THE IDEA OF NATIONAL INCOME

Income is probably the most frequently used term in economics, used by experts and lay men. Income level is the most commonly used tool to determine the well-being and happiness of nations and their citizens. This remains true even today, Even if we know that ‘income’ is not an exhaustive idea to know about the well-being of the society. There has been some reason for such a perception about the concept of income. Basically, when the idea of ‘human development’ came into being in the early 1990s, the concept of the ‘human development index’ ultimately was heavily dependent on the level of ‘income’ of an individual in a country. Education and life expectancy can only be enhanced once the required amount of ‘investment’ (expenditure on them) could be mobilised. Thus, somehow, income came to be established as the ‘focal point’ of ‘development/human dvelopment’.

As income of a single person can be measured, it can be measured for a nation and the whole world, although the method of calculation (accounting) may be a little bit complex in the latter’s case. In due course, four ideas/ways to calculate the income of a nation13 developed, which are the subject matter of the ‘national income accounting’. These four ways to calculate the ‘income’ of an economy, although different from each other in some ways, are the concepts of GDP, NDP, GNP and NNP. All are a form of the national income, but are different from one another. They all present a different story about the income of a nation in their own specific way. Here, we will objectively discuss each one of them.