Gross national product or Gross national income (GNI)

Gross national product or Gross national income (GNI) is defined as the sum total of the incomes which accrue to the residents of the country. Residents of the country is defined a individual/firms from any nationality living/operating in the country. Generally, living for more than 6 months makes the residents of the country.

Gross national income (GNI) consists of the personal consumption expenditure, the gross private investment, the government consumption expenditures, the net income from assets abroad and the gross exports of goods and services, after deducting two components viz. the gross imports of goods and services, and the indirect business taxes.

 GNI = GDP + (Earnings of residents from supply of factors of production to non-residents) – (Payments made by residents to nonresidents for factors of production received)

The difference is that GDP defines its scope according to location, while GNI defines its scope according to ownership. In a global context, world GDP and world GNP are, therefore, equivalent terms.

GNI is calculated based on index like consumer price index (CPI), wholesale price index (WPI), producer price index. In India, wholesale price index is considered for inflation rate estimation whereas in developed countries uses CPI for inflation.