2023 · Q28
Suppose an Indian citizen makes an investment abroad and earns a positive return on her investment. Which of the following is correct?
indian-polity-economyeconomy-fundamentals
- AHer income is part of India's GDP, but not part of India's national income.
- BHer income is part of India's national income, but not part of India's GDP.
- CHer income is part of both India's GDP and national income.
- DHer income is neither part of India's GDP, nor its national income.
Explanation
GDP measures the value of final goods and services produced within India's domestic territory, while national income (GNP) measures the income accruing to Indian residents wherever it is earned. The return on an Indian citizen's investment abroad is factor income from abroad: it adds to India's national income but is not part of GDP, which excludes production outside the domestic territory. Hence option B.