question_answer

How will you treat the following while estimating national income of India? (i) Dividend received by an Indian from his investment in shares of a foreign company. (ii) Money received by a family in India from relatives working abroad. (iii) Interest received on loans given to a friend for purchasing a car. (iv) Dividend received by a foreigner from investment in shares of an Indian company.     

Answer:

Ans.     (i) Dividend received by an Indian from his investment in shares of a foreign company is included in National Income of India because it is a part of net factor income from abroad.             (ii) Money received by a family in India from relatives working abroad is not included in National income of India because it is a kind of transfer income.             (iii) Interest received on loan given to a friend for purchasing a car is not included in National Income because loan is not being used for production purpose.             (iv) Dividend received by a foreigner from investment in shares of an Indian company is included in National Income of India as a negative component, because it is part of net factor income paid to rest of the world.