Question

How will you treat the following in the calculation of Gross Domestic Product of India ? Give reasons for your answer.
(i) Profit earned by a branch of foreign bank in India.
(ii) Salaries of Indian employees working in embassy of Japan in India.
(iii) Salary of residents of Japan working in Indian embassy in Japan.

Answer 1

(i) yes, it will be included in the Gross Domestic Product of India as profits are earned within the domestic territory of India.
(ii) No, it will not be included in the Gross Domestic Product of India as the embassy of Japan is not a part of the domestic territory of India.
(iii) Yes, it will be included in the Gross Domestic Product of India as the Indian Embassy is a part of the domestic territory of India.