Question

From the following data, calculate:

1. NNP at factor cost (National income)
2. GDP at market prices by expenditure method.

	(₹ crore)
(i) Net indirect taxes	800
(ii) Net domestic fixed capital formation	500
(iii) Consumption of fixed capital	100
(iv) Private final consumption expenditure	5,000
(v) Government final consumption expenditure	2,000
(vi) Net factor income to abroad	50
(vii) Net exports	(−) 150
(viii) Change in stock	(−) 30

Answer 1

Given Data (₹ in crore):

Net Indirect Taxes (NIT) = 800

Net Domestic Fixed Capital Formation (NDFCF) = 500

Consumption of Fixed Capital (Depreciation) = 100

Private Final Consumption Expenditure (PFCE) = 5,000

Government Final Consumption Expenditure (GFCE) = 2,000

Net Factor Income to Abroad (NFIA) = –50

Net Exports (X – M) = –150

Change in Stock (Inventory Investment) = –30

Formula: Gross Domestic Capital Formation (GDCF) = Net Domestic Fixed Capital Formation + Consumption of Fixed Capital

= ₹ 500 + ₹100

= ₹ 600

(a) NNP at Factor Cost (National Income) = GDP at Market Price (GDP_MP) − Net Indirect Taxes + Net Factor Income from Abroad

= ₹ 7420 – ₹ 800 – ₹ 50

= ₹ 6,570 crore

(b) GDP at Market Price (GDP_MP) = PFCE + GFCE + GDCF + Net Exports

= ₹ 5000 + ₹ 2000 + ₹ 600 + ₹ (–30) + ₹ (–150)

= ₹ 5000 + ₹ 2000 + ₹ 600 + ₹ –30 + ₹ –150

= ₹ 7,420 crore