How Does National Income Impact India

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Impact of National Income on Saving and Capital Formation in India Dr.M. Moni Asst. Professor of Economics, N.M. Christian College, Marthandam, Tamil Nadu, Abstract The study of national income estimate provides a vivid picture of the entire economy of a country. It enables to know the economic condition of the nation, per capita income and the standard of the people. National income includes the aggregates income of all the people in a country over a period of one year. The study analyses the growth of national income and thereby per capita income. It also examines the impact of national income on savings and investment. The growth of national income and per capita income has been estimated over a period…show more content…
It also adds the income awarded in different factors of production such as, rent, wages, interest and profit over a period of time. Dr. V.K.R.V.Rao3 has defined national income as “a money value of the flow of commodities and services, excluding imports becoming available for sale within the period, the value being reckoned at current prices minus the following items of (1) the money value of any diminution in stock that may have taken place during the period. (2) the money value of the flow of goods and services used up in the course of production.(3) the money value of the flow of goods and services used to maintain the existing capital equipment intact (4) receipt of the state from indirect taxation (5) favourable balance of trade including transaction in the treasure (6) net income in the country’s foreign indebtedness or the net increase in the holding of balances and securities abroad whether by individuals or the government of the country.” In view of Prof.Marshall, “the labour and capital of the country acting on its natural resources, produce annually a certain net aggregate of commodities, materials including services of all kinds are national…show more content…
and Hoselitz, B.F. (1965)4 have made a study on National and State income of India. The study has analysed a general survey of state-wise income and national income of India. It has found that there is a differences in the growth of state income. It varies from state to state. The reasonable difference variation ranges from 7 per cent to 9 per cent. As a result of variations in income, the share of saving would vary from state to state. V.K.R.V. Rao (1980)5 has conducted a study on savings, capital formation and national income. The objective of the study is to see how far savings and capital formation have increased during the three decades of planning and to examine the effects of these increases on growth of national income. The study concludes that savings and capital formation have had a positive influence of increase in national

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