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STUDENTSí CORNER - 31

Let us see some more difficulties that challenge when we try to assess the national income exactly.

In estimating the national income, non-market value is not included since it is not possible to arrive at the value of the non-market value.  Environmental facts like clean air and water are not and cannot be assessed in the sense that they are not traded in the market.  Let us not confuse here with the bottled water and a cylinder of oxygen; both of them are marketed and valued at a price; that is, they are produced at a cost and therefore marketed at a cost. They are accounted.

Another example usually given is some wild animal in the forest. Though they have value, they are not traded in the market. They are all therefore non-marketed goods.

There are some non-market services.  Non-market services cover those services provided to the community as a whole free of charge, or to individual consumers either free of charge or at a fee which is well below 50 per cent of production costs. Counseling when given free of charge is a non-market service; coaching when not charged becomes a non-market service. There are many such services and goods whose value cannot be exactly assessed nor are they included in the national income as they are not exactly valued.

Next comes Depreciation allowances which are crucial factors when calculating tax that is payable. It means a certain amount must be excluded from the profit while calculating tax because the value of some assets used in business would have come down due to wear and tear for a given period.  The depreciation allowances must be deducted from the national income also; but collecting facts of depreciation allowances is an enormous task and often it is not possible for the simple reason too many assets are involved to make the job of collecting facts of depreciation easy and effective.  Likewise, it is also equally difficult to arrive at the exact figure, the accurate amount to be deducted from the national income in connection with accidents and repair and replacement.

Rent from the house also can become a matter of discussion whether to be included or not in the national income. For example, you have been paying Rs 5000 as rent to the house owner; but when you become the owner of the house, the question comes whether the rent amount must be included in your income to be included in the national income.  It is said the discussion appears to continue and no final answer has been arrived at.  This adds to the difficulty in arriving at the national income.

Transfer payments like pension and relief allowances cannot be taken in the national income since they do not generally contribute to current production.

As we saw earlier, someone who produces a certain product may not market but use it for his own consumption or he can barter it for some other product.  In such circumstances, arriving at the exact income figure is well-nigh impossible.

Finally, the national income is measured in terms of money only. The value of money is not stable. It implies that the national income can and does change without any change in output. These are the popular reasons that make arriving at the national income almost impossible.

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