As I explain to my students in my free Google Meet class in Udaipur:
“Last Tuesday, a Class 12 student from Bhilwara asked: ‘Ma’am, if GDP is growing at 7.1%, why hasn’t my father’s textile unit hired anyone?’
That’s the moment I knew—we must stop memorizing acronyms and start seeing economics in our lives.”
1. GDP (Gross Domestic Product)
What it means:
Total value of all final goods and services produced within India in one year.
Formula:
[
\text{GDP} = C + I + G + (X – M)
]
What each letter means:
- ( C ): Your spending → ₹20 chai, ₹500 notebook, ₹299 Jio plan
- ( I ): Business investment → new factory, school building
- ( G ): Government spending → teacher salaries, mid-day meals
- ( X – M ): Net exports
- ( X ): Maruti cars sold to Nepal
- ( M ): iPhones imported from China
Classroom Moment:
“Arjun from Jaipur said: ‘I bought a ₹20 chai near school.’
I replied: ‘That ₹20 is in India’s GDP!’
Why? Because it’s a service produced within India’s borders in 2025.”
(NCERT Class 12 Macroeconomics, Chapter 2)
💡 Real-Life Impact:
Your monthly Jio plan (₹299) is part of ( C ). If 40 crore users pay, that’s ₹1,196 crore added to India’s GDP every month.
2. GNP (Gross National Product)
What it means:
Total income earned by Indian citizens anywhere in the world in one year.
Full Form:
NFIA = Net Factor Income from Abroad
Formula:
[
\text{GNP} = \text{GDP} + \text{NFIA}
]
[
\text{NFIA} = \text{(Income earned by Indians abroad)} – \text{(Income earned by foreigners in India)}
]
What Counts:
✅ + Salary of Indian nurse in Canada
✅ + Profit of TCS in USA
❌ – Dividend paid to Suzuki Japan from Maruti
❌ – Rent earned by German company in Gurgaon
Classroom Moment:
“Priya from Jodhpur: ‘My chacha sends ₹50,000 from Dubai every Diwali.’
I said: ‘That’s +NFIA → part of GNP, not GDP.'”
(NCERT Class 12, p.20)
💡 Real-Life Impact:
India received $125 billion in remittances in 2024 (World Bank). This money funds school fees and small businesses in villages across Rajasthan.
3. NDP (Net Domestic Product)
What it means:
GDP minus depreciation (wear and tear of capital).
Formula:
[
\text{NDP} = \text{GDP} – \text{Depreciation}
]
What is Depreciation?
Loss in value due to use or time.
Example: School bus (₹20 lakh) → ₹12 lakh after 5 years → Depreciation = ₹8 lakh
Classroom Moment:
“At a Bhilwara textile unit: ‘Machines lose ₹2 crore/year.’
I told students: ‘Subtract this from GDP to get NDP.'”
(NCERT Class 12, p.22)
💡 Real-Life Impact:
India loses ₹12 lakh crore/year to depreciation (MOSPI). So 7% GDP growth = only ~5.8% real usable growth.
4. NNP (Net National Product)
What it means:
GNP minus depreciation = True national income.
Formula:
[
\text{NNP} = \text{GNP} – \text{Depreciation}
]
Key Concept:
NNP at factor cost = National Income (Excludes GST, includes subsidies)
Why?
- Market Price = Includes GST
- Factor Cost = What producers actually earn
Example: Chai ₹20 = ₹18 to owner + ₹2 GST → Only ₹18 in NNP at factor cost.
Classroom Calculation:
GDP = ₹250
NFIA = –₹5
Depreciation = ₹20
→ GNP = ₹245 → NNP = ₹225
(NCERT Class 12, pp.23-24)
💡 Real-Life Impact:
NNP determines how much government can sustainably spend on health, education, and jobs without borrowing or eating into capital.
5. Quick Comparison (Mobile-Friendly)
GDP
- Full Form: Gross Domestic Product
- Formula: C + I + G + (X – M)
- Counts: Production within India
- Excludes: Income from abroad
GNP
- Full Form: Gross National Product
- Formula: GDP + NFIA
- Counts: Income by Indians globally
- Excludes: Foreigners’ income in India
NDP
- Full Form: Net Domestic Product
- Formula: GDP – Depreciation
- Counts: Usable output in India
- Excludes: Machine wear and tear
NNP
- Full Form: Net National Product
- Formula: GNP – Depreciation
- Counts: True national income
- Excludes: Depreciation + indirect taxes
6. Common Student Questions (As I Answer in Class)
Q: Ma’am, is your free YouTube class part of GDP?
