Question

From the following data, calculate national income by:

1. Income method
2. Expenditure method

	(₹ in crore)
(i) Compensation of employees	800
(ii) Private final consumption expenditure	1,200
(iii) Profits	500
(iv) Rent	200
(v) Government final consumption expenditure	800
(vi) Interest	150
(vii) Net factor income from abroad	20
(viii) Net indirect taxes	190
(ix) Mixed income of self-employed	630
(x) Net exports	(−) 30
(xi) Net domestic capital formation	500
(xii) Consumption of fixed capital	150

Answer 1

To estimate the operating surplus, we apply the formula:

Given data (₹ in lakh):

Value of output at market prices = ₹ 845

Intermediate consumption = ₹ 418

Indirect taxes = ₹ 80

Subsidies = ₹ 10

Wages and salaries = ₹ 232

Consumption of fixed capital = ₹ 25

Formula: 

(a) National Income by Income Method:

NNP at FC = Compensation of Employees + Rent + Interest + Profits + Mixed Income + Net Factor Income from Abroad

= ₹ 800 + ₹ 200 + ₹ 150 + ₹ 500 + ₹ 630 + ₹ 20

= ₹ 2,300 crore

(b) National Income by Expenditure Method:

NNP at FC = PFCE + GFCE + Net Domestic Capital Formation + Net Exports + Net Factor Income from Abroad − Net Indirect Taxes

= ₹ 1,200 + ₹ 800 + ₹ 500 + ₹ (–30) + ₹ 20 − ₹ 190

= ₹ 2,490 – ₹ 190

= ₹ 2,300 crore