Question

From the following data calculate GNP_MP and National Income by using value added method.

	₹ in crores
(i) Gross value of output in primary sector (at FC)	950
(ii) Gross value of output in secondary sector (at FC)	470
(iii) Gross value of output in tertiary sector (at FC)	500
(iv) Value of intermediate goods in primary sector	360
(v) Value of intermediate goods in secondary sector	200
(vi) Value of intermediate goods in tertiary sector	175
(vii) Depreciation	20
(viii) Indirect Tax	35
(ix) Subsidy	10
(x) Net factor income from abroad	4

Answer 1

The Value Added in each sector is calculated by subtracting the value of intermediate goods from the gross value of output:

GVA Primary​ = 950 − 360 = 590 crores

GVA Secondary​ = 470 − 200 = 270 crores

GVA Tertiary ​= 500 − 175 = 325 crores

Total GVA at Factor Cost is the sum of the value added in all three sectors:

GVA_FC​ = 590 + 270 + 325 = 1185 crores

To calculate GNP_MP, use the formula:

GNP_MP = GVA_FC ​+ Net Factor Income from Abroad + Indirect Taxes − Subsidies

GNP_MP = 1185 + 4 + 35 − 10 = 1214 crores

National Income (NNP_FC) is calculated by deducting depreciation:

NNP_FC = GVA_FC ​+ Net Factor Income from Abroad − Depreciation

NNP_FC = 1185 + 4 − 20 = 1169 crores