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Comparison-Value Added method vs Income Method of Measurement of National Income
Example 24
From the following information, estimate:
(i) Value of output;
(ii) Net value added at factor cost;
(iii) Prove that income generated is equal to net value added at factor cost.
| Particulars | ₹ in Crores |
| (i) Increase in unsold stock | 600 |
| (ii) Sales | 10,625 |
| (iii) Purchase of raw materials | 2,625 |
| (iv) Indirect Taxes | 1,200 |
| (v) Subsidies | 400 |
| (vi) Operating surplus | 3,740 |
| (vii) Mixed incomes | 100 |
| (viii) Wages and Salaries | 3,460 |
| (ix) Depreciation | 500 |
Answer
In this question, we have to Calculate National Income using both
Value Added Method and Income Method
Value Added Method
Income Method
| Calculation of National Income | |
| Different Factor Incomes | |
| Operating Surplus | 3740 |
| Compensation to Employees | 3460 |
| Mixed Income | 100 |
| Total (Domestic Income NDP FC ) | 7300 |
| Add NFIA | 0 |
| NNP FC (National income) | 7300 |
Question 21
From the data given below, prove that "Net Value Added at Factor Cost' is equal to 'Income Generated.
| Particulars | Rs in crores |
| (i) Opening stock | 200 |
| (ii) Closing stock | 400 |
| (iii) Purchase of raw materials | 300 |
| (iv) Sales | 1,200 |
| (v) Corporate tax | 100 |
| (vi) Undistributed profits | 50 |
| (vii) Dividends | 50 |
| (viii) Rent | 150 |
| (ix) Interest | 100 |
| (x) Depreciation | 200 |
| (xi) Indirect taxes | 150 |
| (xii) Subsidies | 50 |
| (xiii) Wages and salaries | 350 |
Answer
Income Method
