Basic Concepts: GDP, GNP, NDP and NNP

Gross Domestic Product (GDP). GDP is the money value of all final goods and services produced within the domestic territory of a country during one year, regardless of who owns the factors of production doing the producing — residents or non-residents. A Japanese-owned car factory in Chennai and its output counts inside India's GDP.

Domestic territory is a geographical concept used in national-income accounting. It includes the political frontiers of a country, its territorial waters and airspace, ships/aircraft operated by residents between two countries, fishing vessels and oil rigs operated by residents in international waters, and embassies of the country located abroad — but it excludes foreign embassies located within the country.

Gross National Product (GNP). GNP is the money value of all final goods and services produced by the normal residents of a country during one year, whether produced within the domestic territory or abroad. GNP therefore adjusts GDP for income crossing the border:

Net Factor Income from Abroad (NFIA) = income earned by a country's residents working/investing abroad − income earned by non-residents working/investing inside the country. For India, NFIA is usually a small positive number driven mainly by remittances and returns on investment of Indian residents working overseas, though over recent years profit repatriation by foreign firms operating in India has often pulled it toward zero or slightly negative in some years.

Gross vs Net — depreciation. "Gross" aggregates do not deduct the wear-and-tear (consumption of fixed capital, i.e. depreciation) that plant, machinery and buildings suffer during production. "Net" aggregates deduct it, giving a more accurate picture of the addition the economy has genuinely made to its wealth in the year: …