Question

From the following data, calculate Personal Income and Personal Disposable Income.

| | | Rs (Crore) |
| (a) | Net Domestic Product at factor cost | 8,000 |
| (b) | Net Factor Income from abroad | 200 |
| (C) | Undisbursed Profit | 1,000 |
| (d) | Corporate Tax | 1,000 |
| (e) | Interest Received by Households | 1,500 |
| (f) | Interest Paid by Households | 1,200 |
| (g) | Transfer Income | 300 |
| (h) | Personal Tax | 500 |

Answer 1

Personal Income = NDPFC + Net factor income from abroad (NFIA) + Transfer Income - Undistributed profit - corporate tax - Net interest paid by households

NDPFC = Rs.8000crores

NFIA = Rs.200crores
Transfer Income = Rs.300crores
Undistributed profit = Rs. 1,000crores
Corporate tax = Rs.500crores
Net interest paid by households = Interest paid - Interest received
= 1200 – 1500
= (-) Rs.300crores
So, putting the values in the above formula

PI = 8000 + 200 + 300 - 1000 - 500 - (- 300)
= 8000 + 200 + 300 - 1000 - 500 + 300
PI = 7300
So, Personal Income = Rs.7300crores
Personal Disposable income = Personal Income - Personal Payments
= 7300 – 500
= Rs.6800crores