Aggregates related to national income - NDP

At factor cost, NDP equals the sum of factor incomes: compensation of employees + rent + interest + profit + mixed income. Thus profit = 6,400 − 3,500 − 360 − 290 − 1,050 = ₹1,200 crore. Option B is correct. Every listed factor income must be deducted; omitting mixed income or another component would produce an incorrect higher figure.

Net value added is obtained by subtracting intermediate consumption and depreciation from the value of output. Here, imputed rent is treated as output from the housing service: ₹4,00,000 − ₹60,000 − ₹30,000 = ₹3,10,000. Therefore, option B is correct. Option C subtracts only maintenance, while option A subtracts an excessive amount; option D adds rather than deducts the relevant costs.

NDP measures current production, so the sale value of an old machine is excluded because that machine was produced in an earlier period. However, the current brokerage service and current repair service are productive services. Their combined value is ₹70,000 + ₹90,000 = ₹1,60,000. Therefore, option C is correct; the machine price itself must not be added.

Real per capita NDP equals total real NDP divided by population. Its growth factor is therefore 1.05/1.07, not simply 1.05 − 1.07. The percentage change is [(1.05/1.07) − 1] × 100 ≈ −1.87%, so real per capita NDP falls by about 1.87%. Option A is correct; a 2% fall is only a rough subtraction approximation.

Real per capita NDP is real NDP divided by population. Therefore, its growth factor is 1.09/1.04. The percentage increase is [(1.09/1.04) − 1] × 100 = approximately 4.81%. Option A is correct. Subtracting 4 from 9 gives 5%, but that is only a rough approximation and not the exact approximate rate requested; options C and D ignore population adjustment.

The governing concept is the distinction between current production and the future capital base. Current NDP can increase because existing resources are used more intensively, even when net investment remains negative. Persistent negative net investment means depreciation exceeds gross investment, so the capital stock declines and future productive capacity weakens. Therefore option A is correct. Options B and C expand the capital base, while D improves productivity rather than weakening capacity.

Use net indirect taxes = indirect taxes − subsidies = 920 − 370 = ₹550 crore. Convert NDP at market price to NDP at factor cost: 10,200 − 550 = ₹9,650 crore. Add net factor income from abroad to obtain NNP at factor cost: 9,650 + 260 = ₹9,910 crore. Finally add depreciation to change net into gross: 9,910 + 520 = ₹10,430 crore. Therefore option C is correct.

First convert GNP to NNP by subtracting depreciation: 13,800 − 820 = ₹12,980 crore. Net factor income from abroad is 430 − 610 = −₹180 crore, so NDP at market price is NNP at market price − NFIA = 12,980 − (−180) = ₹13,160 crore. Net indirect taxes equal 760 − 280 = ₹480 crore. Subtracting them gives NDP at factor cost = 13,160 − 480 = ₹12,680 crore, option B.

First calculate net indirect taxes: NIT = indirect taxes − subsidies = ₹1,100 − ₹300 = ₹800 crore. To obtain NDP at factor cost from GDP at market price, subtract both depreciation and net indirect taxes: NDPFC = GDPMP − depreciation − NIT = ₹11,500 − ₹900 − ₹800 = ₹9,800 crore. Therefore option B is correct. Subtracting only one adjustment or adding subsidies separately without forming NIT gives the other distractor values.

The expenditure method normally gives GDP at market price when gross domestic capital formation is included. To obtain NDP directly, depreciation must already be deducted from the capital-formation component. Net domestic capital formation equals gross domestic capital formation minus depreciation, so it can replace the gross measure in the expenditure sum. Hence option A is correct; the other choices do not provide the required net domestic aggregate.

Under the expenditure method, NDP at market price equals private final consumption expenditure + government final consumption expenditure + net domestic capital formation + net exports. Therefore, NDP = ₹4,600 + ₹1,400 + ₹900 + ₹100 = ₹7,000 crore. Option C is correct. Because capital formation is already net, depreciation must not be subtracted again; doing so would understate NDP.

Per-capita real NDP equals total real NDP divided by population. With an 8% rise, output becomes 1.08 times its original value; with a 5% population rise, population becomes 1.05 times its original value. Per-capita growth = (1.08 ÷ 1.05 − 1) × 100 ≈ 2.86%. Thus option A is correct; 3% is only the subtraction approximation.

National income is NNP at factor cost. The relationship is NNP at factor cost = NDP at factor cost + NFIA. Therefore, NDP at factor cost = NNP at factor cost − NFIA = ₹12,400 crore − ₹600 crore = ₹11,800 crore. Option B is correct. Adding NFIA would incorrectly move from domestic to national rather than the reverse.

