Net National Product (NNP)

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NNP  Net National Product (NNP)  Net National Product (NNP) of an economy is the GNP after deducting the loss due to ‘depreciation’. The formula to derive it may be written like this: NNP = GNP – Depreciation or, NNP = GDP + Income from Abroad – Depreciation. The different uses of the concept of NNP are as given below: (i) This is the ‘National Income’ (NI) of an economy. Though, the GDP, NDP, and GNP, all are ‘national income’ they are not written with capitalized ‘N’ and ‘I’. (ii) This is the purest form of the income of a nation. (iii) When we divide NNP by the total population of a nation we get the ‘per capita income’ (PCI) of that nation, i.e., ‘income per head per year’. A very basic point should be noted here that this is the point where the rates of depreciation followed by different nations make a difference. Higher the rates of depreciation lower the PCI of the nation (whatever be the reason for it logical or artificial as in the case of depreciation being used as a...
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NATIONAL INCOME & GDP

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 NATIONAL INCOME

Measuring progress has been a major riddle for experts. Income as an indicator of progress was tried by many before the idea of the gross domestic product (GDP) was put forward by the US economist Simon Kuznets in 1934. The method tries to calculate (account) a country’s income at domestic and national levels—in gross and net forms—having four clear concepts (GDP, NDP, GNP, and NNP)—a brief and objective overview is presented below.


GDP

Gross Domestic Product (GDP) is the value of all final goods and services produced within the boundary of a nation during one year period. For India, this calendar year is from 1st April to 31st March.

It is also calculated by adding national private consumption, gross investment, government spending, and trade balance (exports-minus-imports). The use of the exports-minus-imports factor removes expenditures on imports not produced in the nation and adds expenditures of goods and services produced which are exported but not sold within the country.

It will be better to understand the terms used in the concept, ‘gross’, which means the same thing in Economics and Commerce as ‘total’ means in Mathematics; ‘domestic’ means all economic activities done within the boundary of a nation/country and by its own capital; ‘product’ is used to define ‘goods and services together; and ‘final’ means the stage of a product after which there is no known chance of value addition in it.

The different uses of the concept of GDP are as given below:

(i) Per annum percentage change in it is the ‘growth rate’ of an economy. 

For example, if acountry has a GDP of ₹107 which is 7 rupees higher than the last year, it has a growth rate of 7 percent. When we use the term ‘a growing’ economy, it means that the economy is adding up its income, i.e., in quantitative terms.

(ii) It is a ‘quantitative’ concept and its volume/size indicates the ‘internal’ strength of the economy. But it does not say anything about the ‘qualitative’ aspects of the goods and services produced.

(iii) This is the most commonly used data in comparative economics. The GDPs of the member nations are ranked by the IMF at purchasing power parity (PPP). India’s GDP is today 3rd largest in the world at PPP (after China and the USA). , While at the prevailing exchange rate of the Rupee (into the US dollars) India’s GDP is ranked 5th largest in the world. 

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