Concept of Net Domestic Product & Net National Product

Every capital goods such as building, machines, equipments, tools, trucks, tractors, trains, airplanes are subject to depreciation and it is a common fact. When Depreciation which is also known as consumption of fixed capital is deducted from the GDP, it is called Net Domestic Product.
NDP=GDP – depreciation
Net National Product:
When net Domestic product includes the Net Factor Income Abroad , it is called Net National Product. It is represented as follows:
NNP=GDP-Depreciation + NFIA
As in the case of Gross National Product, the NNP may be more or less than NDP , depending upon the positive or negative value of the NFIA.
Net Domestic Product at Market Price:
When the value of the Net Domestic Product is estimated at current prices prevailing in the market , it is called Net Domestic product at Market prices.
So, basically, NNP describes the depreciation, compared to the GNP. Naturally, the value of NNP is always less than the GNP.

List of Topics : Economic Survey 2010-11

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