(i) Expenditure on adding a floor to building. |
(ii) Payment of fees to a lawyer engaged by a firm. |
(iii) Payment of interest by a government firm. |
S.No | Items | (Rs.) in crores |
(i) | Gross Value Added at Market Price by Primary Sector | 600 |
(ii) | Private Final Consumption Expenditure | 1,500 |
(iii) | Consumption of Fixed Capital | 300 |
(iv) | Net Indirect Tamxes | 240 |
(v) | Gross Value Added at Market Price by Secondary Sector | 400 |
(vi) | Net Domestic Fixed Capital Formation | 440 |
(vii) | Change in Stock | \[(-)\]40 |
(viii) | Gross Value Added at Market Price by Tertiary Sector | 1,400 |
(ix) | Net Imports | 100 |
(x) | Government Final Consumption Expenditure | 300 |
(xi) | Net Factor Income from Abroad | 40 |
Answer:
Treatment assigned to the following while estimating national income are as follows: (i) Expenditure on adding a floor to building is included in national income because it is a part of investment expenditure. (ii) Payment of fees to a lawyer engaged by a firm is not to be included in estimation of national income as it is treaded as part of intermediate consumption. (iii) Payment of interest by a government firm should be included while estimating national income because it is a kind of factor payment. Or (i) By Product Method Gross Domestic Product at Market Price\[(GD{{P}_{MP}})\] Gross Value Added at Market Price in Primary Sector + Gross Value Added at Marker Price in secondary Sector + Gross Value Added at Market Price in Tertiary Sector = 600+400+1,400 \[GD{{P}_{MP}}\]=Rs. 2,400 crore Net National Product at Factor Cost\[(NN{{P}_{Fc}})=GD{{P}_{MP}}\]+Net Factor Income from Abroad Consumption of Fixed Capital \[-\]Net Indirect Tax \[~=Rs.\,\,2,400+40-300-240\Rightarrow Rs.\,\,2,440-300-240\] \[\therefore NN{{P}_{FC}}\] =Rs. 1,900 crore (ii) By Expenditure Method Gross Domestic Product at Market Price\[(GD{{P}_{MP}})\] = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Domestic Capital Formation (Net Domestic Fixed Capital Formation + Consumption of Fixed Capital + Change in Stock) + Net Exports = \[Rs.\,\,1500+300+[440+300+(-40)]+(-100)\] \[=Rs.\,\,1,800+700-100=Rs.\,\,2,500-100\] \[\therefore GD{{P}_{MP}}\]=Rs. 2,400 crore Net National Product at Factor Cost\[(NN{{P}_{FC}})\] \[GD{{P}_{MP}}-\]=Net Indirect Tax + Net Factor Income from Abroad \[-\] Depreciation \[=Rs\,\,2,400-240+40300\,\,Rs.\,\,2,440-540\] \[NN{{P}_{FC}}\]= Rs.1, 900 crore
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