Question

On the basis of information given below, estimate:

1. national income
2. NDP_MP by value added (net output) method

	(₹ in crore)
(i) Gross value of output at market prices	18,000
(ii) Value of intermediate consumption	5,500
(iii) Depreciation	1,500
(iv) Indirect taxes	800
(v) Subsidies	100
(vi) Net factor income from abroad	(−) 250

Answer 1

To estimate National Income (NNP at Factor Cost) and NDP at Market Price (NDP_MP), we apply the value added (net output) method:

Given Data (₹ in crore): 

Gross value of output at market prices = ₹ 18,000

Intermediate consumption = ₹ 5,500

Depreciation = ₹ 1,500

Indirect taxes = ₹ 800

Subsidies = ₹ 100

Net factor income from abroad = (–) ₹ 250

Formula: Gross Domestic Product at Market Prices (GDP_MP) = Gross value of output – Intermediate consumption

= ₹ 18,000 – ₹ 5,500

= ₹ 12,500 crore

(a) Net Domestic Product at Factor Cost (NDP_FC) = NDP_MP – Indirect Taxes + Subsidies

= ₹ 11,000 – ₹ 800 + ₹ 100

= ₹ 10,300 crore

National Income (NNP_FC) = NDP_FC + Net Factor Income from Abroad

= ₹ 10,300 + (– ₹ 250)

= ₹ 10,050 crore

(b) Net Domestic Product at Market Prices (NDP_MP) = GDP_MP – Depreciation

= ₹ 12,500 – ₹ 1,500

= ₹ 11,000 crore