Question

From the following data calculate national income by:

1. Income method
2. Expenditure method

	(₹ in crore)
(i) Government final consumption expenditure	1,000
(ii) Profits	700
(iii) Net indirect tax	110
(iv) Private final consumption expenditure	1,500
(v) Net exports	(−) 20
(vi) Compensation of employees	1,200
(vii) Rent	200
(viii) Interest	270
(ix) Net factor income from abroad	30
(x) Mixed income of self-employed	600
(xi) Gross domestic capital formation	700
(xii) Net domestic capital formation	600

Answer 1

(a) Income Method

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

= ₹ 1,200 + ₹ 200 + ₹ 270 + ₹ 700 + ₹ 600 + ₹ 30

= ₹ 3,000 crore

(b) Expenditure Method

National Income (NNP at FC) = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Capital Formation + Net Exports + Net Factor Income from Abroad – Net Indirect Tax

= ₹ 1,500 + ₹ 1,000 + ₹ 600 + ₹ (–20) + ₹ 30 – ₹ 110

= ₹ 1,500 + ₹ 1,000 + ₹ 600 + ₹ 30 – ₹ 110 – ₹ 20

= ₹ 3100 – ₹ 100

= ₹ 3,000 crore