What is the National Income (NI) of a Country? Concept of GDP, NDP, GNP and NNP

What Is The National Income (NI)?

National income can be defined as the sum total of all value of goods and services produced within a country in a financial year. In a simple term, the national income of a country for a given period is equal to the money value of final goods and services produced.

There are various indicators/numbers that can be used to denote the National Income (NI) of a country. These can be the Gross Domestic Product (GDP), Net Domestic Product (NDP), Gross National Product (GNP), Net National Product (NNP) and etc.

It depends on the nation which indicator it wants to designate as its National Income (NI) i.e. the nation’s
“National Income Accounting” procedure.

What is Gross Domestic Product (GDP)?

It is the sum total all monetary value of all the final goods and services produced within the boundary of a country during a particular period of time, often annually.

What is Net Domestic Product (NDP)?

It is GDP adjusted to account for depreciation. It is measured by subtracting depreciation from the Gross domestic product (GDP).

Net domestic product (NDP) = Gross Domestic Product (GDP) – Depreciation

What is Gross national product (GNP)?

  1. It is the GDP of a country added with its ‘income from abroad’.
  2. It takes into consideration the Transboundary activities, unlike GDP.
  3. In the case of India, the GDP is higher than GNP. It means that Net Factor Income from Abroad (NFIA) for India is negative.

GNP = GDP + Net Factor Income from Abroad (NFIA) i.e. GDP + Income from abroad (which can be positive or negative)

What is Net National product (NNP) ?

It is the Gross national product (GNP) adjusted to account for depreciation. It is measured by subtracting depreciation from the Gross national product (GNP).

Net National product (NDP) = Gross National Product (GDP) – Depreciation

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