Question

On the basis of the data given below, estimate the value of Gross National Product at Factor Cost (GNP_FC): \[ \begin{array}{|c|l|r|} \hline \textbf{S.No.} & \textbf{Items} & \textbf{Amount (in ₹ crore)} \\ \hline (i) & \text{Wages and Salaries} & 2,000 \\ \hline (ii) & \text{Rent and Interest} & 800 \\ \hline (iii) & \text{Corporate Tax} & 500 \\ \hline (iv) & \text{Undistributed Profit} & 300 \\ \hline (v) & \text{Dividend} & 200 \\ \hline (vi) & \text{Depreciation} & 150 \\ \hline (vii) & \text{Net Factor Income from Abroad} & -50 \\ \hline \end{array} \]

Hint:

For \(GNP_{FC}\), include all factor incomes (domestic and net abroad) and avoid adding non-factor items like depreciation.

Answer 1

Solution: \[ \text{GNP}_{FC} = \text{Wages and Salaries} + \text{Rent and Interest} + \text{Corporate Tax} + \text{Undistributed Profit} + \text{Dividend} + \text{Depreciation} + \text{Net Factor Income from Abroad} \] \[ \text{GNP}_{FC} = 2,000 + 800 + 500 + 300 + 200 + 150 - 50 \] \[ \text{GNP}_{FC} = 2,000 + 800 = 2,800 \] \[ 2,800 + 500 = 3,300 \] \[ 3,300 + 300 = 3,600 \] \[ 3,600 + 200 = 3,800 \] \[ 3,800 + 150 = 3,950 \] \[ 3,950 - 50 = 3,900 \] Therefore, the Gross National Product at Factor Cost (GNP_FC) is ₹3,900 crore. The formula for \(GNP_{FC}\) is: \[ GNP_{FC} = Wages \& Salaries + Rent \& Interest + Corporate Tax + Undistributed Profit + Dividend + Net Factor Income { from Abroad} \] Substituting the values: \[ GNP_{FC} = 2000 + 800 + 500 + 300 + 200 - 50 = {\rupee} 3,950 { crore}. \] Note: Depreciation is not included in \(GNP_{FC}\) as it accounts for net factor incomes.