GDP and GNP

Definition

Two measures of national income: Gross Domestic Product (GDP) is the value of goods and services produced within a country, while Gross National Product (GNP) adds the net income earned abroad by its residents.

Key points

• GDP is output produced inside the country's borders, regardless of who owns the factors of production.
• GNP equals GDP plus net factor income from abroad (income of residents abroad minus income of foreigners at home).
• "At market prices" includes indirect taxes minus subsidies; "at factor cost" excludes them; subtracting depreciation gives the "net" (NDP, NNP) versions.
• Net National Product at factor cost is called national income; NNP per head is per-capita income.
• In India the GDP base year and series are revised periodically; the Ministry of Statistics (MoSPI) releases the data, so verify the latest figures.

Why it matters for CAPF

The GDP-versus-GNP distinction, market price versus factor cost, and the national-income definitions are high-frequency basics of growth measurement.

Common confusion

GDP (within the territory) versus GNP (residents, including abroad); market prices (with net indirect taxes) versus factor cost; gross (with depreciation) versus net (after depreciation).

Parent note

basics national income and growth