The question gives you the data for two producers — a Farmer and a Baker. The key concept here is Value Added, which is defined as:

For the Farmer:

• Total Production = ₹100 crore
• Intermediate Consumption = ₹0 crore
• Value Added = $100 - 0 = 100$ crore (this matches the table).

For the Baker:

• Total Production = ₹200 crore …

The concept of value added is one of the most important ideas in national income accounting. It prevents the problem of double counting — where the same output gets counted more than once as it moves through different stages of production.

Think about what a baker does. The baker takes flour, sugar, and other inputs (intermediate goods) and turns them into bread, cakes, and biscuits. The baker's contribution to the economy is not the full selling price of the final goods — because part of that price simply covers the cost of the raw materials bought from the farmer. The baker's own contribution is the extra value created by the baking process: the wages paid to workers, the rent for the shop, the profit earned, and so on.

That extra contribution is exactly the value added. It is calculated as:

Now apply this to the given table.

The Baker’s Total Production is ₹200 crore. This is the total market value of everything the baker produces (bread, cakes, etc.).

The Baker’s Intermediate Consumption is ₹50 crore. This is the cost of all the raw materials and inputs bought from other producers — in this case, primarily the flour and other ingredients purchased from the Farmer.

So the Baker’s Value Added is:

$\text{Value Added (Baker)} = 200 - 50 = 150 \text{ crore rupees}$ …