In today's class we saw various concepts related to National Income calculation.
GDP
The gross domestic product is the total value of goods and services produced within the domestic territory of a country. It include the market value of goods and services produced by the country's citizens as well as foreign residents who live inside that country. Its the real indicator of a country's potential as it includes the factors of Land, Labour, Capital, Entrepreneur, Government support and market which reflect the country's overall production capacity.
GNP
The Gross National Product is the total value of Goods and services produced and income received by domestic residents of a country. Here the foreign remittances sent by Non-residential Indians are taken into account while the income generated by foreign residents is excluded. GNP is both quantitative as well as qualitative in nature.
NDP
Net Domestic Product is the value of national income where the value of depreciation is excluded( subtracted) from the overall GDP value.
NNP
Net National Product is the value of National Income where the the cost of depreciation is excluded ( subtracted) from the overall GNP value. This is the purest form of national income as it includes the total value of goods and services produced and income received by the residing citizens of a country , while considering the depreciation too. NNP is used for calculating Per Capita income of a country, as it tells the exact value of income generated by citizens .
GAV
The Gross value added is used to find the sector wise contribution to our National Income. The contribution of Each sector ( Primary, Secondary and Tertiary) could be calculated by subtracting the intermediate cost from the final cost of a product.
Subsidies
As our country is a welfare-state, it ensures to provide basic amenities to it's citizens at a subsidised price. The government provides subsidies to people in direct as well as indirect forms. In direct form the government pays to the industry thus enabling the industry to sell the product at a subsidised cost in the market(eg: petrol, diesel, fertilizers) . In indirect method of subsidising, the government returns a part of the total cost directly to the consumers in the form of money( eg: cylinder)
Market price:
It is the value of the product at the market, where the consumer buys that product.
Factor cost:
It is the cost of production of a product produced in an industry.
All these above concepts will be useful for better and deeper understanding of other advanced concepts.
Credits : Leo Vishnu Varthan
