Question

State the steps pertaining to the estimation of National Income by Value Added Method. 

Answer 1

Step 1: Divide all of the economy's production units into primary, secondary, and tertiary sectors. Then, using the Gross Value Added at Market Price (GVA_MP) of each sector, compute the (GDP_MP). GDP_MP is the sum of each sector's GVA_MP,
i.e, ∑GVA_MP = GDP_MP.

Step 2: Depreciation and net indirect taxes are subtracted from GDP_MP to determine domestic income (NDP_FC).
NDP_FC = GDP_MP − Depreciation − Net Indirect Taxes

Step 3: To get the national income, compute the Net Factor Income from Abroad (NFIA) and add it to the domestic income.
National Income or NNP_FC = NDP_FC + NFIA