Economy
Basic Concepts and National Income
Basic Concepts and National Income — Quick Revision
One-page CGPSC quick revision for Basic Concepts and National Income: aggregates, formulas, methods, base years, sector shares and traps in tables.
National income aggregates, measurement methods, history, base years and sectors on one page. For explanations, go back to the chapter.
How to use this sheet
Scan it top to bottom in the week before Prelims. Bold entries are the facts examiners return to most often. Dated numbers are estimates: quote them with their year.
Aggregates and Formulas
| Term | Formula / meaning |
|---|---|
| GDP | Final goods and services produced within the domestic territory in a year (residents and non-residents) |
| GNP / GNI | GDP + NFIA (resident-based) |
| NFIA | Factor income of residents from abroad − factor income of non-residents at home; negative for India |
| NDP / NNP | GDP / GNP − depreciation (consumption of fixed capital) |
| National income | NNP at factor cost |
| Factor cost | Market price − indirect taxes + subsidies |
| GVA at basic prices | GVA at FC + production taxes − production subsidies |
| GDP at MP | GVA at basic prices + product taxes − product subsidies |
| Product taxes | GST, customs, excise (per unit) |
| Production taxes | Land revenue, stamp and registration fees, professional tax |
| Personal disposable income | Personal income − personal direct taxes − fees and fines |
| GDP deflator | Nominal GDP ÷ real GDP × 100; covers all domestic output, excludes imports |
| Rule of thumb | Nominal growth ≈ real growth + deflator inflation |
Measurement
| Item | Key fact |
|---|---|
| Product method | Sum of value added (output − intermediate consumption); avoids double counting |
| Income method | Compensation of employees + operating surplus + mixed income = NDP at FC |
| Expenditure method | C + I + G + (X − M); PFCE is the largest component |
| India’s practice | Product method for goods sectors, income method for many services, expenditure for the demand side |
| Included | Imputed rent, own-account production of goods, brokerage, government services at cost |
| Excluded | Transfer payments, second-hand goods, shares and bonds, unpaid household work, capital gains, lottery winnings |
| Agency | NSO under MoSPI; states: Directorate of Economics and Statistics (GSDP) |
| Release cycle | First AE (Jan) → Second AE (Feb) → Provisional (May/June) → revised estimates |
History and Base Years
| Year | Event |
|---|---|
| 1867–68 | Dadabhai Naoroji: about ₹20 per head; Poverty and Un-British Rule in India (1901) |
| 1931–32 | V.K.R.V. Rao: first systematic estimate |
| 1949 | National Income Committee: P.C. Mahalanobis (chair), D.R. Gadgil, V.K.R.V. Rao |
| 1951 | CSO set up |
| Jan 2015 | 2011–12 base; GVA at basic prices; GDP at constant market prices as headline |
| 2019 | NSO formed: CSO + NSSO |
| 27 Feb 2026 | New series, base year 2022–23: GST/e-Vahan/PFMS data, double deflation (agriculture, manufacturing), Supply and Use Tables |
Base years: 1948–49, 1960–61, 1970–71, 1980–81, 1993–94, 1999–2000, 2004–05, 2011–12, 2022–23.
Numbers to Quote (with dates)
| Indicator | Figure |
|---|---|
| India real GDP growth 2025–26 | 7.7% (Provisional Estimates, 5 June 2026); 7.1% in 2024–25 |
| India nominal GDP 2025–26 | About ₹346.36 lakh crore (PE) |
| India GVA shares 2024–25 (new series) | Primary about 21%, secondary about 26%, tertiary about 53% |
| Agriculture’s share of workers | About 43% (PLFS Annual Report 2025, calendar year) |
| Chhattisgarh GSDP 2025–26 (AE) | About ₹6.31 lakh crore; real growth about 8.11% |
| Chhattisgarh per capita income 2025–26 (AE) | ₹1,79,244 |
| Chhattisgarh GSDP shares 2025–26 (AE) | Industry about 46.6%, services about 32.8%, agriculture about 20.6% |
Sectors
| Sector | Includes |
|---|---|
| Primary | Agriculture, livestock, forestry, fishing, mining and quarrying |
| Secondary | Manufacturing, electricity/gas/water, construction |
| Tertiary | Trade, hotels, transport, communication, finance, real estate, public administration, other services |
| “Industry” (Economic Survey) | Mining + manufacturing + utilities + construction |
| Unorganised sector (NCEUS, Arjun Sengupta) | Unincorporated, proprietary/partnership, fewer than 10 workers |
| e-Shram | Unorganised workers’ database, launched August 2021 |
| Clark–Fisher | Primary → secondary → tertiary as income rises; India took a services-led path |
Don’t Confuse
| This | vs | That |
|---|---|---|
| GDP: territory | vs | GNP: residents |
| Gross: with depreciation | vs | Net: without depreciation |
| Product taxes (GST) | vs | Production taxes (land revenue) |
| Factor income from abroad (in GNP) | vs | Remittances from long-term emigrants (transfers, not in GNP) |
| Naoroji: 1867–68 | vs | V.K.R.V. Rao: 1931–32 |
| National Income Committee (1949) | vs | CSO (1951) |
| Mining: primary | vs | Construction, electricity: secondary |
| Unorganised sector (enterprises) | vs | Informal employment (workers) |
| India: services lead output | vs | Chhattisgarh: industry leads output |
Favourite MCQ trap
“GNP of India is greater than its GDP.” Wrong. GNP = GDP + NFIA, and India’s NFIA is negative, so India’s GNI is slightly below its GDP.
Second favourite trap
“Old-age pensions and scholarships are included in national income because the government spends on them.” Wrong. They are transfer payments: nothing is produced in return. Only government spending on goods and services (including employees’ salaries) enters GDP.
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