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= NDP + NFIA
Or
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.
NDP_MP =NNP_MP – NFIA
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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