Indian Citizenship and its Impact on GNP and GDP

What will happen when an Italian working in India renounces his Italian citizenship and is granted Indian citizenship?

a) Italian GDP will fall; Indian GNP will rise (b) Italian GNP will fall; Indian GNP will rise (c) Italian GDP will fall; Indian GDP will rise (d) Italian GNP will fall; Indian GDP will rise

The correct option is (b) Italian GNP will fall; Indian GNP will rise. When an Italian working in India renounces his Italian citizenship and is granted Indian citizenship, Italian GNP will fall and Indian GDP will rise.

In this scenario, there will be no effect on Italian or Indian GDPs because GDP and GNP are measures of the total value of goods and services produced by a country. GNP stands for Gross National Product, which refers to the total value of goods and services produced by a country's residents and businesses, regardless of where they are located. GDP, on the other hand, refers to the total value of goods and services produced within a country's borders, regardless of who produces them.

When the Italian worker renounces his Italian citizenship and becomes an Indian citizen, his income and output will now be included in India's GNP. Italy's GNP will fall because one of its citizens has migrated, but Italy's GDP will remain unaffected. Similarly, India's GDP will remain unaffected because it only accounts for the value of goods and services produced within its borders. However, India's GNP will increase because it now includes the income and output of the Italian worker.

Therefore, the correct answer is (b) Italian GNP will fall; Indian GNP will rise.