Domestic territory territory and normal resident and typesof goodsds

class XII economics unit 1
national income

1. UNIT : 1 National income and related aggregates

2. NATIONAL INCOME ESTIMATES IN INDIA Dadabhai Naoroji  prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as non-agricultural production.

3. NATIONAL INCOME ESTIMATES IN INDIA Findlay Shirras (1911, 1922 and 1934), Shah and Khambatta (1921), V.K.R.V . Rao ( 1931) and R.C. Desai (1931-40 ) The first person to adopt a scientific procedure in estimating the national income was  Dr. VKRV Rao  in 1931 .

4. NATIONAL INCOME ESTIMATES IN INDIA The Government of India appointed  National Income Committee  in 1949. The committee was chaired by Prof. P.C. Mahalanobis and had Prof D.R. Gadgil and Dr. V.K.R.V. Rao as members . The first report of the committee was presented in 1951. According to the first report, the National Income of India for 1948-49 was Rs . 8,710 crore and the per capita income was Rs . 225.

5. NATIONAL INCOME ESTIMATES IN INDIA Since 1955 the national income estimates are being prepared by  Central Statistical Organisation .

6. DOMESTIC TERRITORY Domestic territory includes all those areas from where an economy receives its domestic income. It includes the following political boundary that is The land and water boundaries of a country

7. DOMESTIC TERRITORY Ships and Air crafts operated by the residents of a country between any two countries (Air space or water territory)

8. DOMESTIC TERRITORY Fishing Vessels and floating oil platforms/ extraction centres operated by the residents of a country in international waters.

9. DOMESTIC TERRITORY Embassies or Indian Consulates in abroad.

10. Bhardwaj’s Arthshashtra

11. NORMAL RESIDENT

12. NORMAL RESIDENT Normal resident does not mean citizen.

13. NORMAL RESIDENT It includes the PERSONS as well as FIRMS.

14. NORMAL RESIDENT Any firm or person living in a country for one year or more. His/ its economic interest lies in that country. It means it/he conducts his economic transactions in that country on a significant scale

15. NORMAL RESIDENT A Clarification: Students remain resident of that country of which they are citizen. The person who cross the borders daily in search of work are the resident of that country of which they are citizen. Persons working in international organisations like UNICEF, World Bank, WHO, UNO,IMF etc are the resident of that country of which they are citizen.

16. DOMESTIC TERRITORY & NORMAL RESIDENT Domestic Territory

17. Bhardwaj’s Arthshashtra

18. Goods & Services

19. Meaning/ Definition of Goods: Commodities which have physical existence and means to satisfy human needs are called goods. All tangible commodities use to satisfy human wants called goods.

20. Meaning of Services: Commodities which do not have a physical existence but means to satisfy human needs are called services. i.e. Transportation, Banking, Tourism services etc. They are non tangible.

21. Types of Goods Produced in an Economy Types of Goods Final Goods Intermediate goods FINAL PRODUCER / CAPITAL GOODS CONSUMER GOODS

22. INTERMEDIATE GOODS The goods which are used as raw material by the producers are called intermediate goods. These are the single use / non durable goods. The value is added into these goods during the process of production and they are resold in the market. They remain inside the production boundary.

23. Final Goods Final Goods in which no further value is added. They are not resold in the market. These goods have crossed the boundary line of production and now ready for being used by consumers and producers. Final consumers includes both Consumers and producers. Final Goods generally categorized in “ Final Consumer Goods ” and “ Final Producer Goods/ Capital goods ”

24. FINAL GOODS Final goods are of two types: Consumer goods Capital goods/ Final Producer goods

25. Consumer Goods Consumer Goods are the final goods which are used by consumers to for satisfying their wants. Expenditure Occurred by consumers on final goods is known as “ Consumption Expenditure ”

26. Final Producer Goods/Capital Goods Capital goods are those durable goods with the help of which other goods are produced. Final Producer Goods are purchased by producers for generally used as fixed capital/ Investment. Expenditure Occurred by producers on final goods is known as “Investment Expenditure/ Capital Formation”

27. Cont…. Expenditure on Final Goods is: Consumption Expenditure + Investment Expenditure or Exp = C + I

28. S ame good may be consumer or intermediate good. Same good may be final good or intermediate good its depends upon its end use. Bread used at homes Bread used at Chaggan Halwai shop for making bread pakora .

29. Same good may be consumer or intermediate good Same good may be final good or intermediate good its depends upon its end use : Flour used at homes for making roti. Flour used at Raju ka Dhaba for making roti.

30. Same good may be consumer or capital good Same good may be consumer good or capital good its depends upon its end use : Refrigerator used at homes . Refrigerator used at Kohli Refreshment for keeping cold drinks.

31. Same good may be consumer or capital good Same good may be consumer good or capital good its depends upon its end use: Furniture used at homes. Furniture used at Ajosys Technologies, a software development firm, for its office.

32. Difference between final goods or intermediate goods Intermediate goods Those non durable goods which are used as raw material for the production of other goods are called intermediate goods. Value addition is yet to be done in these goods. Expenditure spend on these items called intermediate consumption or intermediate cost. Final goods Those goods which are meant for final consumption by consumer or producers. No further value addition is to be done in these goods. Expenditure spend on these items called final expenditure ( C+I) ie final consumption expenditure or investment expenditure/ capital formation.

33. Difference between final goods or intermediate goods Intermediate goods 3. These items are not included in the estimate of national income. 4. These items remain within the production line and are not ready for use as raw material. Final Goods 3. These items are included in the estimate of national Income. 4. These items remain outside the production line and are ready for final consumption/ investment.

34. Difference between final goods or intermediate goods Intermediate goods During the accounting year, these items are resold by the firms to make profit. Final Goods 5. During the accounting year, these items are not resold by the firms but are ready for final consumers.

35. End Use Classification of Goods According to end use of goods, they may be classifies in three: Intermediate goods Consumer goods Capital Goods

36. I. Intermediate Goods Those non durable goods which are transformed into other goods during the production process. These goods are resold in the market after adding value into them. They are generally used as raw material for the production of other goods.

37. II. Consumer goods Consumer goods are things that directly satisfy human needs. No value is added to them, hence they are resold. Example- milk or ice-cream used by a family/ household.

38. Types of Consumer goods Durable Goods- Durable goods are those items that can be used for several years and also have a higher relative value. These items are used repeatedly till the end. Example- T.V., Car, Washing machine, etc.

39. Types of Consumer goods 2. Semi- durable Goods- Semi-durable consumer goods are items that can be used for a year or more. These items are not of much value. Example- Clothes, furniture, electric items.

40. Types of Consumer goods 3. Non-durable or single-use consumer goods- Non-durable or single-use consumer goods are items that can only be used once. Example- milk, petrol, etc.

41. Types of Consumer goods 4. Services- Services are non-physical goods that directly satisfy human needs. Examples: Transportation services, banking services, insurance services, communication services.

42. III. Capital Goods Capital goods those durable goods which help in the production of other goods. These are final goods and are used fixed assets by producers. Expenditure on final goods is called investment or capital formation Capital goods are generally of high value.

43. THANK YOU