Question

Calculate (a) Gross domestic product at market price and (b) Factor income from abroad from the following data:

$\begin{array}{cc}& \\ & \text{(Rs in '000 crores)}\\ \text{(i) Profits}& 500\\ \text{(ii) Exports}& 40\\ \text{(iii) Compensation of employees}& 1,500\\ \text{(iv) Gross national product at factor price}& 2,800\\ \text{(v) Net current transfer from rest of the world}& 90\\ \text{(vi) Rent}& 300\\ \text{(vii) Interest}& 400\\ \text{(viii) Factor income to abroad}& 120\\ \text{(ix) Net indirect taxes}& 250\\ \text{(x) Net domestic capital formation}& 650\\ \text{(xi) Gross fixed capital formation}& 700\\ \text{(xii) Change in stock}& 50\end{array}$

Answer 1

(a) Gross Domestic Product at Market Price

$GD{P}_{MP}$ = Compensation of employees + Rent + Interest+ Profits+ Gross fixed capital formation + Change in stock - Net domestic capital formation + Net indirect taxes

= (iii) + (vi)+ (vii)+ (i)+ (xi)+(xii) - (x) + (ix)

=1,500+300+400+500+700+50-650+250

=1,500+300+400+500+100+250 = Rs 3,050 (in '000 crores)

(b) $GN{P}_{MP}$ = $GN{P}_{FC}$ + Net indirect taxes

= 2,800+250 = 3,050 (in '000 crores)

Net factor income earned from abroad = $GN{P}_{MP}$ - $GN{P}_{MP}$

= 3,050 -3050= 0

$\therefore$ Factor income from abroad - Factor income to abroad = 0.

Or, Factor income from abroad -120 = 0

$\therefore$ Factor income from abroad = 120 (in '000 crores)