Question

On the basis of the data given below, estimate the value of National Income (NNP_FC)

Hint:

National Income is calculated by adding the various economic components, accounting for depreciation (consumption of fixed capital) and taxes, and adjusting for net income from abroad.

Answer 1

To estimate the National Income (NNP at factor cost), we can use the following formula:

Formula:

National Income (NNP) = Private final consumption expenditure + Government final consumption expenditure + Net exports + Net indirect taxes + Net factor income from abroad + Gross domestic fixed capital formation - Consumption of fixed capital

1. Given Values:

• Private final consumption expenditure: ₹2,000 crore
• Government final consumption expenditure: ₹1,500 crore
• Gross domestic fixed capital formation: ₹1,000 crore
• Addition to stock: ₹400 crore (this is included in the Gross domestic fixed capital formation)
• Consumption of fixed capital: ₹50 crore
• Net factor income from abroad: ₹100 crore
• Net indirect taxes: ₹200 crore
• Net Exports: ₹700 crore

2. Calculating the National Income (NNP):

Substituting the values in the formula:

National Income (NNP) = ₹2,000 + ₹1,500 + ₹700 + ₹200 + ₹100 + ₹1,000 - ₹50

National Income (NNP) = ₹5,450 crore

Final Answer:

The National Income (NNP at factor cost) is ₹5,450 crore.