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If an overseas branch’s profit accrues as factor income to an Indian-resident company, how is it treated in India’s GNP?

Answer and explanation

Correct answer: It is included as factor income received from abroad by an Indian resident

GNP is based on income accruing to a country’s residents, not only on where production takes place. If the overseas branch’s profit accrues to an Indian-resident company as factor income from abroad, it contributes to NFIA and hence to India’s GNP. The branch’s foreign production is not part of India’s GDP.

Related tags

GnpGdpForeign BranchNfiaGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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