DOMESTIC TERRITORY

In layman’s language, domestic territory means the political frontiers of a country. However, for national income accounting, it is used in a wider sense.

Definition: Domestic Territory is geographical territory administered by a government within which persons, goods and capital circular freely.

Let us first see what IS not included in a domestic territory:

The domestic territory DOES NOT include-

  • Embassies, consulates and military establishment of a foreign country, for example- the American embassy in India is the domestic territory of America and not India
  • An international organization like UNO, WHO located within the geographical boundaries of a country

What all is included?

Ship and aircraft owned and operated by normal residents between two countries.

  • For example- Planes operated by Air India between London and Paris are part of the domestic territory of India. Similarly, planes operated by Singapore Airways between Indian and Japan are a part of domestic territory of Singapore.

Fishing Vessels, oil and natural gas rigs and floating platforms operated by the residents of a country in the international waters where they have exclusive rights of operation.

  • For example, fishing boats operated by Indian anglers in international waters of Indian Ocean will be considered a part of domestic territory of India.

Embassies, consulates and military establishments of country located abroad.

  • For example- Indian Embassy in Japan is a part of the domestic territory of India.

NORMAL RESIDENTS

Definition: Normal Residents of a country refers to an individual or institution who ordinarily resides in the country and whose centre of economic interest also lies in that country.

‘Centre of Economic Interest’ implies:

  • The resident lives or is located within the domestic Territory.
  • The resident carries out basic economic activities of earning, spending, and accumulation from that location.

Following are not included in Normal residents:-

  • Foreign Tourists & Visitors
  • Foreign staff of Embassies, officials, diplomats and members of the armed forces.
  • International Organization like WHO, UNO etc.
  • Employers of International Organizations.
  • Crewmembers of foreign vessels, commercial travellers and seasonal workers, provided their stay is less than one year.
  • Border workers, who cross borders on a regular basis to work in other countries.

CITIZENSHIP AND RESIDENTSHIP