NATIONAL INCOME PROBLEMS

VALUE ADDED METHOD

Q1. Find NVAfc (NDPfc) from the following:

NDPmp 114
Sales 800
Taxes on production 50
Depreciation 70
Opening stock 100
Closing stock 80
Intermediate cost 200

Solution: [Note- we get GVAmp = GDPmp from value added method]

GDPmp = value of output – intermediate cost

= sales + change in stock – intermediate cost

= sales + (closing – opening stock) – intermediate cost

= 800 -20 -200 = 580

NVAfc = GDPmp – Depreciation – taxes on production = 580 – 70 – 50 = 460

Q2. Calculate GVAmp from the following:

Purchase by firm A from firm B 100

Purchase by firm B from firm A 150
Sales by firm A 200
Sales by firm B 300
Exports by firm B 30
Change in stock of firm A (-)20
Change in stock of firm B 10

Solution: [GVAmp = GDPmp]

(i) GVAmp by firm A = sales + change in stock – intermediate cost

= 200 -20 – 100 = 80
(ii) GVAmp by firm B = sales + change in stock – intermediate cost
= 300 + 10 – 150 = 160
Note: Domestic sales + exports together will be added for sales but if sales is given alone
then no need to add exports separately.
 Q3. Calculate NVAfc.
GST 25
Depreciation 5
Closing stock 10
Opening stock 20
Corporate tax 15
Sales 540
Purchase of raw materials 140

(i) Solution: GVAmp = sales + change in stock – intermediate cost

= 540 + (10-20) – 140 = 390
NVAfc = GDPmp – depreciation – GST
= 390 – 5 – 25 = 360

Q4. Calculate GVAmp.

Goods and Services tax 40
Consumption of fixed capital (D) 15
Closing stock 20
Sales 700
Subsidy 5
Intermediate consumption 400
Opening stock 10

Solution: GVAmp = sales + change in stock – intermediate consumption

= 700 + 20-10 – 400 = 310

Q5. Calculate GVAmp.

Goods and Services tax 30
Sales 800
Depreciation 50
Net change in stocks -40
Purchase of raw material 360
Corporate tax 10

Solution: GVAmp = sales + change in stock – intermediate consumption

= 800 – 40 – 360 = 400
Q6. Calculate NVAfc.
Subsidies 5
Sales 500
Intermediate consumption 200
Closing stock 40
Consumption of fixed capital 60
Indirect tax 30
Opening stock 50
 Solution: GVAmp = sales + change in stock – intermediate consumption
= 500 + (40 – 50) – 200 = 290
NVAfc = GVAmp – consumption of fixed capital – Net indirect tax
= 290 – 60 – (30 – 5) = 230 – 25 = 205
[ Net indirect tax (NIT) = Indirect tax – Subsidy ]

Q7. Calculate value added by firm A and B from the following data:

Purchases by firm B from firm A 40

Sales by firm B 80
Imports by firm B 10
Rent paid by firm B 5
Opening stock of firm B 15
Closing stock of firm B 20
Purchases by firm A from firm B 20
Closing stock of firm A 20
Opening stock of firm A 10

Solution: GVAmp of Firm A = sales + change in stock – intermediate consumption

= 40 + 20 – 10 – 20 = 30

GVAmp of Firm B = sales + change in stock – intermediate consumption

= 80 + 20 -15 – 40 – 10 = 35

Q. 8. Calculate NVAfc.

Total sales 1000

Decrease in stock 70
Production of self consumption 120
Purchase of raw material 300
Exports 150
Electricity charges 50
Income tax 20
Subsidy 40
Goods and services tax 70

Solution: GDPmp = value of output – intermediate consumption

= Sales + change in stock – intermediate consumption

= Sales + Production of self consumption – decrease in stock – [purchase of raw

material + electricity charges ]

= 1000 + 120 – 70 – [300 + 50] = 1120 – 70 -350 = 700

NVAfc = GDPmp – NIT – D = 700 – (70-40) – 0 = 670

Income method (NDPfc - Domestic income)

Q1. Calculate NNPfc national income.

