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Some of the major items whether included or excluded in national income are as follows:

1. Construction of a new house.

Yes, it will be included in the national income as it is a part of capital formation and leads to production of goods and services in the economy.

2. Winning of a lottery prize.

No, it will not be included in the national income as it does not add to the flow of goods and services in the economy.

3. Increase in the prices of stocks lying with a trader.

No, it will not be included in the national income as it does not amount to any flow of goods.

4. National debt interest.

OR

Interest on public debt.

No, it is not included in the national income as it is the interest paid on loans taken by government to meet its consumption purposes.

5. Rent-free house given to an employee by an employer.

Yes, it is included in the national income by Income Method since it is a part of ‘wages in kind’ paid to employees.

6. Profit earned by foreign banks in India.

No, it is not included in the national income as it is a part of the factor income paid abroad. It is subtracted from domestic income to get national income.

7. Purchases by foreign tourists.

OR

Food purchased by a foreign tourist at a hotel in New Delhi.

Yes, purchases by foreign tourists are ‘exports’ and, therefore, they are included in the national income through the Expenditure Method.

8. Rent received by Indian residents on their buildings rented out to foreigners in India.

Yes, it will be included in the national income as it is a part of the factor income from abroad.

9. Payment of fees to a lawyer engaged by a firm.

It is an intermediate expenditure for the firm because it involves purchase of services by one production unit (firm) from another production unit (lawyer). So, it is deducted from the value of output of the firm to arrive at the value added. So, it is not included in national income.

10. Free medical facilities by the employer.

OR

Free boarding and lodging provided to a domestic servant.

Yes. It will be included in national income as these free services are part of compensation to employees.

11. Gifts received from abroad.

OR

Gift received from employer.

National income as gifts received are transfer incomes.

12. Profits of Reliance Industries from its chemicals business in Australia.

Yes, it will be included in the national income as it is a part of the factor income from abroad.

13. Salaries received by Indian residents working in Russian Embassy in India.

Yes, it will be included in the national income as it is a pan of factor income from abroad.

14. Subsidized lunch served to workers in a factory.

OR

Firm incurred expenditure on medical treatment of employee’s family.

Yes, it is a part of the compensation of employees and, therefore, it will be included in the national income.

15. Old age pension

No, it will not be included in the national income as it is a transfer payment made by the government and a transfer income for the receiver.

Old age pension must not be confused with retirement pension. Old age pension is not included in national income as it is a transfer payment. On the other hand, retirement pension is included in national income as it is a part of COE.

16. Durable goods purchased by a household.

OR

Purchase of car by a household.

Yes, it will be included in the national income as it is a part of the private final consumption expenditure.

17. Profits earned by an Indian bank from its branches abroad.

Yes, they will be included in the national income as they are a part of the factor income from abroad.

18. Earnings of shareholders from the sale of shares.

No, it will not be included in the national income as it is a financial claim and does not contribute to any productive activity.

19. Expenditure on advertisement by a firm.

OR

Commodities used in scientific research.

No, it will not be included in the national income as it is a part of intermediate consumption expenditure.

20. Petrol used in police vehicles.

No, it will not be included in national income as petrol is an intermediate good in this case. It is used for the provision of the final product (maintenance of law and order by the police).

21. Financial help received by flood victims.

No, it will not be included in the national income as it is a transfer income.

22. Purchase of a machine by a factory. {CBSE, All India Comptt. 2006}

OR

Purchase of a new taxi by a taxi-driver.

Yes, it will be included in the national income as it is a part of the gross domestic capital formation.

23. Royalty

Yes, it will be included in the national income as royalty is a productive income.

24. Commission on sale of second-hand goods.

OR

Brokerage payment on sale of shares.

Yes, it will be included in the national income as it is the income of a middleman for his productive services to various parties.

25. Dividend received by an Indian from his investment in shares of a foreign company.

{CBSE, Delhi 2010} Yes, it will be included in the national income as it is factor income from abroad.

26. Purchase of raw materials by a production unit.

OR

Milk purchased by a Sweet shop to make milk-cake.

