as per private consumption exp, exp on final goods and services is included in national income. then banking or providing loans to be specific is a service for which we pay interest. this expenditure should also be included

The interest paid on loans is indeed a form of expenditure, but it's not included in the calculation of national income. Here's why:

1. National income is the total amount of money earned by the citizens of a nation. It includes income from production (wages, profits, rent) and ownership of assets (interest, dividends).

2. The interest paid on loans is a transfer of income, not a creation of new income. When you pay interest, you're transferring some of your income to the bank. The bank then pays some of this income to its employees and shareholders, and may also use some of it to purchase goods and services. But the total amount of income in the economy remains the same.

3. Including interest payments in national income would result in double counting. The income earned by the bank's employees and shareholders is already included in national income. If we also included the interest payments themselves, we would be counting this income twice.

4. Finally, national income is a measure of the value of goods and services produced in a country. While banking services do contribute to this value, the interest paid on loans is not a payment for a service. Instead, it's a payment for the use of money, which is a financial asset, not a good or service.