Rent 80
Interest 100
Profit 210
Tax on profits 30
Net indirect tax 60
Mixed income of self employed 250
Employees’ contribution to social security schemes 25
Compensation of employees 500
NFIA -20
Employer’s contribution to social security schemes 50

Solution: NDPfc = profit + rent + interest + mixed income + compensation of employees

= 210 + 80 + 100 + 250 + 500 = 1140

NNPfc = NDPfc + NFIA = 1140 – 20 = 1120

Q2. Calculate national income (NNPfc).

Compensation of employees 400

Profits 200
Rent 150
Interest 100
Dividends 120
Direct tax 100
NFIA -50
Mixed income of self employed 500
Employers’ contribution to social security schemes 40

Solution: NDPfc = profit + rent + interest + mixed income + compensation of employees

= 200 + 150 + 100 + 500 + 400 = 1350

NNPfc = NDPfc + NFIA = 1350 – 50 = 1300

Q3. Calculate NI (NNPfc).

Mixed income of self employed 200
Old age pension 20
Dividends 100
Operating surplus 900
Wages and salaries 500
Profits 400
Employer’s contribution to social security schemes 50
NFIA -10
Consumption of fixed capital (Depreciation) 50
Net indirect tax 50

Solution: NDPfc = Operating surplus + mixed income of self employed + compensation of employees

= OS + MI + wages and salaries + employer’s contribution

= 900 + 200 + 500 + 50 = 1650

NNPfc = NDPfc + NFIA = 1650 – 10 = 1640

{old age pension is a transfer payment do will not be included in NI}

Q4. Calculate GNPMP.

Wages 5000
Employer’s contribution to social scheme 1000
Employees’ contribution to social scheme 2000
Pension on retirement 800
NFIA -80
Consumption of fixed capital 50
Net indirect taxes 200
Profit 300
Rent 700
Mixed income 3000

Answer:- Income method to be used (NDPFC)

NDPFC = Compensation of employees + Operating Surplus + Mixed Income

= (Wages + Employer’s contribution + Pension on retirement) + (Profit +Rent) + Mixed

Income

= 5000 + 1000 + 800 + 300 +700 + 3000 = 10800 crores

GNPMP = NDPFC + Depreciation + NFIA + NIT

 10800 + 50 – 80 + 200 = 10970 crores

Q5. Calculate GNPmp by income method.

Rent 20
Interest 30
Dividend 45
Undistributed profit 5
Corporate tax 10
Compensation of employees 400
Consumption of fixed capital 10
Net indirect tax 50
Net factor income from abroad -10

Solution:

NDPfc = rent + interest + dividend + undistributed profit + corporate tax + compensation of

employees

= 20 + 30 + 45 + 5 + 10 + 400 = 510

GNPmp = NDPfc + Depreciation + NFIA + NIT = 510 + 10 -10 + 50 = 560

Q6. Calculate ‘Operating Surplus’ and ‘Domestic income (NDPfc)’.

Compensation of employees 2000

Rent and interest 800
Indirect taxes 120
Corporation tax 460
Consumption of fixed capital 100
Subsidies 20
Dividend 940
Net factor income to abroad 150
Mixed income 200
Undistributed profit 300
Solution: [we get NDPfc from income method.]

{Note: Corporate tax is also known as corporation tax or company tax is a direct tax)

NDPfc = Profits + Rent + Interest + Mixed income + compensation of employees

= (corporation tax + undistributed profit + dividend) + 800 + 200 + 2000

= (460 + 300 + 940) + 3000 = 4700 crores

Operating surplus = profits + rent + interest

= 1700 + 800 = 2500 crores

Expenditure method

Q1. Calculate GDPmp from the following:-

Consumption of fixed capital 50

Closing stock 40
Private final consumption expenditure 500
Opening stock 60
NFIA -35
Exports 25
Government final consumption expenditure 200
Imports 40
NIT 100
Net domestic capital formation 300

Solution: We get GDPmp from expenditure method.

