Everything You Need to Know About GDP and Other Important Factors


In a current Eco-Political scenario a lot more is talked about GDP. It has become the top newsmaker in our country. Before passing any judgements on GDP, GNP, NDP & NNP let us understand what actually they mean.

What is National Income?

  • National Income can be defined as the total market value of the assets produced by the country in one year by means of different goods & services
  • In 1863, Dadabhai Nauroji estimated per capita annual income to be ₹ 20, This is considered as the first attempt to calculate national income
  • First scientific attempt to measure the national income of our country was made by V. Rao in 1931
  • National Statistical Commission was formed in 2005 for promoting the statistical network in our country

Ways to Calculate Income of the Nation

GDP (Gross Domestic Product)

  • The total value of goods & services produced within the boundary of our country in 1 year
  • GDP = C + G + I + ( X – M )
  • Where:
    C = household consumption expenditures / personal consumption expenditures
    I = gross private domestic investment
    G = government consumption and gross investment expenditures
    X = gross exports of goods and services
    M = gross imports of goods and services
  • In GDP, we consider the value of goods & services produced by foreigner & by an Indian citizen
  • GDP is the Geo-Economic concept

GNP (Gross National Product)

  • The total value of goods & services produced within the boundary of our country as well as from other countries
  • Here we consider transboundary Activities
  • GNP= Value produced in-country + Incoming Value from other countries (Indians) – Outgoing value to foreign countries
  • e.g. ) Indian company goes in the US, Earns money & send it India (This will be added to the GNP)
    US company comes in India, Earns money & send it to the USA ( This will be subtracted from the GNP)

NDP (Net Domestic Product)

  • Net Domestic Product = Gross Domestic Product – Depreciation
  • Depreciation – Decrease in the value of an asset
  • Different assets have different depreciation rates
  • These rates are published by the ministry of commerce & industry

NNP (Net National Product)

  • Net National Product = Gross National Product – Depreciation
  • Depreciation – Decrease in the value of an asset, Different assets have different depreciation rates
  • These rates are published by the ministry of commerce & industry
  • NNP is the purest form of the income of the nation
  • NNP / population = Per Capita Income

Organisation Involved in Measuring National Income

National Sample Survey Office (NSSO) and Central Statistical Office (CSO) are part of Statistic Wing of the Ministry of Statistics and Programme Implementation

NSSO – it is sample-based, meaning they arrive at results based on the data of an available sample set. This is used for social-economic development-related planning, policymaking, etc.

CSO – They calculate the national income, undertake nationwide census and conduct economic surveys. The data is used for official purposes in all ministries and departments of the govt., CSO is also responsible for the promotion of statistical standards.

We have learned about the national income of the country, Factors like GDP, GNP, NDP & NNP matters a lot to the country but these factors & numbers associated with them are not the convenient way to express the nation’s development as they are just the economic data.

Now the question arises how do we calculate the nation’s development?
Well… There are different factors like HDI, PQLI, GNH, HPI, GHI & many more.

Before we start, we need to understand the difference between Economic Growth & Economic Development

Sr. No. Economic Growth Economic Development
1 It is viewed in a quantitative aspect It is viewed in a qualitative aspect
2 It refers to the increase in the flow of goods & services produced by the economy It refers to the growth accompanied by welfare i.e. socio-economic development
3 GDP, GNP, NNP, & NDP are the measures of economic growth HDI, PQLI, GNH, LPI, GHI etc. are the measures of economic development


  • HDI stands for Human Development Index
  • HDI was introduced by UNDP (United Nation Development programme)
  • HDI concept was developed by Pakistani economist Mahbub-ul-Haq & Indian economist Amartya Sen in 1990
  • HDI considers 3 important factors i.e.
    a) Life Expectancy at birth,
    b) Educational attainment
    c) Standard of living
  • Observing the above 3 factors HDI value is assigned to the country on a scale of 0 to 1
  • India is ranked 130 (HDI Value is 0.640 ) out of 188 countries, Topped by Norway (HDI value is 0.953 as per 2018 report
  • HDI



