On the basis of the given data, estimate the value of Gross National Product at Market Price (GNPMP) :
S. No. Items Amount (in ₹ crore) (i) Private final consumption expenditure 800 (ii) Government final consumption expenditure 700 (iii) Net imports 200 (iv) Gross public investment 100 (v) Inventory investment 50 (vi) Gross residential construction investment 300 (vii) Net indirect taxes 70 (viii) Gross business fixed investment 130 (ix) Consumption of fixed capital 20 (x) Interest 150 (xi) Net factor income paid to abroad 100
On the basis of the given data, estimate the value of Gross National Product at Market Price (GNPMP) :
| S. No. | Items | Amount (in ₹ crore) |
|---|---|---|
| (i) | Private final consumption expenditure | 800 |
| (ii) | Government final consumption expenditure | 700 |
| (iii) | Net imports | 200 |
| (iv) | Gross public investment | 100 |
| (v) | Inventory investment | 50 |
| (vi) | Gross residential construction investment | 300 |
| (vii) | Net indirect taxes | 70 |
| (viii) | Gross business fixed investment | 130 |
| (ix) | Consumption of fixed capital | 20 |
| (x) | Interest | 150 |
| (xi) | Net factor income paid to abroad | 100 |
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Solution and Explanation
We are given spending items, so we use the expenditure method. First we find GDP at market price (GDPMP). Then we adjust it for factor income from abroad to get GNPMP.
\[ GDP_{MP} = C + G + I - \text{Net imports} \]
\[ GNP_{MP} = GDP_{MP} + \text{Net factor income from abroad} \]
Step 2: Pick the items that are needed:
C is private final consumption expenditure: (i) = Rs. 800 crore. G is government final consumption expenditure: (ii) = Rs. 700 crore.
Gross investment I has four parts: gross public investment (iv) = 100, inventory investment (v) = 50, gross residential construction investment (vi) = 300 and gross business fixed investment (viii) = 130.
Net imports (iii) = Rs. 200 crore are subtracted.
Net indirect taxes (vii), consumption of fixed capital (ix) and interest (x) are not needed in this method, so we leave them out.
Step 3: Find gross investment:
\[ I = 100 + 50 + 300 + 130 = 580 \]
So gross domestic capital formation is Rs. 580 crore.
Step 4: Find GDP at market price:
\[ GDP_{MP} = 800 + 700 + 580 - 200 \]
\[ GDP_{MP} = 1880 \]
So GDPMP is Rs. 1,880 crore.
Step 5: Adjust for factor income from abroad:
Net factor income paid to abroad (xi) = Rs. 100 crore. This means net factor income from abroad is minus 100.
\[ GNP_{MP} = 1880 + (-100) = 1880 - 100 = 1780 \]
Final Answer:
GNP at market price is Rs. 1,780 crore. \[ \boxed{GNP_{MP} = \text{Rs. } 1{,}780 \text{ crore}} \]
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