Net Domestic Product, or NDP, is derived by subtracting depreciation from Gross Domestic Product. Depreciation refers to the wear and tear or loss of value of capital goods such as machinery, buildings, and equipment used in production. While GDP shows total output, NDP provides a more realistic picture of an economy’s actual productive capacity by accounting for the loss of capital assets. NDP reflects how much value an economy truly adds after maintaining its existing infrastructure. As a result, NDP is often considered a better indicator of sustainable economic growth.