  • PQLI stands for Physical Quality of Life Index
  • PQLI concept was developed by David Morris for the Overseas Development Council
  • It is not used widely for quality of life/well being of humans instead HDI is widely referred
  • Three important factors are considered while giving a score to the country on a scale of 0 to 100 which are as below
    a) Literacy Rate
    b) INDEXED Infant Mortality Rate
    c) INDEXED Life Expectancy
  • PQLI was  criticized due to considerable overlap between infant mortality & life expectancy


  • GNH stands for Gross National Happiness
  • It was introduced by the King of Bhutan (Jigme Singya Wangchuk) for the good governance of  Bhutan
  • GNH considers the following important point
    a) Economic Wellness
    b) Environmental Wellness
    c) Physical Wellness
    d) Mental Wellness
    e) Workplace Wellness
    f) Social Wellness
    g) Political Wellness
  • In 2012, Bhutan’s Prime minister & UN general Secretory Ban Ki-moon met for a high-level discussion on well-being & happiness, At the High-Level meeting, the first World Happiness Report was issued
  • Very Sadly, India ranked 140th out 155 Nation in the World Happiness Report 2019
  • India’s rank was behind Pakistan ( Rank 67),  Nepal (Rank 100), Bhutan (Rank 95), Bangladesh (Rank125) & Sri Lanka ranked at  122th  
  • Finland ranked number 1
  • India slipped by 7 positions from the rank of 133 in 2018 to the rank 140 in 2019
  • Check Details


  • GHI stands for Global Hunger Index
  • GHI was introduced by the International Food Policy Research Institute ( IFPRI, Washington DC)
  • Following indicators are taken into consideration while calculating the GHI of the country.
    a) The proportion of undernourished as a percentage of the population
    b) Prevalence of wasting in children under five years
    c) Prevalence of stunting in children under five years (%)
    d) Under-five mortality rate (%)
  • The score is given on the scale of 0 to 100 in GHI
  • Very sadly, India ranked 103rd out of 119 Nations in GHI report 2018
  • Lesser the GHI score better the country’s performance
  • India’s 2018 GHI score of 31.1 is at the high end of the serious category
  • India’s performance was better than Pakistan (Rank 106, Score 32.6)
  • However, Nepal ( Rank 72 Score 21.2 ) & Bangladesh (Rank 86, Score 26.1 ) performed better than India
  • The worst performing country in 2018 was the Central African Republic with a total score of 53.6
  • More Analysis of https://www.globalhungerindex.org/pdf/en/2018.pdf


  • LPI Stands for Legatum Prosperity Index
  • Legatum Prosperity Index is developed by London-based Legatum Institute
  • Following indicators are taken into consideration while calculating LHI of the country
Indicators Rank of India
Economic Quality   58th
Business  Environment  51st
Governance  40th
Education  104th
Health 109th
Safety & Security  104th
Personal Freedom  99th
Social Capital    102nd
Natural Environment  130th
  • Norway Ranked number 1
  • Get more analysis on http://www.prosperity.com/rankings 
  • India’s overall rank: 94
  • India performed better than Pakistan (Ranked at 104) & Bangladesh (Ranked at 109)
  • Nepal (Ranked at 90) performed better than India


  • GDI stands for Gender Development Index
  • Developed by UNDP (United Nations Development Programme)
  • Following Factors are taken into consideration
    a) Human Development Index (HDI)
    b) Life expectancy at birth
    c) Expected years of schooling
    d) Mean years of schooling
    e) Estimated gross national income per capita
    Above factors of male & female are calculated and the final report is presented
  • Below are some important statistics as per 2017.
  • Qatar Ranked number 1
  • India ranked at 149
  • India’s neighbouring rank performance is as follows:
    Pakistan (Rank 162), Bhutan (Rank 126), Bangladesh (Rank 130) & Nepal (Rank 115)
  • For more analysis visit https://en.wikipedia.org/wiki/Gender_Development_Index

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