Question

On the basis of the following data, estimate the value of National Income (NNP_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

The calculation begins with Gross Domestic Product at Market Price (GDP\textsubscript{MP}), determined by the expenditure method:\[GDP_{MP} = C + I + G + (X-M)\]With the following components: \(C = 800\) (Household Consumption Expenditure) \(I = 150 + 120 + 50 + 130 = 450\) (Gross Investment) \(G = 270\) (Government Final Consumption Expenditure) \((X - M) = -20\) (Net Exports: Exports minus Imports)The GDP\textsubscript{MP} is thus calculated as:\[GDP_{MP} = 800 + 450 + 270 + (-20) = 1500 \ \text{crore}\]Next, Net Domestic Product at Market Price (NDP\textsubscript{MP}) is computed by subtracting the Consumption of Fixed Capital from GDP\textsubscript{MP}:\[NDP_{MP} = GDP_{MP} - Consumption\ of\ Fixed\ Capital\]\[= 1500 - 40 = 1460 \ \text{crore}\]Subsequently, Net Domestic Product at Factor Cost (NDP\textsubscript{FC}) is derived by subtracting Net Indirect Taxes from NDP\textsubscript{MP}:\[NDP_{FC} = NDP_{MP} - Net\ Indirect\ Taxes\]\[= 1460 - 20 = 1440 \ \text{crore}\]Finally, National Income (NNP\textsubscript{FC}) is determined by adding Net Factor Income from Abroad to NDP\textsubscript{FC}:\[NNP_{FC} = NDP_{FC} + Net\ Factor\ Income\ from\ Abroad\]\[= 1440 + (-25) = 1415 \ \text{crore}\]Final Answer: ₹ 1415 crore