Key Concepts & Changes in National Income Calculation (India) part 16

 Okay, here are the summarized notes from the Telugu audio transcript on National Income calculation in India:

Key Concepts & Changes in National Income Calculation (India)

1. Evolution of Calculation:

   • Methods have evolved since independence: Traditional Series -> Revised Series -> New Series.

   • The "New Series" based on the 2011-12 base year introduced significant changes.

2. Base Year Change:

   • Based on Sundaram Committee recommendations.

   • Announced on Jan 30, 2015.

   • Base year shifted from 2004-05 to 2011-12 for national accounts statistics, especially for constant price calculations.

3. Changes in Key Indicators (Post-2015 Recommendations):

   • Current Financial Year NI: Measured as GDP at Market Price (GDP@MP). (Remained consistent).

   • Previous Financial Year NI: Previously NDP@FC, recommended to use NDP at Market Price (NDP@MP).

   • Inter-Decadal Comparison NI/Growth: Previously NNP@FC, recommended to use NNP at Market Price (NNP@MP).

   • Rationale for MP Shift: Primarily for better international comparability, as most countries use Market Prices, even though Factor Cost was sometimes seen as less distorted by taxes/subsidies.

   • Classical Definition: NNP@FC is still considered the theoretical definition of National Income. However, NNP@MP is prioritized in practice for comparisons after the base year revision.

4. Gross Value Added (GVA) - స్థూల విలువ జమ:

   • Used specifically for sector-wise National Income calculation.

   • Represents the value added during the production process within each sector.

   • Closely linked to the Value Added Method of calculating GDP (Production Approach).

   • Purpose: To avoid double-counting intermediate goods.

   • Basic Formula: GVA = Value of Output - Value of Intermediate Consumption (Cost of Inputs).

   • Relationship to GDP: GVA at Basic Prices + (Product Taxes - Product Subsidies) = GDP at Market Price. GVA is essentially GDP calculated from the production side.

5. GVA Variations:

   • a) GVA at Factor Cost (GVA@FC) - కారకాల ధర వద్ద GVA:

     • Measures value based on the cost of factors of production.

     • Components:

       • Compensation of Employees (Wages, salaries, benefits - శ్రమకు వేతనం/పరిహారం).

       • Operating Surplus (Rent, Interest, Profit for Capital/Land/Entrepreneurship - భూమికి బాటకం, మూలధనానికి వడ్డీ, వ్యవస్థాపనకు లాభం).

       • Mixed Income (For self-employed).

       • Consumption of Fixed Capital (Depreciation - యంత్రాల వినియోగం/తరుగుదల).

   • b) GVA at Basic Price (GVA@BP) - ప్రాథమిక ధర వద్ద GVA:

     • Represents the amount received by the producer, excluding product taxes but including production taxes (net of subsidies).

     • Formula: GVA@BP = GVA@FC + Net Production Taxes

     • Net Production Taxes = Production Taxes - Production Subsidies

       • Production Taxes: Taxes paid irrespective of production volume (e.g., Land Revenue, Stamp Duty, Professional Tax - భూమి శిస్తు, స్టాంప్ డ్యూటీ, వృత్తి పన్ను).

       • Production Subsidies: Subsidies linked to factors/inputs, not specific output volume (e.g., input subsidies to farmers/industries).

   • c) GVA at Market Price (GVA@MP) - మార్కెట్ ధర వద్ద GVA:

     • The price paid by the final consumer.

     • Formula: GVA@MP = GVA@BP + Net Product Taxes

     • Net Product Taxes = Product Taxes - Product Subsidies

       • Product Taxes: Taxes levied per unit of product/service (e.g., GST, Excise Duty, Sales Tax, Service Tax, Customs - ఉత్పత్తి సుంకం, అమ్మకం పన్ను, సేవా పన్ను).

       • Product Subsidies: Subsidies given per unit of output to keep consumer prices low (e.g., food, fertilizer subsidies).

6. Hierarchy:

   • GVA@FC < GVA@BP < GVA@MP (Generally, due to the net effect of taxes and subsidies at each stage).

   • GVA@MP is closely related conceptually to GDP@MP.

These notes cover the main points discussed in the audio regarding the calculation methods, base year changes, the introduction of GVA, and the distinctions between Factor Cost, Basic Price, and Market Price in the Indian context.