1.9 / 1.4 |
Exports |
33,93,107 |
38,47,742 |
39,06,346 |
22.6 / 23.9 / 22.6 |
Imports |
35,43,745 |
39,19,021 |
43,46,728 |
23.6 / 24.4 / 25.1 |
Discrepancies |
-4,98,048 |
-5,53,897 |
1,16,571 |
-3.3 / -3.4 / -0.7 |
GDP: 1,50,21,846 / 1,60,71,429 / 1,72,90,281
National Products
Product |
2022-23 |
2023-24 |
Percentage Change |
---|---|---|---|
Gross National Income (GNI) |
1,48,27,920 |
1,58,31,133 |
6.8 / 7.6 |
Net National Income (NNI) |
1,37,46,502 |
1,48,05,736 |
6.8 / 7.7 |
Per Capita Income, Product, and Final Consumption
Item |
2022-23 |
2023-24 |
Percentage Change |
---|---|---|---|
Population (in million) |
1369 |
1383 |
- |
Per Capita GDP (₹) |
1,09,762 |
1,16,216 |
5.9 / 6.7 |
Per Capita GNI (₹) |
1,08,345 |
1,14,478 |
5.7 / 6.7 |
Per Capita NNI (₹) |
94,054 |
99,404 |
5.7 / 6.8 |
Per Capita PFCE (₹) |
63,807 |
67,423 |
5.7 / 2.1 |
Note: RE: Revised Estimates, SAE: Second Advance Estimates
GDP (Production Income Approach) = GVA at Basic Price + Net Taxes on Products
Following Expenditure Approach, GDP = PFCE + GFCE + GFCF + CIS
Second Advance Estimates of National Income and Expenditure Components of GDP, 2023-24 (at Current Prices)
Domestic Product
Item |
2021-22 (2nd RE) |
2022-23 (1st RE) |
2023-24 (SAE) |
Percentage Over Previous Year |
---|---|---|---|---|
GVA at Basic Prices |
2,16,35,584 |
2,46,59,041 |
2,66,77,679 |
14.0 / 8.2 |
Net Taxes on Products |
19,61,815 |
22,90,605 |
27,12,007 |
16.8 / 18.4 |
Gross Domestic Product (GDP) |
2,35,97,399 |
2,69,49,646 |
2,93,89,686 |
14.2 / 9.1 |
Net Domestic Product (NDP) |
2,09,30,595 |
2,38,09,748 |
2,59,92,750 |
13.8 / 9.2 |
Expenditure Components
Component |
2021-22 |
2022-23 |
2023-24 |
Share in GDP (%) |
---|---|---|---|---|
Private Final Consumption Expenditure (PFCE) |
1,43,82,704 |
1,64,22,535 |
1,77,34,041 |
61.0 / 60.9 / 60.3 |
Government Final Consumption Expenditure (GFCE) |
24,72,153 |
28,83,649 |
30,85,666 |
10.5 / 10.7 / 10.5 |
Gross Fixed Capital Formation (GFCF) |
69,79,647 |
82,86,979 |
92,07,604 |
29.6 / 30.7 / 31.3 |
Changes in Stocks (CIS) |
2,13,837 |
2,77,120 |
2,92,655 |
0.9 / 1.0 / 1.0 |
Valuables |
3,85,015 |
3,35,730 |
4,14,375 |
1.6 / 1.2 |
Exports |
50,49,645 |
62,52,449 |
64,33,885 |
21.4 / 23.2 / 21.9 |
Imports |
56,69,023 |
72,13,027 |
70,42,440 |
24.0 / 26.8 / 24.0 |
Discrepancies |
-2,16,578 |
-2,95,789 |
-7,36,100 |
-0.9 / -1.1 / -2.5 |
GDP: 2,35,97,399 / 2,69,49,646 / 2,93,89,686
National Products
Product |
2022-23 |
2023-24 |
Percentage Change |
---|---|---|---|
Gross National Income (GNI) |
2,33,19,590 |
2,65,79,339 |
14.0 / 9.0 |
Net National Income (NNI) |
2,06,52,786 |
2,34,39,442 |
13.5 / 9.1 |
Gross National Disposable Income (GNDI) |
2,39,25,034 |
2,72,19,892 |
13.8 / 8.9 |
Net National Disposable Income (NNDI) |
2,12,58,230 |
2,40,79,994 |
13.3 / 9.0 |
Per Capita Income, Product, and Final Consumption
Item |
2022-23 |
2023-24 |
Percentage Change |
---|---|---|---|
Per Capita GDP (₹) |
1,72,422 |
1,94,879 |
13.0 / 8.1 |
Per Capita NNI (₹) |
1,70,392 |
1,92,201 |
12.8 / 8.0 |
Per Capita NNI (₹) |
1,50,906 |
1,69,496 |
12.3 / 8.1 |
Per Capita GNDI (₹) |
1,74,816 |
1,96,833 |
12.6 / 7.9 |
Per Capita PFCE (₹) |
1,05,092 |
1,18,755 |
13.0 / 7.0 |
RE: Revised Estimates
SAE: Second Advance Estimates
GDP (Production Income Approach = GVA at Basic Price + Net Taxes on Products)
Following the Expenditure Approach, GDP = PFCE + GFCE + GFCF + CIS + Valuable + Export – Import.