A: Excellent question! In my Google Meet last week, Rohan asked this. I told him:
“Only paid services are counted in GDP—because GDP measures market transactions.
Since my videos are free, there’s no money exchanged, so it’s not in GDP.
But if I charged ₹99/month? Then yes—it would count as a service produced in India!”
(NCERT Class 12, p.18)
Q: Can GNP be less than GDP?
A: Yes! During my class in Kota, I explained:
“If foreign companies earn ₹10 lakh crore in India, but Indians earn only ₹8 lakh crore abroad, then NFIA is negative → GNP < GDP.”
Q: Why do we subtract depreciation?
A: I ask students: “Would you count a broken laptop as ‘new output’?”
Of course not! Depreciation removes worn-out capital—so NDP and NNP show real, usable income.
7. Why This Matters for Your Exams
UPSC 2024: Distinguish GDP and GNP with examples.
Ans: GDP = production within borders (e.g., iPhone assembled in Bengaluru). GNP = GDP + net income from abroad (e.g., remittances from Gulf).
CBSE 2025: If GDP = ₹250 lakh crore, depreciation = ₹20 lakh crore, NFIA = –₹5 lakh crore, find NNP.
Ans: GNP = 250 – 5 = ₹245; NNP = 245 – 20 = ₹225 lakh crore.
UGC NET 2023: Why is NNP preferred over GDP for welfare analysis?
Ans: NNP accounts for depreciation and global earnings—reflecting sustainable income available to residents.
8. Lifetime Learning: Why This Shapes Your Future
As I tell my students:
“The 364-day T-bill yield is 5.6349% (RBI, Sept 17, 2025).
This rate affects your education loan EMI.
But NNP tells you if India’s growth is real or borrowed.
When you apply for jobs, start a business, or vote in elections—you’ll use these concepts:
- High GDP growth = more job opportunities
- High NNP = better public services
- Depreciation rate = how fast our capital is wearing out
This isn’t just exam material—it’s your lens to understand India’s economy and your place in it.”
9. FAQ (As I Teach in Class)
Q: How do I remember all four terms?
A: I teach this simple grid:
- Domestic = inside India (GDP, NDP)
- National = by Indians (GNP, NNP)
- Gross = before depreciation
- Net = after depreciation
Q: Is farm produce included in GDP?
A: Yes—but only if sold in market. Your uncle’s wheat? If he sells it in mandi, it counts in GDP. If he keeps it for family, it doesn’t. (NCERT Class 12, p.19)
Q: How often is GDP calculated?
A: Quarterly! As of Sept 18, 2025, the latest data shows 7.1% growth. This helps RBI set interest rates like the 5.6349% on 364-day T-bills.
Q: Is the RBI data real?
A: Yes—on Sept 18, 2025 at 1:00 PM, USD/INR was 88.1209, and 364-day T-bill yield was 5.6349% (RBI/FBIL).
Q: Can I use these concepts to negotiate salary?
A: Absolutely! If you understand that high GDP growth means more jobs and high NNP means better company profits, you’ll have data to support your salary requests.
Resources
- NCERT Class 12 Macroeconomics
→ Download from ncert.nic.in → Textbooks → Class XII → Macroeconomics → Chapter 2 - RBI Market Data (Sept 17–18, 2025)
→ Verified data from RBI website: - 364-day T-bill yield: 5.6349%
- USD/INR: 88.1209 (as of 1:00 PM, Sept 18, 2025)
- World Bank Remittance Data (2024)
→ India received $125 billion in remittances (worldbank.org)
Author Bio
Dr. Amrita Mehta, PhD, MBA, M.Phil (Gold Medalist, MLSU Udaipur), LLB (ALU Jaipur). Founder of GENERAL ECONOMICS YouTube channel. Taught 5,000+ students from NCERT to PG level since 2010. Regular speaker at UGC workshops across Rajasthan.
