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Unformatted text preview: GNI - D = NNI In our example, 1700 - 170 = 1530 where D = 170 (10% of 1700) The reverse operation will be: NNI + D = GNI, or 1530 + 170 = 1700 The significance of the depreciation allowance can be explained with the help of a simple example. If a farmer produces 200 quintals of grain every year then the entire produce cannot be marketed or used for his family consumption. He will keep aside say 10 quintals, to be used as seeds for the next harvest. In this case seeds worth 10 quintals is the depreciation allowance in the absence of which no output can be produced in the next harvest. Only after making the adjustment of depreciation charges what remains in the form of NNI is available for current consumption purposes. Hence it should be understood that the term 'national income' in this analysis refers to it in its net form....
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- Fall '10
- National Income