NDP Exclusion of Transfer Payments Explained
The Net Domestic Product (NDP) measures the total value of final goods and services *produced* within a country during a specific period, after accounting for depreciation.
Transfer payments are payments made by the government to individuals or households where no goods or services are produced in return. Examples include pensions, unemployment benefits, and subsidies.
Reason for Exclusion from NDP:
- NDP specifically measures current economic production.
- Transfer payments represent a redistribution of income, not a payment for a currently produced good or service.
- Since no corresponding production of goods and services occurs to match these payments, they are not included in the calculation of NDP.
Therefore, transfer payments are excluded because they do not represent any contribution to the current output of goods and services in the economy.
The correct option is: No corresponding production of goods and services has taken place to match such payments.
Important Questions from National Income Accounting
- The ratio of nominal to real Gross Domestic Product is called :
Consider the following statements:
1. Statistics day is celebrated every year on 29th July.
2. National Statistical Commission was set up in 2004.
3. The base year of Consumer Price Index (Rural) is same as that of Consumer Price Index (Urban) i.e. 2012 = 100.
Which of the above statements is/are false?- The value of the gross investment in order to accommodate regular wear and tear of capital is called:
- In India, National Income is computed by:
- As per Ministry of Statistics and Programme Implementation, which state of India has the highest per capita income for 2018-19?