[Note: Gross domestic capital formation = net domestic capital formation + D)

GDPmp = Private final consumption expenditure + Government final consumption expenditure

+ Net exports ( exports – imports) + Gross domestic capital formation (Net domestic capital
formation + consumption of fixed capital)

= 500 + 200 + (25 – 40 ) + (300 + 50) = 1050 – 15 = 1035

Q2. Calculate GNPmp by (a) expenditure method [GDPmp] (b) income method [NDPfc]

Compensation of employees 100

Private final consumption expenditure 200
Rent 20
Government final consumption expenditure 50
Profits 10
Interest 10
Gross domestic capital formation 60
Net imports 10
Consumption of fixed capital 20
Net indirect tax 30
Net factor income from abroad -20
Change in stocks 10
Mixed income 110

a) Expenditure method (GDPmp)

[Note: Net imports = imports – exports and
Net exports = exports – imports]
GDPmp = private final consumption expenditure + gross domestic capital formation +
government final consumption expenditure + Net exports (exports – imports)
= 200 + 60 + 50 + (-10) = 300
GNPmp = GDPmp + NFIA = 300 + (-20) = 280

b) Income method (NDPFC)

NDPfc = compensation of employees + profits + rent + interest + mixed income
= 100 + 10 + 20 + 10 + 110 = 250
GNPmp = NDPfc + D + NIT + NFIA = 250 + 20 + 30 + (-20) = 280

Q3. Calculate national income (NNPfc):

Current transfer by government 15
Private final consumption expenditure 400
Net current transfer from the world 20
Government final consumption expenditure 100
Net factor income from abroad -10
Net domestic capital formation 80
Consumption of fixed capital 50
Net exports 40
Net indirect taxes 60

GDPmp = PFCE + GFCE + Net exports + Gross domestic capital formation ( net domestic
capital formation + consumption of fixed capital)
= 400 + 100 + 40 + 80 + 50 = 670
NNPfc = GDPmp – NIT – D + NFIA = 670 – 60 – 50 – 10 = 550 crores

Q4. Calculate value of output from the following data:

Net value added at factor cost 100
Intermediate consumption 75
Goods and services tax 20
Subsidy 5
Depreciation 10
 Solution: Value added method will be used (GVAmp = GDPmp)

GDPmp = value of output – intermediate consumption

Value of output = GDPmp + intermediate consumption

= NVAfc + D + NIT (indirect tax – subsidy) + 75 = 100 + 10 + 20 – 5 + 75 = 200

Q5. Calculate intermediate consumption from the following data.

Value of output 200

Net value added at factor cost 80
Goods and services tax 15
Subsidy 5
Depreciation 20

Solution: GDPmp = value of output – intermediate consumption

Intermediate consumption = Value of output – GDPmp

= value of output – [NVAfc + D + NIT]

= 200 – [80 + 20 + 10 ] = 200 – 110 = 90 crores

Q6. Calculate Sales from the following data:

Net value added at factor cost 300

Intermediate consumption 200
Indirect tax 20
Depreciation 30
Change in stocks -50

Solution: GDPmp = Value of output – intermediate consumption

= Sales + change in stock – intermediate consumption

Sales = GDPmp – Change in stock + IC

= NVAfc + D + NIT – [-50] + 200

= 300 + 30 + 20 + 50 + 200 = 600 crores

Q7. Given the following data, find the missing values of “private final consumption
expenditure and ‘operating surplus’.

National income (NNPfc) 50000

Net indirect taxes 1000
Private final consumption expenditure ?
Gross domestic capital formation 17000
Profits 1000
Government final consumption expenditure 12500
Wages and salaries 20000
Mixed income of self employed 13000
Operating surplus ?
Net factor income from abroad 500
Net exports 2000
Consumption of fixed capital 700

Solution: [we get from Expenditure method: GDPmp]

(i) GDPmp = PFCE + GFCE + GDCF + Net exports

NNPfc + D – NFIA + NIT = PFCE + 12500 + 17000 + 2000

50000 + 700 – 500 + 1000 = PFCE + 31500

PFCE = 51200 – 31500 = 19700 crores.

