Net State Domestic Product (NSDP) represents the total value of goods and services produced within a state’s borders minus depreciation. It reflects the state’s economic performance by measuring the income generated from production activities, excluding wear and tear on capital assets such as machinery, equipment, and infrastructure. NSDP is crucial for understanding the real growth potential of a state’s economy, as it focuses on the net value created.

Unlike Gross State Domestic Product (GSDP), which includes depreciation, NSDP provides a more accurate picture of sustainable economic output by accounting for the decline in asset value over time. It helps policymakers and analysts assess the financial well-being of residents, as it closely correlates with the income available for spending, savings, and investment. By tracking NSDP, governments can plan policies to enhance economic development, improve resource allocation, and promote efficient use of capital assets.