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Question
Answer the following question:
What is double counting of national income?
Solution
One of the major problems involved in the estimation of national income by the value added method is the problem of double counting. Double counting refers to a situation where the value of a good is taken into account (counted) more than once. This is particularly so for intermediate goods. Such a problem occurs because, for every producer, the commodity he sells is the final commodity. Thus, if the value of the intermediate good is taken into account every single time, it leads to its estimation more than once, one when it was produced and second as a part of final good. This leads to overestimation of the value of final good.
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| g) | Output method | ||
| h) | Transfer income | ||
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PASSAGE
Corona has slowed down the economy Lockdown imposed to contain the spread of Corona virus had resulted in closure of manufacturing and business activities. During this financial year, the economy is expected to move towards a contractionary phase rather than expansionary phase. This has been stated in the budget. This is the first paperless budget in the history of India. At the same time, it is the third post-independence budget to be presented at a time when the economy is shrinking. The budget shows a fiscal deficit of more than 5%.
The Union Finance Minister has presented a budget that seeks to accelerate the economy by balancing the impact of Corona on the economy on one hand and growing expectations of all sectors on the other. A significant increase in the allocation for Healthcare by 137% is a feature of this budget. In this budget, the expected revenue for the year 212-2022 is Rs. 34,35, 000crore and the expected expenditure is Rs. 35,83, 000 crore.
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