[we get from Income method: NDPfc]

(ii) NDPfc = operating surplus + mixed income of self employed + compensation of

employees (wages and salaries)
NNPfc – NFIA = Operating Surplus + 13000 + 20000
50000 – 500 = OS + 33000
OS = 50000 – 33500 = 16500crores

Q8. Find the missing value of ‘GDCF’ and ‘Wages and Salaries’.
Mixed income of self employed 3500
Net indirect taxes 300
Wages and salaries ?
Government final consumption expenditure 14000
Net exports 3000
Consumption of fixed capital 300
Net factor income from abroad 700
National income (NNPfc) 30000
Profits 500
Gross domestic capital formation ?
Private final consumption expenditure 11000
Operating surplus 12000

Solution: Expenditure method : GDPmp

(i) GDPmp = PFCE + GFCE + GDCF + Net exports
NNPfc + D – NFIA + NIT = 11000 + 14000 + GDCF + 3000
30000 + 300 – 700 + 300 = GDCF + 28000
GDCF = 29900 – 28000 = 1900crores
(ii) Income method : NDPfc
NDPfc = Operating surplus + mixed income + wages and salaries
NNPfc – NFIA = 12000 + 3500 + Wages and salaries
30000 – 700 = 15500 + Wages and salaries
Wages and salaries = 29300 – 15500 = 13800 crores

Q9. Calculate NDPfc.

Private final consumption expenditure 8000
Government final consumption expenditure 1000
Exports 70
Imports 120
Consumption of fixed capital 60
Gross domestic fixed capital formation 500
Net current transfer to abroad -30
Indirect taxes 700
Subsidies 50
Change in stock 100
Factor income from abroad 90
Factor income to abroad 40

Solution: GDPmp = PFCE + GFCE + GDCF + Net exports

= 8000 + 1000 + (GDFCF + change in stock) + exports – imports
= 9000 + 500 + 100 + 70 – 120 = 9550
NDPfc = GDPmp – D – NIT (IT – subsidy) = 9550 – 60 – (700 – 50) = 8840 crores
Q. Calculate sales from the following data.

Ans :

Nominal GDP and Real GDP

Formula:

Real GDP (at constant price) =

Q1.If nominal GDP is rs15000 crores and real GDP is rs12000 crores, then find GDP deflator.

Solution: GDP Deflator (Price index) = Nominal GDP/ Real GDP x 100

15000/12000 x100 = 125

Q2. If the nominal GDP is rs1200 and price index (with base = 100) is 120, calculate Real GDP.

Solution: Real GDP = [Nominal GDP / price index] x 100 = [1200 / 120] x 100 = rs1000

Q3. If the real GDP is rs300 and nominal GDP is rs330, calculate price index (base=100).

Solution: Price index = Nominal GDP/Real GDP x 100 = 330/300 x 100 = 110.

Q4. If real GDP is rs500 and price index is 125. Calculate Nominal GDP.

Solution: Nominal GDP = Real GDP x price index /100 = 500 x 125 / 100 = 625

National Income at current price and constant price

National income at constant price =

(National income at constant price is also known as Real National

Income.)

Q1. If price index for the current year is 150 and the national income
at current price is ₹150000 crores, then the national income at
constant price will be :

Solution: NI at constant price = = ₹1,00,000 crores

Some of the major items whether included or excluded in
national income are as follows:
1. Construction of a new house.

Yes, it will be included in the national income as it is a part of capital

formation and leads to production of goods and services in the
economy.

2. Winning of a lottery prize.

No, it will not be included in the national income as it does not add to
the flow of goods and services in the economy.

3. Increase in the prices of stocks lying with a trader.

No, it will not be included in the national income as it does not

amount to any flow of goods.

