Question

From the following data, calculate Personal Income and Personal Disposable Income.

		Rs (crore)
(a)	Net Domestic Product at factor cost	8,000
(b)	Net Factor Income from abroad	200
(c)	Undisbursed Profit	1,000
(d)	Corporate Tax	500
(e)	Interest Received by Households	1,500
(f)	Interest Paid by Households	1,200
(g)	Transfer Income	300
(h)	Personal Tax	500

Answer 1

Personal Income = NDP_FC + Net factor income from abroad (NFIA) + Transfer Income − Undistributed profit − corporate tax − Net interest paid by households

NDP_FC = Rs.8000 crores

NFIA = Rs.200 crores

Transfer Income = Rs.300 crores

Undistributed profit = Rs.1,000 crores

Corporate tax = Rs.500 crores

Net interest paid by households = Interest paid − Interest received

= 1200 − 1500

= (−) Rs.300 crores

So, putting the values in the above formula

PI = 8000 + 200 + 300 − 1000 − 500 − (− 300)

= 8000 + 200 + 300 − 1000 − 500 + 300

⇒ PI = 7300

So, Personal Income = Rs.7300 crores

Personal Disposable income = Personal Income − Personal Payments

= 7300 − 500

= Rs.6800 crores