Net Domestic Product
Also called: NDP, NDPMP · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Net Domestic Product (NDP, or NDP_MP) is GDP minus depreciation. Depreciation, also called consumption of fixed capital, is the wear and tear of machines and buildings used in production. NDP is the value of domestic output after setting aside what is needed to replace used-up capital. NCERT describes depreciation as "what the country must spend just to maintain its current GDP".
NDP_MP = GDP_MP − depreciation
Example
Raju the barber earns ₹500 in a day, so his GDP is ₹500. His equipment wears out by ₹50 a day. His net domestic product is 500 − 50 = ₹450.
Don't confuse with
- Net National Product (NNP): NNP = NDP + NFIA. It also counts factor income earned from abroad (net).
- NDP at factor cost: this also subtracts net indirect taxes, leaving only factor incomes.
Related concepts
- Gross National Product
- Net factor income from abroad
- Normal residents
- Domestic territory
- NDP at factor cost
- Net National Product
- GNP at factor cost
- National income
- Personal income
- Undistributed profits