(a) State the steps pertaining to the estimation of National Income by Income Method. (b) "In the past few decades, Indian economy has been fairly benefitted by positive externalities created by rapid rise in infrastructure." Justify the given statement with valid arguments.

Question

Accepted Answer

(a) Steps for Income Method:
Step 1: Identify and classify all producing enterprises into primary, secondary, and tertiary sectors.
Step 2: Estimate factor incomes paid by each sector under heads: Compensation of Employees, Rent and Royalty, Interest, Profit, and Mixed Income.
Step 3: Calculate Domestic Income (NDP_FC) by summing all factor incomes.
Step 4: Add Net Factor Income from Abroad (NFIA) to get National Income (NNP_FC).

(b) Positive externalities have benefited the Indian economy through:
- Education and skill development creating a more productive workforce
- Technology spillovers from multinational corporations
- Infrastructure development (roads, ports) benefiting surrounding businesses
- Public health programs reducing disease burden and increasing productivity