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INDIAN ECONOMY > 3.National income accounting (Part 3) > Flashcards

3.National income accounting (Part 3) Flashcards

1
Q

What is the formula for GVA at basic prices?

A

GVA at basic prices = CE + OS/MI + CFC + Production taxes less Production subsidies

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2
Q

What is the formula for GDP at market price?

A

GDP = GVA at basic prices + Product taxes - Product subsidies

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3
Q

What is the formula for NDP/NNI?

A

NDP/NNI = GDP/GNI-CFC

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4
Q

What is the formula for GNI?

A

GNI = GDP + Net primary income from ROW (Receipts less payments)

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5
Q

What are the components of primary incomes?

A

Primary Incomes = CE + Property and Entrepreneurial Income

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6
Q

What is the formula for NNDI?

A

NNDI = NNI + other current transfers from ROW, net (Receipts less payments)

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7
Q

What is the formula for GNDI?

A

GNDI = NNDI+ CFC = GNI + other current transfers from ROW, net (Receipts less payments)

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8
Q

What is the formula for Gross Capital Formation (GCF)?

A

Gross Capital Formation (GCF) = Gross Savings + Net Capital Inflow from ROW

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9
Q

What are the components of GCF?

A

GCF= GFCF + CIS + Valuables + “Errors and Omissions”.

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10
Q

What is the formula for Gross Disposable Income of Govt.?

A

Gross Disposable Income of Govt. = GFCE + Gross Saving of General Government

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11
Q

What is the formula for Gross Disposable Income (GDI) of Households?

A

Gross Disposable Income (GDI) of Households = GNDI - GDI of Govt. - Grass Savings of all Corporations

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12
Q

What is India’s ranking in terms of nominal GDP in the world?

A

India is the fifth largest economy in the world in terms of nominal GDP.

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13
Q

What is India’s ranking in terms of GDP per capita in the world?

A

India is the 139th richest country in the world in terms of GDP per capita.

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14
Q

What is GDP at Purchasing power parity (PPP)?

A

GDP at Purchasing power parity (PPP) is a measure of a country’s economic output that accounts for its currency’s purchasing power, or the amount of goods and services that can be purchased with one unit of the country’s currency.

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15
Q

What is India’s ranking in terms of GDP at Purchasing power parity (PPP) in the world?

A

India is the third largest country in the world in terms of GDP at Purchasing power parity (PPP).

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16
Q

Who calculates the GDP at Purchasing power parity (PPP) for India?

A

GDP at Purchasing power parity (PPP) for India is not calculated by the Indian government, but by international agencies such as the IMF, UN, and CIA (Central Investigation Agency of USA).

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17
Q

What is Purchasing Power Parity (PPP)?

A

Purchasing power parity, or PPP, is a measurement of the cost of particular goods in various countries to compare the absolute purchasing power of currencies.

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18
Q

How is PPP calculated?

A

The PPP ratio is calculated by dividing the price of a basket of goods at one location by the price of the same basket of goods at a different location.

19
Q

What is the difference between PPP and market exchange rate?

A

The PPP inflation and exchange rate may be different from the market exchange rate because PPP takes into account the relative cost of local goods and services of the country, rather than using International market exchange rates.

20
Q

Why is GDP at PPP considered more useful than Nominal GDP?

A

GDP comparisons using PPP are generally considered more useful than those using Nominal GDP when accessing the domestic market of a state because PPP takes into account the relative cost of local goods and services of the country.

21
Q

Which country has the first largest GDP at PPP?

A

China has the first largest GDP at PPP.

22
Q

Which country has the first largest GDP at PPP?

A

China has the first largest GDP at PPP.

23
Q

What is the contribution of Agriculture to India’s GDP?

A

The contribution of Agriculture to India’s GDP is 18.8%.

24
Q

What is the contribution of the Manufacturing sector to India’s GDP?

A

The contribution of the Manufacturing sector to India’s GDP is 28.2%.

25
Q

What is the contribution of the Service sector to India’s GDP?

A

The contribution of the Service sector to India’s GDP is 53%.

26
Q

What is the difference between India’s nominal GDP and PPP GDP?

A

India is the fifth largest economy in the world in Nominal GDP, but in GDP per capita India is the 139th richest country in the world. In GDP at PPP, India is the third largest country of the world. If India’s nominal GDP in 2022 is 3.46 trillion US dollars, then in terms of PPP it will be 3.46 trillion dollars X 3.36 = 11.66 trillion US dollars.

27
Q

How is PPP calculated in terms of the exchange rate?

A

As per International monetary fund calculations in 2022, if in the USA someone wants to buy something for 1 dollar on average, but in India, we have to pay around rupees 24.1 for the same thing on average. That means the exchange rate is 1 dollar equal to 24.1, and we need to increase the GDP by 3.36 times (81 divided by 24.10).

28
Q

What is ICOR?

A

❖ICOR stands for Incremental Capital Output Ratio.
❖It measures the amount of capital required to produce one extra unit of output.

29
Q

How is efficiency related to ICOR?

A

The higher the ICOR, the less efficient we are in the usage of capital.

30
Q

What is the Harrod Domar model?

A

The Harrod Domar model states that the growth rate is equal to the investment rate divided by the ICOR.

31
Q

What factors does ICOR depend upon?

A

ICOR depends upon the choice of industries, time and cost overrun, and technology.

32
Q

How does the choice of industries affect ICOR?

A

For heavy industries like steel, cement, aluminum, etc, the ICOR will be higher.

33
Q

How does time and cost overrun affect ICOR?

A

Time and cost overrun will increase ICOR. A recent report by MoSPI stated that there is a total extra amount of money spent on delayed projects worth rupees 4.3 lakh crores.

34
Q

How does technology affect ICOR?

A

Latest technology leads to lesser ICOR and old technology leads to more ICOR.

35
Q

What was the total extra cost incurred on delayed projects as per the MoSPI report?

A

As per the MoSPI report on 22nd February 2023, the total extra amount of money spent on delayed projects is rupees 4.5 lakh crores.

36
Q

How many government projects costing more than 150 crore rupees were hit by cost overruns as per the MoSPI report?

A

As per the MoSPI report, 343 government projects that cost more than 150 crore rupees were hit by cost overruns.

37
Q

How much was the original cost of implementation of the government projects according to the MoSPI report?

A

The original cost of implementation of the government projects was 20.35 lakh crore rupees, which is now 24.86 lakh crore.

38
Q

How many delayed projects were delayed by more than 60 months out of the total 835 delayed projects according to the MoSPI report?

A

Around 130 projects have been delayed by more than 60 months out of the total 835 delayed projects according to the MoSPI report.

39
Q

What is Net Disposable Income?

A

Net Disposable Income is the earned income left after tax deductions.

40
Q

How is discretionary income calculated?

A

Discretionary income is calculated by subtracting the amount of money needed for basic necessities like food, shelter, and clothing from Net Disposable Income.

41
Q

What is the significance of Net Disposable Income?

A

Net Disposable Income is important because it reflects the amount of money an individual has available for spending after taxes. It is the income that can be used for both necessary expenses and discretionary spending.

42
Q

How is Net Disposable Income different from Gross Income?

A

Gross Income is the total income earned before any deductions, such as taxes or social security. Net Disposable Income is the income left over after taxes and other deductions have been taken out.

43
Q

What is the importance of discretionary income?

A

Discretionary income is important because it reflects the amount of money an individual has available for non-essential purchases. It is used to determine an individual’s purchasing power and can be used for things like vacations, entertainment, and luxury items.

INDIAN ECONOMY (35 decks)

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