Question

On the basis of the given data, estimate the value of National Income (NNP_FC):

S.No.	Items	Amount (in ₹ Crore)
(i)	Household Consumption Expenditure	1,800
(ii)	Gross Business Fixed Capital Formation	1,150
(iii)	Gross Residential Construction Expenditure	1,020
(iv)	Government Final Consumption Expenditure	2,170
(v)	Excess of Imports over Exports	720
(vi)	Inventory Investments	540
(vii)	Gross Public Investments	1,300
(viii)	Net Indirect Taxes	240
(ix)	Net Factor Income from Abroad	(-) 250
(x)	Consumption of Fixed Capital	440

Hint:

To calculate National Income (NNP\textsubscript{FC}), subtract the depreciation (consumption of fixed capital) from the Gross National Product (GNP).

Answer 1

National Income (NNP_FC) is calculated by subtracting the depreciation (Consumption of Fixed Capital) from the Gross National Product (GNP).
First, let's calculate the Gross National Product (GNP) at factor cost: \[ \text{GNP} = C + I + G + (X - M) + \text{Net Factor Income from Abroad} \] Where: - \(C\) is the Household Consumption Expenditure = ₹1,800 crore
- \(I\) is the Gross Business Fixed Capital Formation + Gross Residential Construction Expenditure + Inventory Investments + Gross Public Investments = ₹1,150 + ₹1,020 + ₹540 + ₹1,300 = ₹4,010 crore
- \(G\) is the Government Final Consumption Expenditure = ₹2,170 crore
- \((X - M)\) is the Excess of Imports over Exports = ₹720 crore
- Net Factor Income from Abroad = ₹-250 crore
Substituting these values into the GNP equation: \[ \text{GNP} = 1,800 + 4,010 + 2,170 + 720 + (-250) = 8,450 \text{ crore} \] Now, to calculate National Income (NNP_FC), we subtract the consumption of fixed capital (depreciation): NNP_FC = GNP - Consumption of Fixed Capital 
NNP_FC = 8,450 - 440 = 8,010 crore
Thus, the value of National Income (NNP_FC) is ₹8,010 crore.