Why this matters now
The national-income aggregates and their relationships (GDP vs GVA vs GNP vs NNP; nominal vs real) are prelims-heavy and underpin all macroeconomic analysis.
The key aggregates
GDP = value of all final goods & services produced within a country in a year. GVA (Gross Value Added) = output minus intermediate consumption (GDP = GVA + net product taxes). GNP = GDP + net factor income from abroad. NNP = GNP − depreciation; NNP at factor cost = National Income.
Methods of measurement
National income is measured by three methods that should match: the production (value-added) method, the income method (wages + rent + interest + profit), and the expenditure method (C + I + G + net exports). The difference between market price and factor cost is net indirect taxes (taxes − subsidies).
Nominal vs real & per-capita
Nominal GDP is at current prices; real GDP is at constant (base-year) prices, stripping out inflation — so real GDP shows true growth. Per-capita income (national income ÷ population) indicates living standards. In India, the NSO/MoSPI compiles these accounts (with periodic base-year revisions).
UPSC angle
Know GDP vs GVA (GDP = GVA + net product taxes), GNP (=GDP+NFIA), NNP (=GNP−depreciation; NNP-FC = National Income), the three measurement methods, market price vs factor cost, and nominal vs real GDP.
Frequently asked questions
What is the difference between GDP and GVA?
GVA is output minus intermediate consumption; GDP = GVA + net product taxes (taxes minus subsidies on products).
What is GNP?
Gross National Product — GDP plus net factor income from abroad.
What is the difference between nominal and real GDP?
Nominal GDP is at current prices; real GDP is at constant base-year prices, removing the effect of inflation.
What are the three methods of measuring national income?
The production (value-added), income and expenditure methods.