National Income – National income is the sum total of the values expressed in that country’s currency at the prevailing market price of the final consumption of the final consumed goods and services produced by the inhabitants of the country during a financial year. Here, final consumption items and services are those items and services which are used by a consumer or a producer. National income is being estimated since 1956, every year, by the Central Statistical Organization. After achieving independence, a national income committee was constituted under the chairmanship of Prafulla Chandra Mahalanobis for the estimation of national income. Committee Adviser was Prof. Simon Kuznets.

Following are the characteristics of national income:

(a) National Income is concerned with a particular country. For example, national income of India, Pakistan, etc.
(b) National income relates to a fixed time period, normally a financial year. In India, it is from 1st April to 31st March of each year.
(c) National income is concerned with economic activities of residents of a country. But presently, economic activities of residents and non-residents of the geographical area of a country is also included.
(d) National income is related with productive economic activities, i.e. non-productive activities are not included in the calculation of national income.
(e) Production of final goods and services is included in the calculation of national income. It means that production of interim, i.e. semi-finished goods and services, is not included in the calculation of national income.
(f) National Income is calculated at current market prices.
(g) National income is expressed in currency terms of that country.
(h) National income is the money aggregate of goods and services.
(i) National income is a type of flow and not a stock.
(j) National income is calculated in net form, i.e. depreciation is deducted from gross national income/output.