PPT: National Income Accounting | Indian Economy for UPSC CSE PDF Download

 Page 1


Lecture 2 
National Income Accounting
Prelims 2020 Crash Course 
Capstone IAS Learning
Page 2


Lecture 2 
National Income Accounting
Prelims 2020 Crash Course 
Capstone IAS Learning
What will we cover
Gross Domestic Product(GDP) 
Final, Intermediate, Consumer & Capital goods. 
Stock Vs Flow 
GDP Estimation Methodology 
GDP at FC, BP & MP + some other 
macroeconomic aggregates. 
Drivers of economic growth 
GDP & Welfare
Page 3


Lecture 2 
National Income Accounting
Prelims 2020 Crash Course 
Capstone IAS Learning
What will we cover
Gross Domestic Product(GDP) 
Final, Intermediate, Consumer & Capital goods. 
Stock Vs Flow 
GDP Estimation Methodology 
GDP at FC, BP & MP + some other 
macroeconomic aggregates. 
Drivers of economic growth 
GDP & Welfare
GDP
Adam Smith’s enquiry reveals what 
generates wealth of nations. 
According to him, it is not the 
bounty of natural resources, but how 
they are used in generating the flow 
of production that makes nations 
rich or poor. 
GDP - it is the monetary value of 
final goods and services produced 
in the domestic territory of a 
country in a specific period of time. 
GDP measures the creation of 
wealth in a country in a year. 
It is the final output of an economy 
in a year.
GDP in India is measured by 
NSO(National Statistical 
Organisation) which is under 
Ministry of Statistics & 
Programme Implementation
Page 4


Lecture 2 
National Income Accounting
Prelims 2020 Crash Course 
Capstone IAS Learning
What will we cover
Gross Domestic Product(GDP) 
Final, Intermediate, Consumer & Capital goods. 
Stock Vs Flow 
GDP Estimation Methodology 
GDP at FC, BP & MP + some other 
macroeconomic aggregates. 
Drivers of economic growth 
GDP & Welfare
GDP
Adam Smith’s enquiry reveals what 
generates wealth of nations. 
According to him, it is not the 
bounty of natural resources, but how 
they are used in generating the flow 
of production that makes nations 
rich or poor. 
GDP - it is the monetary value of 
final goods and services produced 
in the domestic territory of a 
country in a specific period of time. 
GDP measures the creation of 
wealth in a country in a year. 
It is the final output of an economy 
in a year.
GDP in India is measured by 
NSO(National Statistical 
Organisation) which is under 
Ministry of Statistics & 
Programme Implementation
Goods
Intermediate Goods 
These are goods used 
as inputs in production 
of other goods 
including final goods. 
These are still in active 
economic flow.
Final Goods 
These are goods which 
would undergo no more 
stages of production or 
transformation. 
These are outside active 
economic flow.
Consumer  
Goods
Capital 
Goods
Intermediate goods are not used 
In GDP estimation so as to prevent 
Double Counting 
Page 5


Lecture 2 
National Income Accounting
Prelims 2020 Crash Course 
Capstone IAS Learning
What will we cover
Gross Domestic Product(GDP) 
Final, Intermediate, Consumer & Capital goods. 
Stock Vs Flow 
GDP Estimation Methodology 
GDP at FC, BP & MP + some other 
macroeconomic aggregates. 
Drivers of economic growth 
GDP & Welfare
GDP
Adam Smith’s enquiry reveals what 
generates wealth of nations. 
According to him, it is not the 
bounty of natural resources, but how 
they are used in generating the flow 
of production that makes nations 
rich or poor. 
GDP - it is the monetary value of 
final goods and services produced 
in the domestic territory of a 
country in a specific period of time. 
GDP measures the creation of 
wealth in a country in a year. 
It is the final output of an economy 
in a year.
GDP in India is measured by 
NSO(National Statistical 
Organisation) which is under 
Ministry of Statistics & 
Programme Implementation
Goods
Intermediate Goods 
These are goods used 
as inputs in production 
of other goods 
including final goods. 
These are still in active 
economic flow.
Final Goods 
These are goods which 
would undergo no more 
stages of production or 
transformation. 
These are outside active 
economic flow.
Consumer  
Goods
Capital 
Goods
Intermediate goods are not used 
In GDP estimation so as to prevent 
Double Counting 
Consumer Goods 
-
A consumer good is a commodity that is used by a consumer to 
satisfy current wants or needs, rather than to produce another good. 
-
Examples : Microwave, Clothes, food etc. 
-
Certain consumer goods are durable in nature, thus they are called 
“Consumer Durables”. Eg - TV, Fridge, A.C, Microwave etc. 
Capital Goods 
-
It is a durable good that is used in the production process of other 
goods and services, rather than being bought by consumers. 
-
They form the crucial backbone of any production process 
-
That part of our final output that comprises of “capital goods” 
constitute “Gross Investment” of an economy. 
-
Examples : Machines, tools, buildings, office spaces, Infrastructure 
etc.