No, it will not be included in the national income as it is a part of the intermediate consumption expenditure.

27. Earnings of a self-employed doctor having a clinic at his own residence.

Yes, it will be included in the national income as it is a mixed income.

28. Money received from sale of second-hand goods.

OR

Money received by government from sale of a public sector firm to a private owner.

No, it will not be included in the national income because receipts from the sale of second­hand goods are by virtue of transfer of an already existing object.

29. Imputed rent of self occupied houses.

Yes, it will be included in the national income as people living in such houses enjoy housing services similar to those in rented houses.

30. Contribution to provident fund by employer.

OR

Value of interest foregone on loans provided by employer to employee.

Yes, it will be included in the national income as it is a part of the compensation to employees.

31. Wheat grown by a farmer but used entirely for family’s consumption.

Yes, it is included in the national income because it adds to the current flow of goods and services. Therefore, its imputed value should be included.

32. Expenditure on the construction of a flyover by the government.

Yes, it will be included in the national income as it is a part of gross domestic capital formation.

33. Commission received by a dealer from the buyer and seller of a house.

Yes, it will be included in the national income as it is the income of the dealer for his productive services.

34. Growing vegetables in a kitchen garden of the house.

No, it will not be included in the national income as it is difficult to estimate the value of production (It is a non-market transaction).

35. Services rendered by family members to each other

No, it will not be included in the national income as it is difficult to determine the value of services provided by family members to each other.

36. Expenditure by government in providing free education.

OR

Expenditure on free services provided by government.

Yes, it will be included in the national income as it is a part of the government final consumption expenditure.

37. Insurance premium paid by employees.

OR

Fees received from student.

Yes, it is included in the national income as it is a part of the private final consumption expenditure.

38. Mineral wealth of a nation.

It is a part of National wealth and is not included in national income. However, that part of mineral wealth which has been extracted during the current year will be included in national income under the product method.

39. Value of wood purchased for manufacturing a table.

OR

Expenditures on the purchase of cold drinks by a school canteen from the manufacturer.

OR

Transport expenses by a firm.

No, it will not be included in the national income as it is a part of intermediate consumption expenditure.

40. Purchase of equipment’s for installation in a factory.

Yes, it will be included in the national income as it is a part of capital formation.

41. Payment of wealth tax.

OR

Payment of Death duty.

No, it will not be included in the national income as it is a compulsory transfer payment to the government.

42. Entertainment tax received by the government.

No, it will not be included in the national income as it is an indirect tax and a compulsory transfer payment received by the government.

43. Salaries paid to Russians working in Indian Embassy in Russia.

No, it is not included in the national income as it is a part of the factor income paid abroad. It is subtracted from domestic income to get national income.

44. Capital gains to Indian residents from sale of shares of a foreign company.

No, capital gains will not be included in the national income as they do not add to the current flow of goods and services in the economy.

45. Harish works in USA and sends money to his family in India.

No, it will not be included in the national income as it is a transfer payment.

46. Destruction of building due to an earthquake.

No, it will not be included in the national income as it will not affect national product directly.

47. HP uses its own new Laptops in its office for self-consumption.

Yes, it is included in the national income as it adds to current flow of goods and services. Therefore, imputed value of laptops should be included.

48. Purchase of a truck to carry goods by a production unit.

Yes, it will be included in the national income as it is a part of the gross domestic capital formation.

49. Direct purchase made abroad by government.

Yes, it will be included in the national income as it is a part of the government final consumption expenditure.

50. Earning from a part time job in McDonalds by a student.

Yes, it is included in the national income as it is an income received for productive services.

51. Receipt from sale of property, inherited from a relative.

No, it will not be included in the national income as receipt from sale of such property is by virtue of transfer of an already existing object.

52. Entertainment allowance to an employee for entertaining business guests.

No, it will not be included in the national income as it is intermediate consumption expenditure of the business.

53. Expenditure on the purchase of shares of a new company.

OR

Sale of bonds by a company.

