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National income: GDP, GNP, NNP, GVA, real vs nominal
Understand
Gross Domestic Product (GDP) is the market value of all FINAL goods and services produced within a country's domestic territory during a quarter or a year. Only final goods count (or, equivalently, the value added at each stage); otherwise steel would be counted once as steel and again inside the car. GDP is about WHERE production happens: a Japanese company's factory in Gujarat adds to India's GDP. Gross National Product (GNP, now usually called GNI) is about WHO produces: GNP = GDP + Net Factor Income from Abroad (NFIA), i.e. income earned by Indian residents abroad minus income earned by foreigners in India. India's NFIA is negative (more interest, dividends and profits flow out than in), so India's GNI is a little smaller than its GDP. 'Gross' means machines' wear and tear (depreciation, or consumption of fixed capital) has not been deducted. Subtract it and you get Net: NNP = GNP − depreciation. Values can be at market prices (including indirect taxes, net of subsidies) or at factor cost (what the factors of production actually receive). National Income in the strict sense is NNP at factor cost; divide it by population to get per capita income. India measures output first as Gross Value Added (GVA) at basic prices, by sector, and then adds product taxes and subtracts product subsidies to reach GDP. Nominal GDP uses current prices; real GDP uses the prices of a base year, so it rises only when actual output rises. The ratio nominal ÷ real × 100 is the GDP deflator. GDP can be measured by the production, income or expenditure method; in principle all three match.
Rule
GDP = value of final goods and services produced within the domestic territory; GNP (GNI) = GDP + NFIA.
NNP = GNP − depreciation; National Income = NNP at factor cost; per capita income = national income ÷ population.
Market price = factor cost + net indirect taxes (indirect taxes − subsidies).
India: GVA at basic prices + product taxes − product subsidies = GDP at market prices.
Expenditure method: GDP = C (private consumption) + I (investment) + G (government consumption) + (X − M).
GDP deflator = nominal GDP ÷ real GDP × 100; it covers all goods and services in GDP, not a fixed basket.
Compiler: NSO, MoSPI. Base-year history: 2004-05 → 2011-12 → 2022-23.
Transfer payments (pensions, scholarships, gifts) and sales of second-hand goods are NOT part of GDP; only new production counts.
Current position
MoSPI released the new national accounts series with base year 2022-23, replacing base 2011-12, on 27 February 2026. Manufacturing GVA now uses double deflation (output and inputs deflated separately).
Effective: 27 Feb 2026Source (opens in a new tab)
Current position
Provisional Estimates (5 June 2026): real GDP grew 7.7% in 2025-26 (₹323.12 lakh crore) and nominal GDP 8.9% (₹346.36 lakh crore); 2024-25 growth was 7.1%.
Effective: 5 Jun 2026Source (opens in a new tab)
Current position
As of 11 October 2026, the latest quarterly print is Q1 (April–June) 2026-27, released 31 August 2026: real GDP growth 7.8%, nominal 10.3%, real GVA 8.2%.
Effective: 31 Aug 2026Source (opens in a new tab)
Example
Q1 2026-27 (MoSPI): nominal GDP ₹88.27 lakh crore, real GDP ₹81.36 lakh crore. Deflator = 88.27 ÷ 81.36 × 100 ≈ 108.5. A year earlier: ₹80.00 and ₹75.46 lakh crore, deflator ≈ 106.0. Real growth = 81.36 ÷ 75.46 − 1 ≈ 7.8%; nominal growth ≈ 10.3%; so prices across the economy rose only about 2.3%. Toy case: GDP ₹200, NFIA −₹5, depreciation ₹20, net indirect taxes ₹15 → GNP ₹195, NNP at market price ₹175, NNP at factor cost (national income) ₹160.
| Measure | Formula | Key idea |
|---|---|---|
| GDP | Value of final output within the territory | Where it is produced |
| GNP / GNI | GDP + NFIA | Who (residents) produces it |
| NDP | GDP − depreciation | Net of wear and tear |
| NNP at market price | GNP − depreciation | Net national product |
| NNP at factor cost | NNP at MP − net indirect taxes | National Income |
| Real GDP | Output at base-year prices | Volume growth only |
Common mistake
GDP counts production inside India by anyone; GNP counts production by India's residents anywhere — don't swap them.
Because India's NFIA is negative, India's GNI is LOWER than GDP, not higher.
National Income = NNP at factor cost, not GDP.
Nominal GDP can rise even when output falls if prices rise; growth headlines quote REAL GDP.
The new base year is 2022-23 (from 27 Feb 2026); 2011-12 is the old base — don't mix them up.