State the steps pertaining to the estimation of National Income by the Value Added Method.
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Solution and Explanation
The steps involved in estimating National Income using the Value Added Method are:
Identify Producing Units: Classify all producing units into primary, secondary, and tertiary sectors.
Calculate Gross Value of Output: Add the value of all goods and services produced in each sector.
Subtract Intermediate Consumption: Deduct the value of inputs used in production to get the gross value added.
Adjust for Depreciation: Subtract depreciation from the gross value to get the net value added.
Include Net Factor Income from Abroad (NFIA): Add NFIA to obtain the final National Income.
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Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.
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