How will you treat the following in estimating National Income of India? Give reasons for your
answer.
(i) Value of bonus shares received by shareholders of a company.
(ii) Fees received from students.
(iii) Interest received on loan given to a foreign company in India.
(i) Value of bonus shares received by shareholders of a company is not included in the estimation of National Income of India because these are just financial transactions, not contributing to the flow of goods and services in the economy.
(ii) From the students’ point of view, expenditure on fees is to be treated as a part of private final consumption expenditure. Accordingly, it is to be included in National Income when expenditure method is used to estimate it. However, from the school’s point of view, fee received is just a revenue from the sale of services.
(iii) Interest received on loan given to a foreign company in India is included in estimating National Income of India as a part of Net Factor Income from Abroad.