Question

Calculate Subsidies Items Rs.in crores GNP FC 27710 Consumption of fixed capital 4000 Indirect taxes 120 NDP MP 24000 Factor income to abroad 600 Factor income from abroad 400

Answer 1

Answer:

GNPfc = NDPmp + dep +NFIA - NIT

27,710 = 24,000 + 4000 + (400-600) - (120 - 0)

27,170 = 28,000 -200 -120 - sub

27,710 = 27,680 - sub

sub = 27,710 - 27,680

sub = 30

Answer 2

Subsidies are Rs. 30 crores.

1. GNPfc = GNPmp - Indirect taxes + subsidies
2. GNPmp = GDPmp + Factor income from abroad- Factor income to abroad
3. GDPmp = NDPmp +Depriciation/ consumption of fixed capital

Therefore, GNPfc can be re-written as

GNPfc = GNPmp - Indirect taxes + subsidies

OR

= GDPmp + Factor income from abroad- Factor income to abroad - Indirect taxes + subsidies

OR

= NDPmp +Depriciation/ consumption of fixed capital+ Factor income from abroad- Factor income to abroad - Indirect taxes + subsidies.

Therefore subsidies can be calculated as follows:

Putting all the values in the formula of

GNPfc = NDPmp +Depriciation/ consumption of fixed capital+ Factor income from abroad- Factor income to abroad - Indirect taxes + subsidies.

27710 = 24000+4000+400-600-120+ subsidies

⇒ subsidies = 27710-24000-4000-400+600+120

= 30