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Worked Examples · Example 10

Q.From the following data, calculate National Income (NNP at Factor Cost):
GDP at Market Price = ₹5,000 crore; Consumption of Fixed Capital (Depreciation) = ₹300 crore; Net Factor Income from Abroad = (−) ₹50 crore; Net Indirect Taxes = ₹400 crore.

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Method 1 — step by step from GDP at MP:

GNPMP=GDPMP+NFIA=5,000+(−50)=₹4,950 croreGNP_{MP} = GDP_{MP} + NFIA = 5{,}000 + (-50) = ₹4{,}950 \text{ crore}

NNPMP=GNPMP−Depreciation=4,950−300=₹4,650 croreNNP_{MP} = GNP_{MP} - \text{Depreciation} = 4{,}950 - 300 = ₹4{,}650 \text{ crore}

NNPFC=NNPMP−Net Indirect Taxes=4,650−400=₹4,250 croreNNP_{FC} = NNP_{MP} - \text{Net Indirect Taxes} = 4{,}650 - 400 = ₹4{,}250 \text{ crore}

So National Income = ₹4,250 crore.

Method 2 — independent cross-check via NDP at Factor Cost:

NDPMP=GDPMP−Depreciation=5,000−300=₹4,700 croreNDP_{MP} = GDP_{MP} - \text{Depreciation} = 5{,}000 - 300 = ₹4{,}700 \text{ crore}

NDPFC=NDPMP−Net Indirect Taxes=4,700−400=₹4,300 croreNDP_{FC} = NDP_{MP} - \text{Net Indirect Taxes} = 4{,}700 - 400 = ₹4{,}300 \text{ crore}

NI=NDPFC+NFIA=4,300+(−50)=₹4,250 croreNI = NDP_{FC} + NFIA = 4{,}300 + (-50) = ₹4{,}250 \text{ crore}

Both independent routes — adjusting NFIA before depreciation/taxes, and adjusting depreciation/taxes before NFIA — arrive at the same figure, confirming the answer.

✓Final answer

National Income (NNP at Factor Cost) = ₹4,250 crore.

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