Question

On the basis of the following data, estimate the value of National Income (NNP\textsubscript{FC}):

S.No.	Items	Amount (in ₹ crore)
(i)	Household Consumption Expenditure	\( 800 \)
(ii)	Gross Business Fixed Capital Formation	\( 150 \)
(iii)	Gross Residential Construction Investment	\( 120 \)
(iv)	Government Final Consumption Expenditure	\( 270 \)
(v)	Excess of Imports over Exports	\( 20 \)
(vi)	Inventory Investments	\( 50 \)
(vii)	Gross Public Investments	\( 130 \)
(viii)	Net Indirect Taxes	\( 20 \)
(ix)	Net Factor Income from Abroad	\( -25 \)
(x)	Consumption of Fixed Capital	\( 40 \)

Hint:

Always follow the sequence: GDP\textsubscript{MP} → NDP\textsubscript{MP} → NDP\textsubscript{FC} → NNP\textsubscript{FC}, adjusting for depreciation, indirect taxes, and net factor income from abroad.

Answer 1

First, we calculate Gross Domestic Product at Market Price (GDP\textsubscript{MP}) using the expenditure method: \[ GDP_{MP} = C + I + G + (X-M) \] Where, \(C = 800\) (Household Consumption Expenditure) \(I = 150 + 120 + 50 + 130 = 450\) (Gross Investment) \(G = 270\) (Government Final Consumption Expenditure) \((X - M) = -20\) (Excess of Imports over Exports) Now, \[ GDP_{MP} = 800 + 450 + 270 + (-20) = 1500 \ \text{crore} \] Now, calculate Net Domestic Product at Market Price (NDP\textsubscript{MP}): \[ NDP_{MP} = GDP_{MP} - Consumption\ of\ Fixed\ Capital \] \[ = 1500 - 40 = 1460 \ \text{crore} \] Next, calculate Net Domestic Product at Factor Cost (NDP\textsubscript{FC}): \[ NDP_{FC} = NDP_{MP} - Net\ Indirect\ Taxes \] \[ = 1460 - 20 = 1440 \ \text{crore} \] Finally, calculate National Income (NNP\textsubscript{FC}): \[ NNP_{FC} = NDP_{FC} + Net\ Factor\ Income\ from\ Abroad \] \[ = 1440 + (-25) = 1415 \ \text{crore} \] Final Answer: ₹ 1415 crore