S. No. | Items | (Rs.) in crores |
(i) | Government Final Consumption Expenditure | 100 |
(ii) | Subsidies | 10 |
(iii) | Rent | 200 |
(iv) | Wages and Salaries | 600 |
(v) | Indirect tax | 60 |
(vi) | Private Final Consumption Expenditure | 800 |
(vii) | Gross Domestic Capital Formation | 120 |
(viii) | Social Security Contributions by Employer | 55 |
(ix) | Royalty | 25 |
(x) | Net Factor Income Paid to Abroad | 30 |
(xi) | Interest | 20 |
(xii) | Net Domestic Capital Formation | 110 |
(xiii) | Profits | 130 |
(xiv) | Net Export | 70 |
Answer:
According to Expenditure method, National Income is measured in terms of expenditure on purchase of final goods and services in the economy during an accounting year. Net exports is the difference between exports and imports during an accounting year. If goods exported exceed the goods imported, then this will result in increase in the income of the country. With increased income, the expenditure will also increase, because of this reason exports are included in the estimation of domestic product by expenditure method. Gross Domestic Product (GDP) can be greater than Gross National Product (GNP) if net factor income from abroad is negative. Net Factor income from abroad will be negative if factor payments from abroad are less than factor payments to abroad. National Income by Income Method Net National Product at Factor Cost\[(NN{{P}_{FC}})\]= Rent + Wages and salaries + Social security contribution by Employer + Royalty + Interest + Profits - Net Factor Income paid to Abroad =200+600+55+25+20+130-30 =Rs.1,000 crore National Income by Expenditure Method Net National Product at Factor Cost\[(NN{{P}_{FC}})\]= Private Final consumption Expenditure + Government Final consumption Expenditure + Gross Domestic Capital Formation + Net Exports - Depreciation ? Net Factor Income to Abroad - Net Indirect Taxes \[=800+100+120+70-10-30-50\] =Rs. 1,000 crore Note: (i) Depreciation = Gross Domestic Capital Formation ? Net Domestic Capital Formation \[Depreciation=120-110=Rs.\,\,10\,\,crore\] (ii) Net Indirect Taxes = Indirect Tax - Subsidy \[\therefore Net\,\,Indirect\,\,Taxes~=60-10=Rs.\,\,50\,\,crore\]
You need to login to perform this action.
You will be redirected in
3 sec