National Income Aggregates — GDP, GNP, NDP, NNP

National income is expressed through several closely related aggregates, and knowing exactly which one is being quoted matters for interpreting any economic figure correctly.

Gross Domestic Product (GDP) is the market value of all final goods and services produced within a country's domestic territory during a year, regardless of whether the factors of production used are owned by residents or non-residents — GDP is a purely territorial concept.

Gross National Product (GNP) shifts the focus from territory to residency — it values output/income earned by a country's own normal residents, wherever in the world they earn it:

where NFIA is income residents earn abroad (wages, interest, profit, rent) minus income non-residents earn within the domestic economy and repatriate. For India, NFIA has generally stayed a small negative figure in most recent years, since profit/interest outflows to foreign investors operating in India have tended to somewhat exceed the factor income Indian residents earn overseas.

Net National Product (NNP) removes the wear and tear (depreciation, formally called consumption of fixed capital) that machinery and buildings suffer during a year's production, since that capital eventually has to be replaced:

NNP at Factor Cost is what is officially called a country's National Income. The domestic counterpart, Net Domestic Product (NDP), subtracts depreciation from GDP instead of GNP.

Every one of these aggregates can be quoted at Market Price (MP) — the price the final buyer actually pays, which includes indirect taxes (such as GST) and is net of any government subsidy — or at Factor Cost (FC) — the amount actually received by the producer for supplying the factors of production: …