The three identities of calculating the GDP of a country are being discussed below –

v Value Added Method –

Ø It is also called product method. Under this method national income is measured in terms of value addition by each producing enterprise.

Ø GDP at market price = GVA in primary sector at market price + GVA in secondary market at market price + GVA in territory sector at market price

Ø NDP at market price = GDP at market price - depreciation

Ø NDP at factor cost = NDP at market price - net indirect tax

Ø National income = NDP at market price + NFIA

v Income method

Ø Under this method national income is measured in terms of factor payments to the owners of factors of production.

Ø Net domestic income = compensation of employees + operating surplus + mixed income of self employed

Ø National income = Net domestic income + NFIA

v Expenditure method

Ø Under this method national income is measured in terms of expenditure on purchase of final goods and services produced in the economy.

Ø GDP at market price = Private final consumption expenditure + Government final consumption expenditure + Gross domestic fixed capital formation + Change in stock + Net Exports

Ø NDP at market price = GDP at market price - depreciation

Ø NDP at factor cost = NDP at market price - net indirect tax

Ø National income = NDP at factor cost + NFIA