Question

Calculate `Compensation of Employees' (COE) from the following data :

Hint:

Remember: $GDP_{MP} - CFC = NNP_{MP}$. Then $NNP_{MP} - NIT = NNP_{FC} = NDP_{FC}$. This is the starting point for the Income Method.

Answer 1

Step 1: Understanding the Concept:
We use the Income Method identity. Domestic Income (\(NDP_{FC}\)) is the sum of factor incomes:
\(NDP_{FC} = COE + \text{Operating Surplus} + \text{Mixed Income}\)
Step 2: Key Formula or Approach:
1. Convert \(GDP_{MP}\) to \(NDP_{FC}\):
\(NDP_{FC} = GDP_{MP} - \text{Consumption of Fixed Capital (Depreciation)} - NIT\)
2. Use the Income Method formula to find \(COE\).
Step 3: Detailed Explanation:
First, find \(NDP_{FC}\):
\[ NDP_{FC} = 600 - 40 - 30 \]
\[ NDP_{FC} = 530 \text{ Crore} \]
Now, calculate \(COE\):
\[ NDP_{FC} = COE + \text{Operating Surplus} + \text{Mixed Income} \]
\[ 530 = COE + 200 + 120 \]
\[ 530 = COE + 320 \]
\[ COE = 530 - 320 \]
\[ COE = 210 \text{ Crore} \]
Step 4: Final Answer:
The Compensation of Employees (\(COE\)) is 210 Crore.