Q.From the following data, calculate National Income by the Income Method:
Compensation of Employees = ₹1,80,000 crore; Rent = ₹25,000 crore; Interest = ₹30,000 crore; Profit = ₹40,000 crore; Mixed Income of Self-Employed = ₹1,10,000 crore; Net Factor Income from Abroad = ₹5,000 crore. (Note: transfer payments of ₹15,000 crore were also received by households in the same period — state whether they should be included.)

National Income by the income method is the sum of factor incomes for current production, plus NFIA to move from domestic to national income; transfer payments are never included because they are not payment for current production. …

Step 1 — Domestic factor income (Net Domestic Product at Factor Cost):

Step 2 — add NFIA to move from domestic to national income:

On the transfer payments: the ₹15,000 crore of transfer payments must be excluded. Under the income method, only factor incomes earned in exchange for a current productive contribution (labour, land, capital, enterprise) are counted. A transfer payment — a pension, scholarship or interest on public debt — is received without the recipient supplying any current factor service, so including it would count income that was never actually generated by this year's production, inflating National Income artificially. …

Adding transfer payments into the income-method total (they belong only in the NI-to-Personal-Income conversion, never in NI itself); forget …