question_answer

Calculate 'Gross National Product at Factor Cost'    from the following data by

(i) Income Method and

(ii) Expenditure Method,

        

S. No.	Items	(Rs.) in crores
(i)	Private Final Consumption Expenditure	1,000
(ii)	Net Domestic Capital Formation	200
(iii)	Profits	400
(iv)	Compensation of Employees	800
(v)	Rent	250
(vi)	Government Final Consumption Expenditure	500
(vii)	Consumption of Fixed Capital	60
(viii)	Interest	150
(ix)	Net Current Transfers from Rest of the World	\[(-)\]80
(x)	Net Factor Income from Abroad	\[(-)\]10
(xi)	Net Exports	\[(-)\]20
(xii)	Net Indirect Taxes	\[(-)\]80

 

Answer:

                                    (i) Income Method Net Domestic Product at Factor Cost\[(ND{{P}_{FC}})\]= Compensation of Employees + Operating Surplus (Profits+Rent+Interest)+Mixed Income \[~=800+(400+250+150)+0=800+800\] = Rs. 1,600 crore Gross National Product at Factor Cost \[(GN{{P}_{FC}})\] \[ND{{P}_{FC}}\]= +Net Factor Income from Abroad +Depreciation \[=\text{ }1,600+(-10)+60=1,660-10=Rs.\,\,1,650\text{ }crore\]   (3) (ii) Expenditure Method Gross Domestic Product at Market Price\[(GD{{P}_{MP}})\]                                            = Privat Final Consumption Expenditure+Government Final Consumption Expenditure+ Gross Domestic Capital Formation+Net Exports \[=1,000+500+(200\text{ }+\text{ }60)+(20)\] \[=1,000+500+260-20=Rs.\,\,1,740\,\,crore\] Gross National Product at Factor Cost\[(GN{{P}_{FC}})\]=\[GD{{P}_{MP}}-\]Net Indirect Taxes+Net Factor Income from Abroad (NFIA) \[=1,740-80+\text{(}-10\text{)}=1,740-90\] =Rs. 1,650 crore