National Income — GDP to GNP to NNP in Four Steps

Four Aggregates, Three Deciding Words

Every national-income question in every paper turns on just three either/or choices hidden inside the name of the aggregate.

• ›Domestic or National? *Domestic* is about geography — produced inside the country's borders, by anyone. *National* is about who owns the factor — earned by the country's residents, wherever they are.
• ›Gross or Net? *Net* means depreciation has been subtracted. Machines wear out; net figures account for that, gross figures do not.
• ›Market Price or Factor Cost? *Market price* is what the buyer pays. *Factor cost* is what actually reaches the producers, after removing indirect taxes and adding back subsidies.

Read any term as three answers to those three questions and the formula assembles itself. "NNP at factor cost" = national, net, factor cost — and that particular combination has a special name: National Income.

This chapter is worth 1–2 direct marks in almost every general-awareness paper, and the marks are pure definition.

1. Gross National Product (GNP) is obtained from Gross Domestic Product (GDP) by:

2. In national income accounting, the term 'National Income' technically refers to:

3. Net National Product at market price minus net indirect taxes gives:

4. For a country, GDP at market price is ₹200 lakh crore, net factor income from abroad is −₹2 lakh crore, depreciation is ₹18 lakh crore, indirect taxes are ₹25 lakh crore and subsidies are ₹9 lakh crore. Its National Income is:

5. Who made the first estimate of India's national income?

6. The National Income Committee set up in 1949 was chaired by:

7. The GDP deflator is calculated as:

8. India's net factor income from abroad is generally negative. This means that for India: