Question

Calculate:

1. GDP at market prices
2. National income by expenditure method from the data given below.

	(₹ crore)
(i) Gross capital formation	330
(ii) Net capital formation	300
(iii) Net factor income from abroad	(−) 20
(iv) Exports	30
(v) Imports	60
(vi) Private final consumption expenditure	1,000
(vii) Government final consumption expenditure	450
(viii) Net indirect taxes	60

Answer 1

Given Data: Gross Capital Formation (GCF) = ₹ 330

Net Capital Formation (NCF) = ₹ 300

Net Factor Income from Abroad (NFIA) = – ₹ 20

Exports (X) = ₹ 30

Imports (M) = ₹ 60

Private Final Consumption Expenditure (PFCE) = ₹ 1,000

Government Final Consumption Expenditure (GFCE) = ₹ 450

Net Indirect Taxes (NIT) = ₹ 60

Formula: Net Exports (X − M) = Exports – Imports

= ₹ 30 − ₹ 60

= − ₹ 30

(a) GDP at Market Prices (GDP_MP) = PFCE + GFCE + Gross Capital Formation + Net Exports

= ₹ 1,000 + ₹ 450 + ₹ 330 – ₹ 30

= ₹ 1,750 crore

(b) Depreciation = GCF − NCF

= ₹ 330 − ₹ 300

= ₹ 30

National Income (NNP at Factor Cost) = GDP_MP – Depreciation − Net Indirect Taxes + Net Factor Income from Abroad

= ₹ 1,750 – ₹ 30 – ₹ 60 + ₹ (–20)

= ₹ 1,750 – ₹ 110

= ₹ 1,640 crore