Basic Concepts in National Income
CHAPTER 2
BASIC CONCEPTS OF NATIONAL ACCOUNTS AGGREGATES
Introduction
2.1 Various concepts of national income and related aggregates used in national accounts connote a particular meaning which may not necessarily conform to the one used in common parlance. It is, therefore, necessary that these are made familiar to the users to enable them to appreciate these in right perspective. It is with this objective that it has been considered necessary to refer to these in this publication. The basic concepts and definitions of the terms used in national 2.4 accounts largely follow those given in the SNA. It is intended to give in the following paragraphs the major concepts used in National Accounts Statistics and the inter relationship particularly of those relating to macro-economic aggregates of national product, consumption, saving and capital formation. taken of the rental of buildings which are owned and occupied by the owners themselves. Own account construction activities are also similarly to be included. However, certain other activities like services of house-wives are excluded from production mainly due to the problem of measurement. Also excluded are illegal activities such as smuggling, black marketing, etc. Another important feature of the measure is that it is an unduplicated value of output or in other words only the value added at each stage of processing is taken into account while measuring the total, i.e., in the measurement of national output a distinction is made between "final" and "intermediate" products and unduplicated total is one that is confined to the value of the final products and excludes all intermediate products. To use a simple example, if the production process during a year involves the production of wheat, its milling into flour and the baking of bread which is sold to consumers then the value of national output should equal the final value of the bread and should not count the separate value of the wheat and flour which have
BASIC CONCEPTS OF NATIONAL ACCOUNTS AGGREGATES
Introduction
2.1 Various concepts of national income and related aggregates used in national accounts connote a particular meaning which may not necessarily conform to the one used in common parlance. It is, therefore, necessary that these are made familiar to the users to enable them to appreciate these in right perspective. It is with this objective that it has been considered necessary to refer to these in this publication. The basic concepts and definitions of the terms used in national 2.4 accounts largely follow those given in the SNA. It is intended to give in the following paragraphs the major concepts used in National Accounts Statistics and the inter relationship particularly of those relating to macro-economic aggregates of national product, consumption, saving and capital formation. taken of the rental of buildings which are owned and occupied by the owners themselves. Own account construction activities are also similarly to be included. However, certain other activities like services of house-wives are excluded from production mainly due to the problem of measurement. Also excluded are illegal activities such as smuggling, black marketing, etc. Another important feature of the measure is that it is an unduplicated value of output or in other words only the value added at each stage of processing is taken into account while measuring the total, i.e., in the measurement of national output a distinction is made between "final" and "intermediate" products and unduplicated total is one that is confined to the value of the final products and excludes all intermediate products. To use a simple example, if the production process during a year involves the production of wheat, its milling into flour and the baking of bread which is sold to consumers then the value of national output should equal the final value of the bread and should not count the separate value of the wheat and flour which have