GDP, GNP and National Income
Last updated: 3 October 2026
National income tells us the total value of goods and services produced in a country in one year. It is the most common measure of the size and growth of an economy.
Key terms
| Term | Meaning |
|---|---|
| GDP (Gross Domestic Product) | Market value of all final goods and services produced within the country in a year, by residents and non-residents. |
| GNP (Gross National Product) | GDP + Net factor income from abroad (income earned by residents abroad minus income earned by foreigners in the country). |
| NDP (Net Domestic Product) | GDP − Depreciation. |
| NNP (Net National Product) | GNP − Depreciation. |
| National Income | NNP at factor cost. |
| Per capita income | National income ÷ population. |
| GVA (Gross Value Added) | GDP − product taxes + product subsidies. |
Market price and factor cost
Factor cost is the cost of the factors of production (land, labour, capital, enterprise). Market price = Factor cost + Indirect taxes − Subsidies.
Nominal and real GDP
- Nominal GDP uses current-year prices.
- Real GDP uses the prices of a fixed base year, so it removes the effect of inflation.
- GDP deflator = (Nominal GDP ÷ Real GDP) × 100.
Three methods of measuring national income
| Method | How it works |
|---|---|
| Production (value added) method | Adds the value added by every sector of the economy. |
| Income method | Adds all incomes: wages, rent, interest and profit. |
| Expenditure method | GDP = C + I + G + (X − M): consumption + investment + government spending + net exports. |
In India
- National income data is released by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
- The economy is divided into the primary (agriculture), secondary (industry) and tertiary (services) sectors; services form the largest share of GDP.
- India’s financial year runs from 1 April to 31 March.
Quick revision
- GNP = GDP + net factor income from abroad.
- NNP at factor cost = national income.
- Real GDP removes the effect of price changes.
- Expenditure method: C + I + G + (X − M).
- Data is released by the NSO (MoSPI).