GNP at factor cost
Also called: GNPFC · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
GNP at factor cost (GNP_FC) is the gross value of output earned by the factors of production that belong to a country, measured without taxes and subsidies. It is "gross" because depreciation (the wear and tear of capital) has not been subtracted.
GNP_FC = GNP_MP − net product taxes − net production taxes, which is the same as GDP_FC + NFIA. NFIA is net factor income from abroad.
Example
Take GDP at market prices of ₹1,100 crore, NFIA of ₹100 crore and net indirect taxes of ₹150 crore. Then GNP_MP = 1,100 + 100 = ₹1,200 crore. GNP_FC = 1,200 − 150 = ₹1,050 crore.
Don't confuse with
- National income (NNP at factor cost): this equals GNP_FC minus depreciation. In the example above, with depreciation of ₹200 crore, national income = 1,050 − 200 = ₹850 crore.
- GDP at factor cost: this does not include NFIA.
Related concepts
- Gross National Product
- Net factor income from abroad
- Normal residents
- Domestic territory
- Net Domestic Product
- NDP at factor cost
- Net National Product
- National income
- Personal income
- Undistributed profits