Depreciation is deducted from GNP to arrive at NNP because depreciation:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → does not become part of anybody's income
Depreciation is the wear and tear of capital. It is not paid to anyone, so it does not become part of anybody’s income. It is deducted from GNP to get NNP.
NCERT (2026-27): “Gross National Product (GNP) … We have already noted that a part of the capital gets consumed during the year due to wear and tear. This wear and tear is called depreciation. Naturally, depreciation does not become part of anybody’s income. If we deduct depreciation from GNP the measure of aggregate income that we obtain is called Net National Product (NNP). …” |