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National income calculator GDP to NNP at factor cost

Start from any one of the eight aggregates, or measure national income by the value added, income or expenditure method. Every step is written out the way your answer sheet needs it.

Try an example:
National income (NNP at FC)780

₹ crore

Starting from GDP at MP, the national income at factor cost is ₹780 crore.

The ladder

+ NFIA · domestic → national− Depreciation · gross → net− NIT · market price → factor cost
GDPGNPNDPNNPMP

1,000

Start here

Your figure

980

GDP + NFIA

900

GDP − Dep.

880

GDP + NFIA − Dep.

FC

900

GDP − NIT

880

GDP + NFIA − NIT

800

GDP − Dep. − NIT

780

GDP + NFIA − Dep. − NIT

The shaded NNP card at FC is national income.

Working

  1. NIT = Indirect taxes − Subsidies = 120 − 20 = 100
  2. GNP at MP = GDP at MP + NFIA = 1,000 + (−20) = 980
  3. NDP at MP = GDP at MP − Depreciation = 1,000 − 100 = 900
  4. NNP at MP = GDP at MP + NFIA − Depreciation = 1,000 + (−20) − 100 = 880
  5. GDP at FC = GDP at MP − NIT = 1,000 − 100 = 900
  6. GNP at FC = GDP at MP + NFIA − NIT = 1,000 + (−20) − 100 = 880
  7. NDP at FC = GDP at MP − Depreciation − NIT = 1,000 − 100 − 100 = 800
  8. NNP at FC = GDP at MP + NFIA − Depreciation − NIT = 1,000 + (−20) − 100 − 100 = 780

Common mistakes in the exam

  • The sign of NFIA. NFIA is always added to go from domestic to national. When NFIA is negative, adding it lowers the figure: GNP = GDP + (−20) = GDP − 20. Do not write GDP − (−20).
  • NIT is indirect taxes minus subsidies, not plus. Subsidies lower the NIT.
  • Depreciation is taken away when you go from gross to net, so GDP − Dep. = NDP.
  • Change in stock is added to sales to get output (value added method), and added to fixed investment to get gross capital formation (expenditure method).
  • Double counting. Intermediate goods are already inside the final price, so count only the value each firm adds.

Include or exclude?

National income counts the final goods and services made inside the year. These are not counted:

  • Transfer payments such as pensions, scholarships and gifts. Money changes hands, but no new output is made.
  • Second-hand goods. A car sold again was counted when it was new. Only the dealer’s commission on the sale counts.
  • Buying and selling shares or bonds. This only changes who owns an asset. The broker’s fee for the service does count.
  • Intermediate goods. The cloth a tailor buys is not counted on its own. Only the stitched shirt is.

The ladder in plain words

All eight measures are linked by three adjustments. Start with GDP at market price (MP): the value of final goods and services made inside the country, at the prices buyers paid.

  • Add NFIA to move from domestic to national. NFIA is what residents earn from abroad minus what foreigners earn here. It can be negative.
  • Take away depreciation to move from gross to net. Depreciation is the wear and tear on machines and buildings.
  • Take away NIT to move from market price to factor cost. Indirect taxes raise the price a buyer pays; subsidies lower it. NIT is the net of the two, so factor cost is what the people who produced the goods actually receive.

A worked example

The calculator above starts with this example. GDP at MP is ₹1,000 crore, NFIA is −₹20 crore, depreciation is ₹100 crore, indirect taxes are ₹120 crore and subsidies are ₹20 crore. So NIT = 120 − 20 = ₹100 crore.

  • GNP at MP = 1,000 + (−20) = ₹980 crore
  • NDP at MP = 1,000 − 100 = ₹900 crore
  • GDP at FC = 1,000 − 100 = ₹900 crore
  • NNP at FC = 1,000 + (−20) − 100 − 100 = ₹780 crore

Going the other way works too. If you are given the NNP at FC of ₹780 crore, add back depreciation and NIT and take away NFIA: 780 + 100 + 100 − (−20) = ₹1,000 crore.

Three ways to measure, one answer

  • Value added method. Each firm’s output is its sales plus the change in its stock. Its value added is that output minus the intermediate goods it bought. The total value added is GDP at MP.
  • Income method. Add the factor incomes: compensation of employees, rent, interest, profit and mixed income. The total is NDP at FC. Add depreciation and NIT to reach GDP at MP.
  • Expenditure method. Add the spending on final goods: private consumption, government consumption, gross capital formation (fixed investment plus change in stock) and net exports.

With correct figures, all three methods give the same GDP. If your three answers differ, look for double counting of intermediate goods, a transfer payment that slipped in, or a missed change in stock.

Learn the chapter

Learning aid — check the method and sign conventions with your textbook and teacher. Figures are in ₹ crore.

By the ACES team · Last checked 6 November 2026