GDP NDP GNP & NNP- MEANING & DIFFERENCES
What is GDP?
- GDP is the total value of all final goods and services produced within a country in a given period. In other words, GDP refers to total monetary value of all finished goods and services produced within a country’s borders in a specific time period.
- GDP includes final goods/services while it excludes intermediate goods, used goods, illegal activities, non-market transactions (like household work).
- GDP is measured using three methods (Expenditure, Income, and Product/Value Added).
- Net Domestic Product (NDP): Net value of GDP after deducting depreciation.
- The National Statistical Office (NSO) under MoSPI calculates GDP in India.
- India follows UN System of National Accounts (SNA 2008), moving to SNA 2025 by 2029–30.
Nominal GDP and Real GDP
- Nominal GDP: Current market prices (includes inflation).
- Real GDP: Constant base year prices (excludes inflation).
Base Year = A reference year used to calculate real GDP (inflation-adjusted). India’s latest base year is 2022–23.
To reflect structural changes in the economy (e.g., GST rollout, COVID impact, digital economy growth) base year is revised.
Gross National Product (GNP)
- Definition: GNP measures the total value of all final goods and services produced by the residents of a country in a given period, regardless of whether production takes place inside or outside the country’s borders.
- GNP captures the income of nationals globally, unlike GDP which is limited to domestic territory. For example, if an Indian company earns profits in the UK, that income is included in India’s GNP but not in India’s GDP.
- Formula: GNP=GDP+Net income from abroad (exports of factor services – imports of factor services)
GDP vs GNP
- GDP: Output within borders.
- GNP: Output by citizens, regardless of location (GDP + net income from abroad).
Net National Product (NNP)
- Definition: NNP is GNP after deducting depreciation (consumption of fixed capital).
- NNP shows the net output available for consumption and investment after accounting for wear and tear of capital assets.
- Formula: NNP=GNP−Depreciation
- Example: If GNP is ₹200 lakh crore and depreciation is ₹20 lakh crore, NNP = ₹180 lakh crore.
GNP vs NNP
- GNP: means output by nationals worldwide. Adjusted by GDP + net factor income from abroad.
- NNP: Net output of nationals, adjusted by GNP – depreciation
Comparison Table
Particulars Definition/Meaning Key Use Nominal GDP GDP at current prices Shows present market value (includes inflation) Real GDP GDP at constant base year prices Measures actual growth excluding inflation GNP GDP + income earned abroad – income of foreigners Captures national income globally NNP GNP – depreciation Net measure of national output GDP Deflator Nominal ÷ Real GDP × 100 Inflation indicator
GDP vs GNP vs NNP
These are understood easily by following key concepts.
- GDP → within borders
- GNP → by nationals
- NNP → GNP minus depreciation
FAQ on GDP, GNP & NNP
Which method adds consumption, investment, government spending, and net exports to calculate GDP?
Expenditure Method
GDP at constant prices denotes?
Real GDP
GDP Deflator is used to?
Measure inflation
The concept of GDP was developed by?
Simon Kuznets
GDP, NDP and GNP, NNP?
GDP: Total monetary value of all finished goods and services produced within a country’s borders in a specific time period
NDP: Net value of GDP after deducting depreciation.
GNP: total value of all final goods and services produced by the residents of a country in a given period, regardless of whether production takes place inside or outside the country’s borders.
NNP: GNP minus depreciation.