If a company say XYZ limited is manufacturing 30crore national flags for “Har ghar tiranga campaign” on govt’s order. The cost to the company is RS. 30 (Factor cost) . The company is supplying it to govt for Rs. 35. The govt is now distributing it free to public. While distribution labour were engaged and services worth 50Lacs were generated . Which of the above scenarios will form the part of national income and by what amount ? Can we consider govt supplying national flags to public for free as transfer payments and transfer payments do not form part of the national income , what will be its consequence on the same?
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