No, it will not be included in the national income as it is a financial claim and does not contribute to any productive activity.

54. Goods lying within the production boundary.

No, such goods will not be including ‘ in national income as goods lying within the production boundary are intermediate goods.

55. Money received by a family in India from relatives working abroad.

No, it will not be included in the national income as it is a transfer receipt.

56. Dividend received by a foreigner from investment in shares of an Indian company.

No, it is not included in the national income as it is a part of factor income paid abroad. It is subtracted from domestic income to get national income.

57. Expenditure by father on marriage of his daughter.

No, it will not be included in the national income as it does not add to current flow of goods and services.

58. Expenditure on the purchase of an old house.

OR

Purchase of house by the tenant.

OR

Purchase of rented factory building by the factory owner.

No, it will not be included in the national income because payment for purchase of second­hand goods is due to transfer of an already existing object.

59. Insurance money received from Oriental Insurance due to destruction of factory due to fire.

No, it is not included in the national income because it is a transfer receipt.

60. Interest paid by banks on deposits by individuals.

OR

Payment of interest by a government firm.

OR

Payment of interest by a firm

Yes, it will be included in the national income as such interest is paid on loan taken for productive purpose. It is a factor payment by a producer.

61. Interest received on loans given to a friend for purchasing a car.

OR

Interest payment on loan taken by an individual to buy a motor cycle.

OR

Payment of interest on a loan taken by an employee from the employer.

No, it will not be included in the national income because it is a non-factor receipt as the loan is not used for production but for consumption.

62. Interest received on loan given to a foreign company in India.

Yes, it will be included in national income as it is a part of factor income from abroad.

63. Interest received on debentures.

Yes, it will be included in the national income as such interest received is a factor income because debenture is a sort of loan taken by a production unit.

64. Expenditure on improvement of fixed capital asset.

OR

Expenditure on construction of a house.

OR

Expenditures on adding a floor to the building.

Yes, it will be included in the national income as it is a part of capital formation.

It must be noted that any expenditure on repairs of fixed assets will not be included in national income.

65. Scholarship given to Indian students studying in India by a foreign company.

OR

Expenditure by the Government on scholarships to students.

No, it will not be included in the national income as it is a transfer payment.

66. Value of bonus shares received by shareholders of a company.

No, it will not be included in the national income as such bonus shares are mere paper claims and do not contribute to the production of goods and services.

67. Pension paid after retirement.

Yes, it is a part of the compensation of employees and, therefore, it will be included in the national income.

68. Expenditure on maintenance of building.

OR

Expenditure on maintenance by a firm.

No, it will not be included in the national income as it is a part of intermediate consumption expenditure.

69. Payment of interest on borrowings by general government.

No, it will not be included in national income because it is a non-factor payment as general government borrows only for consumption purpose.

70. Family members working free on farm owned by family.

Yes, Imputed salaries of these members will be included in national income.

71. Payment of bonus by a firm.

Yes, it will be included in the national income as it is a part of the compensation to employees.

72. Purchase of tractor by a farmer.

Yes, it will be included in the national income as it is a part of the capital formation or investment by the farmer.

73. Expenditure on fertilizers by a farmer.

No, it will not be included in the national income as it is intermediate cost for the farmer and deducted from value of output while arriving at national income.

74. Purchase of furniture by a firm.

Yes, it will be included in the national income as it is a part of the capital formation or investment by the firm.

75. Expenditure on education of children by a family.

Yes, it is included in the national income as it is a part of the private final consumption expenditure.

76. Payment of electricity bill by a school.

No, it will not be included in the national income as it is intermediate cost for the school and deducted from value of output while arriving at national income.

77. Payment of excise duty by a firm.

No, it will not be included in the national income as it is an indirect tax paid by the firm.

78. Festival gift from an employer.

No, it will not be included in the national income as it is merely a transfer payment.

79. Contribution to provident fund by employees.

No, it is not included in the national income because such contribution is made by the employees from compensation of employees only. So, it is not separately included in the estimation of national income.

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