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Question

Gross national product at market prices of an economy is Rs.65,000 crores. The capital stock of the economy is valued at Rs.1,20,000 crores, which depreciates at the rate of 10 per annum. Indirect taxes amount to Rs.6,000 crores and subsidies amount to Rs.1,000 crores. Estimate national income of the economy.

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Solution

Depreciation: 10% * 120000 = 12000
Formula: National Income or NNP at FC = GNP at MP - Depreciation - Indirect Tax + Subsidies
= 65000 - 12000 - 6000 + 1000
= Rs 48000 crores.

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