Question

From the data given below, calculate:

1. NDP at market prices
2. National income

	(₹ crore)
(i) Private final consumption expenditure	600
(ii) Net exports	(−) 20
(iii) Government final consumption expenditure	100
(iv) Net indirect taxes	30
(v) Net domestic capital formation	70
(vi) Net factor income from abroad	10

Answer 1

Given Data: Private Final Consumption Expenditure (PFCE) = 600

Net Exports (X − M) = –20

Government Final Consumption Expenditure (GFCE) = 100

Net Indirect Taxes (NIT) = 30

Net Domestic Capital Formation (NDCF) = 70

Net Factor Income from Abroad (NFIA) = 10

Formula: Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Capital Formation + Net Exports

(a) NDP at Market Prices = PFCE + GFCE + NDCF + Net Exports

= ₹ 600 + ₹ 100 + ₹ 70 + ₹ (–20)

= ₹ 750 crore

(b) National Income (NNP at Factor Cost) = NDP at MP − Net Indirect Taxes + Net Factor Income from Abroad

= ₹ 750 + ₹ (–30) + ₹ 10

= ₹ 730 crore