Net National Product (NNP) at factor cost is

🔑Key Points:
The Net National Product (NNP) of an economy is the GNP after deducting the loss due to ‘depreciation’.

• The formula to derive it may be written as follows:
NNP = GNP – Depreciation OR
NNP = GDP + Income from Abroad – Depreciation. 
NNP is the ‘National Income (NI) of an economy.
Though, the GDP, NDP, and GNP, all are ‘national income’ they are not written with capitalized ‘N’ and ‘I’. 
This is the purest form of income for a nation. 
When we divide NNP by the total population of a nation we get the ‘per capita income’ (PCI) of that nation.

🔴Additional Information:
Market Price and Factor Cost represent two different ways to value the goods and services within an economy.

• Here is the differentiation between the two:

• Market Price:
The market price is the amount that consumers pay for a good or service in the marketplace.
It includes the cost of production as well as taxes (indirect taxes) levied on the product or service and any subsidies provided by the government.
The market price represents the final price paid by consumers, which also covers the cost of making the product available in the market (transportation, retailing, etc.).

• Factor Cost:
Factor cost is the total production cost of goods and services, measured as the sum of the income earned by the factors of production (land, labour, capital, and entrepreneurship).
In simple terms, it is the cost of employing resources in producing goods and services, without considering any taxes or subsidies.
Factor cost provides a perspective on the costs acquired by businesses in an economy to produce the goods and services that are consumed.

• Using the concepts of market price and factor cost, we can differentiate between NNP at Market prices and NNP at Factor cost:

• NNP (Net National Product) at Market Price:
This is the value of final goods and services produced within an economy, including net income from abroad, measured at market prices. It includes indirect taxes and excludes subsidies paid by the government.
It is essentially the GDP (Gross Domestic Product) adjusted for depreciation and net factor income from abroad.

• NNP at Factor Cost:
This is the value of final goods and services produced within the economy, including net income from abroad, measured at factor cost.
To calculate NNP at factor cost, we deduct indirect taxes and add subsidies to the NNP at market price.
This gives us a measure of the income generated by the factors of production, disregarding the taxes and subsidies that may affect the market price.
Example: 
Suppose the NNP at market price for an economy is ₹1,000 billion (1 lakh crore), with indirect taxes of ₹100 billion (10,000 crores) and subsidies of ₹50 billion (5,000 crores). 
To calculate the NNP at factor cost, we would subtract the indirect taxes (₹100 billion) and add the subsidies (₹50 billion) to the NNP at market price (₹1,000 billion).
This results in an NNP at a factor cost of ₹950 billion (₹1,000 billion – ₹100 billion + ₹50 billion).

🛑Important Points:
NNP at factor cost, also known as Net National Income, represents the total income generated by an economy's factors of production, such as labour and capital.
It measures the net value of goods and services produced within a nation and includes net income from abroad, measured at the cost of employing resources in production.
By excluding the effects of indirect taxes and subsidies, it offers a clear assessment of the actual earnings of an economy's resources, reflecting the income available to its citizens.