Question

From the following data, calculate national income by income method and expenditure method:

Item	₹ in crores
(i) Compensation of employees	700
(ii) Government final consumption expenditure	750
(iii) Net factor income from abroad	(-)10
(iv) Net exports	(-)15
(v) Profits	600
(vi) Net indirect taxes	60
(vii) Mixed income of self employed	350
(viii) Rent	200
(ix) Interest	310
(x) Private final consumption expenditure	1100
(xi) Net domestic capital formation	385
(xii) Consumption of fixed capital	65

Answer 1

1. National income by income method:

NNP_FC​ = Compensation of employees + Rent + Interest + Profits + Mixed income of self-employed + Net Factor Income from Abroad

= 700 + 200 + 310 + 600 + 350 + (−10)

= ₹ 2150 crores.

2. National income by expenditure method:

National Income (NI) = Private final consumption expenditure + Net domestic capital formation + Government final consumption expenditure + Net exports + Net factor income from abroad − Net indirect taxes NI

NI = 1100 + 385 + 750 − 15 − 60 − 10

= 2150 crores.