4. National debt interest.

OR

Interest on public debt.

No, it is not included in the national income as it is the interest paid

on loans taken by government to meet its consumption purposes.

5. Rent-free house given to an employee by an employer.

Yes, it is included in the national income by Income Method since it is
a part of ‘wages in kind’ paid to employees.

6. Profit earned by foreign banks in India.

No, it is not included in the national income as it is a part of the factor

income paid abroad. It is subtracted from domestic income to get
national income.

7. Purchases by foreign tourists.

OR

Food purchased by a foreign tourist at a hotel in New Delhi.

Yes, purchases by foreign tourists are ‘exports’ and, therefore, they are
included in the national income through the Expenditure Method.

8. Rent received by Indian residents on their buildings rented out to

foreigners in India.

Yes, it will be included in the national income as it is a part of the

factor income from abroad.

9. Payment of fees to a lawyer engaged by a firm.

It is an intermediate expenditure for the firm because it involves

purchase of services by one production unit (firm) from another
production unit (lawyer). So, it is deducted from the value of output of
the firm to arrive at the value added. So, it is not included in national
income.
10. Free medical facilities by the employer.

Free boarding and lodging provided to a domestic servant.

Yes. It will be included in national income as these free services are

part of compensation to employees.

11. Gifts received from abroad.

OR

Gift received from employer.

National income as gifts received are transfer incomes.

12. Profits of Reliance Industries from its chemicals business in

Australia.

Yes, it will be included in the national income as it is a part of the

factor income from abroad.

13. Salaries received by Indian residents working in Russian Embassy

in India.

Yes, it will be included in the national income as it is a pan of factor

income from abroad.

14. Subsidized lunch served to workers in a factory.

OR

Firm incurred expenditure on medical treatment of employee’s family.

Yes, it is a part of the compensation of employees and, therefore, it will
be included in the national income.

15. Old age pension

No, it will not be included in the national income as it is a transfer

payment made by the government and a transfer income for the
receiver.

Old age pension must not be confused with retirement pension. Old
age pension is not included in national income as it is a transfer
payment. On the other hand, retirement pension is included in
national income as it is a part of COE.

16. Durable goods purchased by a household.

OR

Purchase of car by a household.

Yes, it will be included in the national income as it is a part of the

private final consumption expenditure.

17. Profits earned by an Indian bank from its branches abroad.

Yes, they will be included in the national income as they are a part of
the factor income from abroad.

18. Earnings of shareholders from the sale of shares.

No, it will not be included in the national income as it is a financial
claim and does not contribute to any productive activity.

19. Expenditure on advertisement by a firm.

OR

Commodities used in scientific research.

No, it will not be included in the national income as it is a part of

intermediate consumption expenditure.

20. Petrol used in police vehicles.

No, it will not be included in national income as petrol is an

intermediate good in this case. It is used for the provision of the final
product (maintenance of law and order by the police).

21. Financial help received by flood victims.

No, it will not be included in the national income as it is a transfer

income.

22. Purchase of a machine by a factory. {CBSE, All India Comptt.

2006}

OR

Purchase of a new taxi by a taxi-driver.

Yes, it will be included in the national income as it is a part of the gross
domestic capital formation.

23. Royalty

Yes, it will be included in the national income as royalty is a

productive income.

24. Commission on sale of second-hand goods.

OR

Brokerage payment on sale of shares.

Yes, it will be included in the national income as it is the income of a

middleman for his productive services to various parties.

25. Dividend received by an Indian from his investment in shares of a

foreign company.

{CBSE, Delhi 2010} Yes, it will be included in the national income as it

is factor income from abroad.

26. Purchase of raw materials by a production unit.

OR

Milk purchased by a Sweet shop to make milk-cake.

No, it will not be included in the national income as it is a part of the

intermediate consumption expenditure.
27. Earnings of a self-employed doctor having a clinic at his own
residence.

Yes, it will be included in the national income as it is a mixed income.

