Question

Q. Consider the following statements in reference to the National Income Aggregates.

Which of the statements given above is/are correct?

• A. 1 and 2 only
• B. 3 only
• C. 2 and 3 only
• D. 1, 2 and 3

Answer 1

The correct option is C 2 and 3 only

Explanation:

• Statement 1 is incorrect: GVA at basic prices includes production taxes and excludes production subsidies available on the commodity. Production taxes or production subsidies are paid or received with relation to production and are independent of the volume of actual production. Some examples of production taxes are land revenues, stamps and registration fees, and tax on the profession. Some production subsidies include subsidies to Railways, input subsidies to farmers, etc.
• Statement 2 is correct: GVA at factor cost doesn’t include or exclude taxes and subsidies respectively. It merely includes the cost of all the factors of production consumed or used in producing a good or service.
• Statement 3 is correct: GDP at market prices includes both production and product taxes and excludes both production and product subsidies. a) GVA(BP) = GVA(FC) + (Production taxes – Production Subsidies) b) GDP = GVA(BP) + (Product Taxes – Product Subsidies). This was adopted as part of the revision of National Accounts statistics done by the Central Statistical Organization (CSO).