Discrepancy refers to the gap between GDP (Production Income Approach) and GDP (Expenditure Approach)
Source: NSO-MOSPI Report Q3 29.02.2024
FORMULAE
1. Gross Value Added (GVA) at Basic Prices
-
Production Approach: GVA at basic prices (Production Approach) = Output at basic price - Intermediate Consumption
-
Income Approach: GVA at basic prices (Income Approach) = CE + OS/MI + CFC + Production taxes less Production subsidies
2. Gross Domestic Product (GDP)
-
GDP = GVA at basic prices + Product taxes less Product subsidies
3. Net Domestic Product / Net National Income
-
NDP / NNI = GDP / GNI - CFC
4. Gross National Income (GNI)
-
GNI = GDP + Net primary income from ROW (Receipts less payments)
5. Primary Incomes
- Primary Incomes = CE + Property and Entrepreneurial Income
6. Net National Disposable Income (NNDI)
- NNDI = NNI + other current transfers from ROW, net (Receipts less payments)
7. Gross National Disposable Income (GNDI)
-
GNDI = NNDI + CFC = GNI + other current transfers() from ROW, net (Receipts less payments)
8. Gross Capital Formation (GCF)
-
Financing Side: Gross Capital Formation = Gross Savings + Net Capital Inflow from ROW
-
Expenditure Side: GCF = GFCF + CIS + Valuables
9. Gross Disposable Income
-
Government: Gross Disposable Income of Govt. = Saving of Central Government + GFCE + Gross
-
Households: Gross Disposable Income (GDI) of Households = GNDI - GDI of Govt. - Gross Savings of All Corporations
Remarks on the Formulae
-
Production taxes or subsidies are paid or received with relation to production and are independent of the volume of actual production. Some examples are:
-
Production Taxes: Land Revenues, Stamps & Registration fees, Tax on profession
-
Production Subsidies: Subsidies to Railways, Subsidies to villages and small industries
-
-
Product taxes or subsidies are paid or received on per per-unit basis. Some examples are:
-
Product Taxes: Goods & Services Tax, Excise duties, Sales tax, Service Tax, Import & Export duties
-
Product Subsidies: Food, Petroleum, and Fertilizer Subsidies
-
-
Other Current Transfers refers to current transfers other than the primary incomes.
-
Gross Capital Formation (GCF) at current as well as constant prices is estimated by two approaches:
-
Flow of Funds Approach: Derived as Gross Saving plus net capital flow from Rest of the World (ROW)
-
Commodity Flow Approach: Derived from the type of assets
-
Fiscal Developments
The Gross Tax Revenue registered a YoY growth of 15.5% from April to November 2022, driven by robust growth in the direct taxes and Goods and Services Tax (GST).
-
The growth in direct taxes during the first eight months of the year was much higher than their corresponding longer-term averages.
-
The GST has stabilized as a vital revenue source for central and state governments, with the gross GST collections increasing at 24.8% on a YoY basis during April-December 2022.
Expenditure Side
-
On the expenditure side, the Union Government's emphasis on capital expenditure (Capex) has continued despite higher revenue expenditure requirements, increased from a long-term average of 1.7% of GDP during the year.
-
The Centre's Capex has steadily increased from FY09 to FY20 to 2.5% of GDP in FY22 PA.
Fiscal Deficit of the Union Government
-
At the end of November 2022, the fiscal deficit stood at 58.9% of the BE, lower than the five-year moving average of 104.6% of the BE during the same period.
Fiscal Deficit (As percentage of GDP)
Year |
2019-20 |
2020-21 |
2021-22 |
2022-23* |
---|---|---|---|---|
Fiscal Deficit |
4.7% |
9.2% |
6.7% |
6.4% |
*Provisional Actuals / Budget Estimates [Source: ES 2022-23]
-
The Gross Tax Revenue registered a YoY growth of 15.5% from April to November 2022, and the Net Tax Revenue to the Centre after the assignment to states grew by 7.9% on a YoY basis.
-
Direct taxes, which broadly constitute half of the Gross Tax Revenue, registered a YoY growth of 26% from April to November 2022, enabled by corporate and personal income tax growth.
-
The capital expenditure by the Centre has steadily increased from a long-term average of 1.7% of GDP (FY09 to FY20) to 2.5% of GDP in FY22 PA. It is further budgeted to increase to 2.9% of GDP in FY23.
Developments in Union Government Finances
-
While India entered the pandemic with a stretched fiscal position, the government's prudent and calibrated fiscal response enabled stable public finances even amidst the present uncertainties.
-
The fiscal deficit of the Union Government, which reached 9.2% of GDP during the pandemic year FY21, has moderated to 6.7% of GDP in FY22 and is further budgeted to reach 6.4% of GDP in FY23.
Gross Domestic Product (GDP) Price Deflator
-
The Gross Domestic Product (GDP) price deflator is a formula that measures the extent to which the real value of an economy's total output is reduced by inflation.
-
The GDP deflator formula takes into account the value of all final goods, including exports. It does not factor in the prices of imports.
Formula: GDP Price Deflator = (Nominal GDP / Real GDP) x 100
Final Thoughts
The concept of national income is central to understanding a country’s economic health, as it measures the flow of goods and services within a defined period. Its comparison with national wealth highlights the difference between productive capacity and accumulated assets.
The various methods of calculation, such as GNP, NNP, GDP, and NDP at market prices and factor cost, provide different perspectives on economic performance.
Recent data on India’s national income and expenditure reveal steady growth in GDP, GNI, and per capita income, despite global and domestic challenges. Fiscal developments, including rising tax revenues and higher capital expenditure, indicate stronger government finances and investment priorities.
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