28. Money received from sale of second-hand goods.

OR

Money received by government from sale of a public sector firm to a

private owner.

No, it will not be included in the national income because receipts

from the sale of secondhand goods are by virtue of transfer of an
already existing object.

29. Imputed rent of self occupied houses.

Yes, it will be included in the national income as people living in such

houses enjoy housing services similar to those in rented houses.

30. Contribution to provident fund by employer.

OR

Value of interest foregone on loans provided by employer to employee.

Yes, it will be included in the national income as it is a part of the

compensation to employees.
31. Wheat grown by a farmer but used entirely for family’s
consumption.

Yes, it is included in the national income because it adds to the current

flow of goods and services. Therefore, its imputed value should be
included.

32. Expenditure on the construction of a flyover by the government.

Yes, it will be included in the national income as it is a part of gross

domestic capital formation.

33. Commission received by a dealer from the buyer and seller of a

house.

Yes, it will be included in the national income as it is the income of the

dealer for his productive services.

34. Growing vegetables in a kitchen garden of the house.

No, it will not be included in the national income as it is difficult to

estimate the value of production (It is a non-market transaction).

35. Services rendered by family members to each other

No, it will not be included in the national income as it is difficult to

determine the value of services provided by family members to each
other.

36. Expenditure by government in providing free education.

OR

Expenditure on free services provided by government.

Yes, it will be included in the national income as it is a part of the

government final consumption expenditure.

37. Insurance premium paid by employees.

OR

Fees received from student.

Yes, it is included in the national income as it is a part of the private

final consumption expenditure.

38. Mineral wealth of a nation.

It is a part of National wealth and is not included in national income.

However, that part of mineral wealth which has been extracted during
the current year will be included in national income under the product
method.

39. Value of wood purchased for manufacturing a table.

OR

Expenditures on the purchase of cold drinks by a school canteen from

the manufacturer.

OR
Transport expenses by a firm.

No, it will not be included in the national income as it is a part of

intermediate consumption expenditure.

40. Purchase of equipment’s for installation in a factory.

Yes, it will be included in the national income as it is a part of capital

formation.

41. Payment of wealth tax.

OR

Payment of Death duty.

No, it will not be included in the national income as it is a compulsory

transfer payment to the government.

42. Entertainment tax received by the government.

No, it will not be included in the national income as it is an indirect tax

and a compulsory transfer payment received by the government.

43. Salaries paid to Russians working in Indian Embassy in Russia.

No, it is not included in the national income as it is a part of the factor

income paid abroad. It is subtracted from domestic income to get
national income.
44. Capital gains to Indian residents from sale of shares of a foreign
company.

No, capital gains will not be included in the national income as they do
not add to the current flow of goods and services in the economy.

45. Harish works in USA and sends money to his family in India.

No, it will not be included in the national income as it is a transfer

payment.

46. Destruction of building due to an earthquake.

No, it will not be included in the national income as it will not affect
national product directly.

47. HP uses its own new Laptops in its office for self-consumption.

Yes, it is included in the national income as it adds to current flow of

goods and services. Therefore, imputed value of laptops should be
included.

48. Purchase of a truck to carry goods by a production unit.

Yes, it will be included in the national income as it is a part of the gross

domestic capital formation.

49. Direct purchase made abroad by government.

Yes, it will be included in the national income as it is a part of the

government final consumption expenditure.
50. Earning from a part time job in McDonalds by a student.

Yes, it is included in the national income as it is an income received for

productive services.

51. Receipt from sale of property, inherited from a relative.

No, it will not be included in the national income as receipt from sale
of such property is by virtue of transfer of an already existing object.

52. Entertainment allowance to an employee for entertaining business

guests.

No, it will not be included in the national income as it is intermediate

consumption expenditure of the business.

53. Expenditure on the purchase of shares of a new company.

OR

Sale of bonds by a company.

No, it will not be included in the national income as it is a financial

claim and does not contribute to any productive activity.

