Following are the major definitions of National Income:
1. According to Marshall, ” The labour and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities, material and non-materials including services of all kinds. This is known as national income.”
2. According to Pigou, ” National income is that part of the objective income of the community, including, of course, income derived from abroad, which can be measured in money.”
3. According to Fisher, ” National income refers solely to services received by ultimate consumers, whether from their material or human environments. In this way a piano or overcoat made for me this year is not a part of income of this year but an addition to capital. Only the services rendered by these goods is income.”
4. According to Simon Kuznets, ” It is the net output of commodities and services flowing during the year from the country’s productive system in the hands of the ultimate consumers.”
Following are the characteristics of National Income:
(a) National Income is concerned with a particular country. For example, national income of India, Pakistan, etc.
(b) National income relates to a fixed time period, normally a financial year. In India, it is 1st April to 31st March.
(c) National income is concerned with economic activities’of residents of a country. But . presently, economic activities of residents and non-residents of geographical area of a country are also included.
(d) National income is related with productive economic activities, i.e. non-productive activities are not included in the calculation of national income.
(e) Production of final goods and services are included in the calculation of national income. It means that production of interim, i.e. semi-finished goods and services, is not included in the calculation of national income.
(f) National income is calculated at current market prices.
(g) National income is expressed in currency terms of that country.
(h) National income is the money aggregate of goods and services.
(i) National income is a type of flow and not a stock.
(j) National income is calculated in net form, i.e. depreciation is deducted from gross national income/output.
