5. Measurement of National Income

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5. Measurement of National Income

In India, GDP is estimated by Central Statistical Office (CSO). There are three different ways of estimating the national income of a country, these three methods are:

1. Value Added Method (or the Product Method)

2. Income Method

3. Expenditure Method

Which method is to be employed depends on the availability of data and purpose.

5.1. Value Added Method 5.2. Income Method GDP = Wages+ Interest + Rent +Profit + Dividend + Indirect Taxes-Subsidies+ Depreciation 5.3. Expenditure Method GDP= C+I+G+X-IM We can illustrate why these three approaches are equivalent with the help of an example.Product Method Income Approach Expenditure Approach 5.5. Base Year, GDP Deflator 5.6. Difficulty of Measurement (With Special Reference to India)

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