Gross domestic product minus depreciation is called net domestic product. When a charge for depreciation is deducted from GDP, we get the net domestic product. Depreciation means wear and tear of fixed capital assets or decrease in value of fixed capital assets. It is also known as the capital consumption allowance.

NDP measured at actual market price is called NDP at a market price whereas NDP is measured as the sum of price paid to all factors of production in the form of wages and salaries, profit, interest, and rent for their contribution to the production of goods and services is called NDP at factor cost.

Gross national product is the market value of all final goods and services produced during a year by domestically owned resources or factors of production. In other words, it is the market value of all final goods and services and produced within a country in a year plus net factor income from aboard. It is a broader concept than GDP because GNP is equal to GDP plus net factor income from abroad. Net factor income from abroad is the difference between the factor income earned by our residents from foreign countries and the factor income earned by foreigners from our country.

As long as the resources or factors of production are owned by Nepali nationals, firms, or the government, the income that these resources earn for their owners is included in Nepal’s GNP. For example, Himalaya Snacks is owned by Nepali nationals but it produces noodles in India. But the profits that the Himalaya Snack earns on its foreign-made noodles are counted as part of Nepal’s GNP. However, those profits are not earned in Nepal; they are counted as part of Nepal’s GNP.

1. It is calculated in monetary terms.

2. It includes only final goods and services.

3. The intermediate goods are excluded to avoid double counting.

4. It includes income earned by the residents of a country within a country and abroad.

5. It does not include capital gains and transfer payments.

6. It includes only those goods which have market value and are brought in the market for sale.

GNP measured at the actual market price, which either the consumers or producers pay for the purchase of goods and services whether for consumption or investment is called GNP at market price. In other words, it is the market value of all final goods and services produced in a year. On the other hand, if GNP is measured as the sum of price paid to all factors of production in the form of wages and salaries, profits, interest, and rent for their contribution in production, it is known as the GNP at factor cost. In order to calculate GNP at factor cost, we have to deduct the net indirect taxes from GNP at market price. Net indirect tax is equal to indirect taxes minus subsidies.

Gross Domestic Product (GDP)	Gross National Product (GNP)
1. It is money value of all final goods and services produced within the domestic territory of a country.	1. It is the money value of all final goods and services produced by citizens of a country and abroad.
2. It is a narrow concept.	2. It is a boarder concept.
3. It is a territorial concept as it is concerned with the domestic territory of a country.	3. It is a national concept as it is concerned with the normal residents of a country.
4. It does not include net factor income earned from abroad.	4. It include net factor income earned from abroad.
5. GDP = Value of all final output produced in a domestic territory of a country.	5. GNP = GDP + Net factor income from abroad.