GDP (Gross Domestic Product): GDP is the total value of all goods & services produced in the economy in a given period of time. When we calculate GDP we focus on four major things i.e.
i. Political boundary: It defines the boundary of the economy(region) whose GDP is to be measured.
For example Iphone company of USA set up a factory in India then all the goods that will be produced by this company will be count in India's GDP not in USA's GDP. Another example an Indian settle in Gulf Country for his job then his earnings will be count in the GDP of that Gulf country.
ii.Time: In GDP calculations we take 1 year as a standard time. This means that the sum total of goods and services produce in a year.
iii.Goods & Services: When we get something in return of money that can be touched then it is called goods for example books ,pens etc. When we get something in return of money that can't be touched then it is called services for example tuition, consultation from doctors.
iv.Final cost: It is the end cost of a product. For example 100kg wheat is cultivated and out this 100kg 60kg is used in biscuit making and rest are used in cake making. So when we calculate GDP we will not take the cost of cultivated wheat in account as it will overlap with the final cost biscuits and cakes. Similarly if sugarcanes are produce then we will take the final cost of the sugarcane product.
For example1: In India there are 2 companies one of them is a foreign company Iphone which produce 10 phone of cost ₹10 each and another is Indian company Copy which produce 8 copies of cost ₹5 each.Also there is a NRI who earns ₹50. So the GDP of India will be (10 X 10)+(8 X 5) i.e. ₹140. We not consider the amount produce by the NRI as he doesn't live in India. But we consider the amount of that foreign company as it manufactures goods in India.
NDP (Net Domestic Product) :As by name we can understand that unlike GDP where the total cost of produce goods is taken into account. Here we take the net products produce that means we exclude those product which get damaged or worn and tear during the manufacturing. From the above example1 if out of 10 Iphones 2 get age during the manufacturing and out of 8 copies 4 get damage then
NDP = GDP-depriciation i.e. 140-{ (2X10) + (4X5) } So NDP will be 140-40 i.e. ₹100.
GNP (Gross National Product) :In GNP we calculate the total amount of goods & services produced by the nationals of a country. For example in GNP we will calculate only the amount of goods & services produced by Indians no matterdam wheather they are in India or abroad. So the GNP will be
GNP=GDP+ X - Y ,(where X is Indian nationals or companies that are not in India whereas Y stands for foreign nationals or companies that are in India)
So the GNP according to example1 will be GNP=GDP+ X - Y i.e. 140+50-100 i.e. ₹90;
NNP (Net National Product) :In NNP we take the net products produce by the nationals of a nation that means we exclude those product which get damaged or worn and tear during the manufacturing.From the above example1 if out of 10 Iphones 2 get damage during the manufacturing and out of 8 copies 4 get damage then
NNP =GNP - Xdepreiciation ,(where Xdepreiciation is damages that happen during manufacturing by the Indian companies) i.e. 90 - (4x5) i.e. ₹70
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