Question

Find out:

1. National income
2. GNP at market prices by expenditure method.

	(₹ crore)
(i) Private final consumption expenditure	400
(ii) Indirect taxes	65
(iii) Net domestic capital formation	120
(iv) Government final consumption expenditure	100
(v) Consumption of fixed capital	20
(vi) Subsidies	5
(vii) Exports	30
(viii) Net factor income from abroad	(−) 10
(ix) Imports	40

Answer 1

Given Data: Private Final Consumption Expenditure (PFCE) = ₹ 400

Indirect Taxes = ₹ 65

Net Domestic Capital Formation (NDCF) = ₹ 120

Government Final Consumption Expenditure (GFCE) = ₹ 100

Consumption of Fixed Capital (Depreciation) = ₹ 20

Subsidies = ₹ 5

Exports = ₹ 30

Net Factor Income from Abroad (NFIA) = − ₹ 10

Imports = ₹ 40

Formula: GDP at Market Price (GDP_MP) = NDCF + Depreciation

= ₹ 120 + ₹ 20 

= ₹ 140

Net Exports = Exports − Imports

= ₹ 30 − ₹ 40 

= − ₹ 10

GDPMP = PFCE + GFCE + GDCF + Net Exports

= ₹ 400 + ₹ 100 + ₹ 140 + ₹ (−10)

= ₹630 crore

(a) Net Indirect Taxes = Indirect Taxes − Subsidies

= ₹ 65 − ₹ 5 

= ₹ 60

NPFC = GNPMP − Depreciation − Net Indirect Taxes

= ₹ 620 – ₹ 20 – ₹ 60

= ₹ 540 crore

(b) GNPMP = GDPMP + Net Factor Income from Abroad

= ₹ 630 + ₹ (−10)

= ₹ 620 crore