Economics • Economic BasicsHard
In the framework of regional economic accounting, how does the estimation of Gross State Value Added at basic prices differ from Gross State Domestic Product at market prices for Sikkim?
A. Gross State Value Added excludes net product taxes, whereas Gross State Domestic Product includes them.✓ Correct Answer
B. Gross State Value Added includes international tariffs, whereas Gross State Domestic Product excludes them.
C. Gross State Value Added accounts exclusively for agricultural output.
D. There is no conceptual difference between the two aggregates.
💡 Solution & Explanation
Gross State Value Added at basic prices measures output by valuing production at prices received by producers, minus taxes plus subsidies on products. Gross State Domestic Product at market prices adds net product taxes to Gross State Value Added, reflecting total consumer expenditure. This distinction helps policymakers analyze tax incidence across different producing sectors within the state.
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