54. Goods lying within the production boundary.

No, such goods will not be including ‘ in national income as goods

lying within the production boundary are intermediate goods.

55. Money received by a family in India from relatives working abroad.

No, it will not be included in the national income as it is a transfer
receipt.

56. Dividend received by a foreigner from investment in shares of an

Indian company.

No, it is not included in the national income as it is a part of factor

income paid abroad. It is subtracted from domestic income to get
national income.

57. Expenditure by father on marriage of his daughter.

No, it will not be included in the national income as it does not add to
current flow of goods and services.

58. Expenditure on the purchase of an old house.

OR

Purchase of house by the tenant.

OR

Purchase of rented factory building by the factory owner.

No, it will not be included in the national income because payment for
purchase of secondhand goods is due to transfer of an already existing
object.

59. Insurance money received from Oriental Insurance due to

destruction of factory due to fire.
No, it is not included in the national income because it is a transfer
receipt.

60. Interest paid by banks on deposits by individuals.

OR

Payment of interest by a government firm.

OR

Payment of interest by a firm

Yes, it will be included in the national income as such interest is paid

on loan taken for productive purpose. It is a factor payment by a
producer.

61. Interest received on loans given to a friend for purchasing a car.

OR

Interest payment on loan taken by an individual to buy a motor cycle.

OR

Payment of interest on a loan taken by an employee from the

employer.

No, it will not be included in the national income because it is a non-

factor receipt as the loan is not used for production but for
consumption.
62. Interest received on loan given to a foreign company in India.

Yes, it will be included in national income as it is a part of factor

income from abroad.

63. Interest received on debentures.

Yes, it will be included in the national income as such interest received

is a factor income because debenture is a sort of loan taken by a
production unit.

64. Expenditure on improvement of fixed capital asset.

OR

Expenditure on construction of a house.

OR

Expenditures on adding a floor to the building.

Yes, it will be included in the national income as it is a part of capital

formation.

It must be noted that any expenditure on repairs of fixed assets will

not be included in national income.

65. Scholarship given to Indian students studying in India by a foreign

company.

OR
Expenditure by the Government on scholarships to students.

No, it will not be included in the national income as it is a transfer

payment.

66. Value of bonus shares received by shareholders of a company.

No, it will not be included in the national income as such bonus shares
are mere paper claims and do not contribute to the production of
goods and services.

67. Pension paid after retirement.

Yes, it is a part of the compensation of employees and, therefore, it will

be included in the national income.

68. Expenditure on maintenance of building.

OR

Expenditure on maintenance by a firm.

No, it will not be included in the national income as it is a part of

intermediate consumption expenditure.

69. Payment of interest on borrowings by general government.

No, it will not be included in national income because it is a non-factor

payment as general government borrows only for consumption
purpose.
70. Family members working free on farm owned by family.

Yes, Imputed salaries of these members will be included in national

income.

71. Payment of bonus by a firm.

Yes, it will be included in the national income as it is a part of the

compensation to employees.

72. Purchase of tractor by a farmer.

Yes, it will be included in the national income as it is a part of the

capital formation or investment by the farmer.

73. Expenditure on fertilizers by a farmer.

No, it will not be included in the national income as it is intermediate

cost for the farmer and deducted from value of output while arriving at
national income.

74. Purchase of furniture by a firm.

Yes, it will be included in the national income as it is a part of the

capital formation or investment by the firm.

75. Expenditure on education of children by a family.

Yes, it is included in the national income as it is a part of the private

final consumption expenditure.
76. Payment of electricity bill by a school.

No, it will not be included in the national income as it is intermediate

cost for the school and deducted from value of output while arriving at
national income.

77. Payment of excise duty by a firm.

No, it will not be included in the national income as it is an indirect tax

paid by the firm.

78. Festival gift from an employer.

No, it will not be included in the national income as it is merely a

transfer payment.

79. Contribution to provident fund by employees.

No, it is not included in the national income because such contribution

is made by the employees from compensation of employees only. So, it
is not separately included in the estimation of national income.