Monetary value

Indian Economy glossary

Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 6, Ch 13 "The Value of Work"; Class 6, Ch 14 "Economic Activities Around Us"

Meaning

Monetary value is value that can be measured in money. Activities that create monetary value are economic activities. They involve money or money's worth, such as a lawyer's fee, a truck driver's wage, or payment in kind like mangoes given as wages. Activities done out of love, care, sevā or duty are non-economic activities. They create real value, but not monetary value. GDP counts only monetary value, which is one reason it leaves out a lot of useful work.

Example

Rajesh, a carpenter, buys wood for ₹600 and sells a chair for ₹1,000. The ₹400 difference is the monetary value of his skill, time and effort. When parents cook for the family or volunteers serve langar at a gurudwara, they also create value. That value is not monetary, so it does not enter GDP.

Don't confuse with

  • Social value of non-economic work: unpaid domestic work, caring for grandparents and volunteering all have real worth. They are left out of GDP only because they are not valued in money.

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