The relevant concept is economic territory, which is not identical to a country’s geographical boundaries. Offices of international organisations are generally treated under national-accounting conventions as outside the host country’s domestic territory. Consequently, their production is not normally included in India’s domestic product. It is not classified as depreciation, restricted to agriculture, or included merely because the office is physically located in India. Therefore option B is the appropriate answer.

Conventional NDP is calculated by subtracting consumption of produced fixed capital from GDP. It does not automatically subtract every loss of natural capital, pollution damage, or decline in environmental quality because these effects may not be recorded as market transactions in the standard production accounts. This limitation does not mean that the environment has no value. Green or adjusted accounting is needed to include such costs. Therefore option A is correct.

National product measures market-valued production, so expenditure on cleaning pollution or treating its effects can itself raise recorded output. However, the original loss of environmental quality, health, or natural capital may not be fully valued and deducted from NDP. In that situation, NDP increases even though some spending merely repairs damage created by pollution. Thus the measured product can overstate welfare, making option A correct.

National income is NNP at factor cost. First convert GDP at market price to NDP at factor cost: NDPFC = GDPMP − depreciation − net indirect taxes = 14,000 − 1,100 − 900 = ₹12,000 crore. Then add net factor income from abroad to change domestic factor income into national factor income: national income = 12,000 + 200 = ₹12,200 crore. Therefore option C is correct.

Use the sequence implied by the aggregate definitions. First subtract depreciation from GNP at market price: NNP at market price = ₹11,200 − ₹680 = ₹10,520 crore. Subtract NFIA to convert national to domestic: NDP at market price = ₹10,520 − ₹260 = ₹10,260 crore. Finally subtract net indirect taxes to reach factor cost: ₹10,260 − ₹490 = ₹9,770 crore. Option A is correct.

Convert NNP at factor cost to NDP at factor cost by subtracting NFIA: ₹8,750 − (−₹220) = ₹8,970 crore. Net indirect taxes equal taxes minus subsidies, or ₹680 − ₹240 = ₹440 crore. Add this valuation adjustment to obtain NDP at market price: ₹8,970 + ₹440 = ₹9,410 crore. Hence option B is correct; the negative NFIA must not be treated as positive.

First convert GDP at market price into NDP at market price by removing depreciation: ₹10,100 − ₹410 = ₹9,690 crore. The difference between NDP at market price and NDP at factor cost is net indirect taxes: ₹9,690 − ₹9,080 = ₹610 crore. Therefore option B is correct. Option D is the unadjusted GDP–NDP difference and ignores the common net basis.

The difference between NDP at market price and factor cost gives net indirect taxes: ₹8,260 − ₹7,850 = ₹410 crore. Since net indirect taxes = indirect taxes − subsidies, subsidies = ₹590 − ₹410 = ₹180 crore. Thus option A is correct. Option B is only the net-tax amount, while C is the gross tax and D has no valid basis in the given relationship.

First remove depreciation from GNP at market price: NNP at market price = ₹12,600 − ₹730 = ₹11,870 crore. Remove NFIA to obtain NDP at market price: ₹11,870 − ₹290 = ₹11,580 crore. The difference between this and NDP at factor cost is net indirect taxes: ₹11,580 − ₹11,020 = ₹560 crore. Therefore option B is correct.

First convert NDP at market price to NDP at factor cost by subtracting net indirect taxes: ₹7,920 − ₹520 = ₹7,400 crore. GDP at factor cost equals NDP at factor cost plus depreciation, so depreciation = ₹7,800 − ₹7,400 = ₹400 crore. Hence option B is correct. Option C confuses the tax adjustment with depreciation, while D uses the gross difference without valuation conversion.

Use the sequence GDP at market price − depreciation = NDP at market price, followed by NDP at market price − net indirect taxes = NDP at factor cost. Depreciation is 5.5% of 7,900 = 434.5 crore rupees, so NDP at market price is 7,465.5 crore rupees. Net indirect taxes = 7,465.5 − 6,900 = 565.5 crore rupees. Thus B is correct.

Under the value-added method, gross value added at market price equals value of output minus intermediate consumption: 2,500 − 890 = 1,610 crore rupees. Subtract depreciation to obtain net value added at market price: 1,610 − 190 = 1,420. Finally subtract net product taxes: 1,420 − 110 = 1,310 crore rupees. Hence, option A is correct.