Question

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

S.No.	Items	Amount (in ₹ Crore)
(i)	Household Consumption Expenditure	1,800
(ii)	Gross Business Fixed Capital Formation	1,150
(iii)	Gross Residential Construction Expenditure	1,020
(iv)	Government Final Consumption Expenditure	2,170
(v)	Excess of Imports over Exports	720
(vi)	Inventory Investments	540
(vii)	Gross Public Investments	1,300
(viii)	Net Indirect Taxes	240
(ix)	Net Factor Income from Abroad	(-) 250
(x)	Consumption of Fixed Capital	440

Hint:

To calculate National Income (NNP\textsubscript{FC}), subtract the depreciation (consumption of fixed capital) from the Gross National Product (GNP).

Answer 1

National Income (NNP_FC) is derived by deducting depreciation (Consumption of Fixed Capital) from the Gross National Product (GNP).
Initially, the Gross National Product (GNP) at factor cost is computed: \[ \text{GNP} = C + I + G + (X - M) + \text{Net Factor Income from Abroad} \] In this formula: - \(C\) represents Household Consumption Expenditure, valued at ₹1,800 crore.
- \(I\) signifies Gross Business Fixed Capital Formation plus Gross Residential Construction Expenditure plus Inventory Investments plus Gross Public Investments, totaling ₹1,150 + ₹1,020 + ₹540 + ₹1,300 = ₹4,010 crore.
- \(G\) denotes Government Final Consumption Expenditure, amounting to ₹2,170 crore.
- \((X - M)\) indicates the Excess of Imports over Exports, quantified at ₹720 crore.
- Net Factor Income from Abroad is ₹-250 crore.
Substituting these figures into the GNP equation yields: \[ \text{GNP} = 1,800 + 4,010 + 2,170 + 720 + (-250) = 8,450 \text{ crore} \] Subsequently, to ascertain National Income (NNP_FC), the consumption of fixed capital (depreciation) is subtracted: NNP_FC = GNP - Consumption of Fixed Capital
NNP_FC = 8,450 - 440 = 8,010 crore.
Therefore, the National Income (NNP_FC) is established at ₹8,010 crore.