Distribution
of national income
1]
Personal income distribution of national income
Personal
income distribution of national income is the distribution of national
income
among the people of the country. Therefore national income refers to
the total
earnings of all the people in the country in the current year.
This
gives an idea of the inequality in the distribution in income and
wealth;
Savings and liabilities of the people; purchasing power and
consumption of the
people
It
helps the government to decide the tax structure of the country.
While
calculating personal income care should be taken to avoid double
counting ie
all transfer payments/incomes should be ignored.
2]
Functional distribution of national income
Functional
distribution of national income, is the distribution of national
income between
the various factors of production of the country ie rent and royalty
for land;
wages and salaries for labour; interest and dividend for capital and
profit for
enterprise.
This
distribution gives an idea of the stage of development a country is
in.
Land
Labour
Capital
Enterprise
NATIONAL
INCOME
Rent&royalty
Wages&salaries
Interest÷nds
Profits
3]
Sectoral income distribution of national income
Sectoral
income distribution of national income is the distribution of national
among
the various sectors of the economy. Therefore national income refers
to the
total incomes of all the sectors of the country in the current year
Sectors in
the country may be classified as
Sectors
Occupation
Ownership
Primary
Secondary
Tertiary
Private
Public
a]
Occupation
i]
Primary sector
Primary
sector consists of all productive activities in which the role of
nature is
primary. All these activities directly or indirectly originate from
land which
is the most fundamental factor of production. Primary sector
activities include
agriculture, forestry, fishery, cattle breeding, floriculture,
horticulture,
dairy farming, mining etc. Since agriculture is the most popular and
dominant
activity in this sector, it is popularly known as “Agricultural
sector” and
denoted by “A”
In
developing countries like India, it is the most important sector in
the economy
from various points of view. It makes the largest contribution to
national
income. Also a majority of the population is directly or
indirectly dependent
on this sector for their livelihood.
ii]
Secondary sector – Secondary sector consists of all those productive
activities
in which the role of nature is secondary. This sector is dominated by
the role
of manmade instruments of production and includes tiny, mini, village,
khadi,
handicraft, small scale, medium scale, large scale; agro based etc
industries as
well as construction activities. It is popularly known as “Industrial
sector”
and denoted by “I” This is also known as the manufacturing
sector or the
modern sector.
In
advanced counties this sector plays a very important role and makes a
greater
contribution to national income. Development of the secondary sector
is an
indication of the industrial and economic development of the country.
iii]
Tertiary sector – Tertiary sector consists of services of all kinds
which help
in the development of the primary and secondary sectors. This sector
includes
services of professionals; banking, insurance, trade, transport and
communication, irrigation and power generation, education, training
and
research facilities, marketing and credit facilities etc and
government services.
All these are intangible. It is popularly known as “Service sector”.
The
dominant activity in this sector is government services, therefore by
it is
denoted by “G”.
b]
Ownership
i]
Private sector
ii]
Public sector