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Question
Calculate Net Domestic Product at Factor Cost and Private Income:
| Rs crore | ||
| 1 | Gross National Disposable Income | 600 |
| 2 | Net current transfers to abroad | (-)20 |
| 3 | Consumption of fixed capital | 60 |
| 4 | Current transfers from government | 30 |
| 5 | Indirect tax | 100 |
| 6 | Income accruing to government | 80 |
| 7 | Subsidies | 10 |
| 8 | Net factor income to abroad | (-)10 |
| 9 | National debt interest | 40 |
| 10 | Personal tax | 150 |
Solution
Gross National Disposable Income = Net National Disposable Income + Consumption of fixed capital
600 = Net National Disposable Income + 60
Net National Disposable Income = Rs 540 crore
Net National Disposable Income = Net Domestic Product at Factor Cost + (Indirect tax- Subsidies) + Net factor income from abroad + Net current transfers from abroad
540 = Net Domestic Product at Factor Cost + (100-10)-(-10)-(-20)
540 = Net Domestic Product at Factor Cost + 120
Net Domestic Product at Factor Cost = Rs 420 crore
Private Income = Net Domestic Product at Factor Cost- Income accruing to government + Net factor income from abroad + Current transfers from government+ Net current transfers from abroad+ National debt interest
Private Income = 420-80-(-10)+30-(-20)+40
Private Income = Rs 440 crore
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