Updated on July 18, 2023
NNP stands for Net National Product. It is a measure that calculates the net value of all goods and services produced by the residents of a country within a specific time period, after accounting for depreciation or wear and tear on capital goods. Net National Product takes into account the total output of goods and services in an economy but subtracts the depreciation of capital goods. By deducting depreciation, NNP provides a more accurate representation of the net value generated by a country’s residents. NNP measures the net production of goods and services by Indian residents, both within the country’s borders and abroad. It considers the contributions of individuals, businesses, and other economic entities that are part of the Indian economy.
How is NNP calculated?
NNP provides insights into the overall economic output and income generation within India. It helps in assessing the economic well-being of the nation, the level of investment in capital goods, and the sustainability of economic growth. The formula to calculate NNP can be represented below.
NNP = Gross National Product (GNP) – Depreciation
Gross National Product (GNP) represents the total value of goods and services produced by the residents of a country, including those produced abroad. Depreciation accounts for the reduction in the value of capital goods due to wear and tear, obsolescence, or other factors.
By subtracting depreciation from GNP, NNP provides a measure of the net output generated by the country’s residents. It represents the value of goods and services available for consumption or investment after accounting for the deterioration of capital assets.