Suppose an Indian citizen makes an investment abroad and earns a positive return on her investment. Which of the following is correct? (a) Her income is part of India's GDP, but not part of India's national income. (b) Her income is part of India's national income, but not part of India's GDP. (c) Her income is part of both, India's GDP and national income. (d) Her income is neither part of India's GDP, nor its national income.

Gross Domestic Product (GDP) measures the aggregate value of goods and services produced strictly within the domestic territory of a country, regardless of the nationality of the producer [3]. Therefore, income earned by an Indian citizen from investments made abroad is excluded from India's GDP because the production or economic activity occurred outside national borders [3]. Conversely, National Income (often represented by GNP or GNI) includes the total income earned by a country's residents, irrespective of where the underlying production takes place [1][2][3]. It is calculated by adding Net Factor Income from Abroad (NFIA) to the GDP [1]. Since the Indian citizen is a resident factor of production earning a positive return (factor income) from the rest of the world, this income is added to the GDP to arrive at the national income [1][2]. Thus, the income is part of India's national income but not its GDP.

Sources

1. [3] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > National Income Identity for an Open Economy > p. 102
2. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > 1.11 Macroeconomic Variables > p. 16
3. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.3 SOME MACROECONOMIC IDENTITIES > p. 25