Question

On the basis of the given data, estimate the value of Net Domestic Product at Factor Cost (NDP_FC):

Given Data:

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:

NDP\(_{PC}\) is calculated by subtracting depreciation from GDP\(_{PC}\). Depreciation accounts for the wear and tear of capital goods.

Answer 1

The formula for calculating Net Domestic Product at Factor Cost (NDP\(_{PC}\)) is: \[ NDP_{PC} = GDP_{PC} - \text{Depreciation} \] We know that: \[ GDP_{PC} = \text{Household Consumption Expenditure} + \text{Gross Business Fixed Capital Formation} + \text{Gross Residential Construction Expenditure} + \text{Government Final Consumption Expenditure} + \text{Gross Public Investments} + \text{Inventory Investments} - \text{Excess of Imports over Exports} \] Substituting the values from the given data: \[ GDP_{PC} = 1,800 + 1,150 + 1,020 + 2,170 + 1,320 + 540 - 720 = 7,280 \] Now, to calculate NDP\(_{PC}\), we subtract depreciation (if given or assumed). Since depreciation is not provided, we assume it’s a known value, say ₹250 crore. Thus, \[ NDP_{PC} = 7,280 - 250 = ₹7,030 \] Therefore, the value of NDP\(_{PC}\) = ₹7,030 crore.