Question

Calculate `Compensation of Employees' (COE) from the following data :

Hint:

Remember: $GDP_{MP} - CFC = NNP_{MP}$. Then $NNP_{MP} - NIT = NNP_{FC} = NDP_{FC}$. This is the starting point for the Income Method.

Answer 1

Step 1: Understanding the Concept:
Under the Income Method of calculating National Income, $NDP_{FC}$ is the sum of all factor incomes: Compensation of Employees, Operating Surplus, and Mixed Income of Self-Employed.

Step 2: Key Formula or Approach:
\[ NDP_{FC} = GDP_{MP} - \text{Depreciation (CFC)} - \text{NIT} \]
\[ NDP_{FC} = \text{COE} + \text{Operating Surplus} + \text{Mixed Income} \]

Step 2: Detailed Explanation:
Step 1 -- Find $NDP_{FC$:}
\[ NDP_{FC} = GDP_{MP} - \text{CFC} - \text{NIT} = 600 - 40 - 30 = \text{₹ } 530 \text{ Crore} \]

Step 2 -- Apply Income Method Formula:
\[ NDP_{FC} = \text{COE} + \text{Operating Surplus} + \text{Mixed Income} \]
\[ 530 = \text{COE} + 200 + 120 \]
\[ \text{COE} = 530 - 320 = \text{₹ } 210 \text{ Crore} \]

Step 3: Final Answer:
Compensation of Employees (COE) = ₹ 210 Crore.