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Why only the final goods and services are added in national income?

Only the final goods and services are taken to calculate Gross Domestic Product because GDP provides the total production of a particular year. The final goods and services suggests the end result of the economic activity of a particular year and that is why it is taken into account, in order to provide with a correct and rational figures.

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n order to calculate National Income, we take just take the value added by each of the sectors. That is we estimate (Total value of output- Intermediate consumption) for each of the sector. Accordingly, the contribution of the agriculture sector would Rs 100 minus the value intermediate consumption (such as seeds, fertilisers, etc.). But, when the value of output for the industrial sector is calculated, then Rs 70 is deducted from the total value of the industrial sector. This is because this Rs 70 is the intermediate consumption for this sector. That is, Rs 70 is not taken as a part of the value of output of the industrial sector. Thereby, the actual value of output of each of the sectors is clearly reflected.
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