GROSS VALUE ADDITION and NET VALUE ADDITION :

The term value added means the net contribution made by a firm in the process of production .The raw materials that a firm buys from another firm which are completely used up in the process of production are called intermediate good. Therefore the value added of a firm is ( value of production of a firm) minus ( the value of the intermediate goods used by the firm ). The value added of a firm is distributed among its for factor of production namely land, labor, capital  and organization .

GROSS VALUE ADDITION:-

GVA  is a measure in economics of the value of goods  and services produced in an area ,industry or sector of an economy. In National accounts GVA is output minus intermediate consumption .It is a balancing item of the national accounts.

 

NET VALUE ADDITION :-

Net value addition is the value of output less the values of both intermediate consumption and consumption of fixed capital .

         NVA _MP =GVA _MP  - Consumption of fixed capital  ( Depreciation)

   We can explain the difference between the GVA and NVA with the help of the example ,  if we suppose that a firm Rs. 100 worth of goods per year . Rs. 20 is a value of intermediate used by it Rs. 10 is the value of depreciation ,then the GVA of the firm is –

                              Rs. 100-Rs. 20=Rs. 80

                         And  NVA will be Rs.80-Rs. 10=Rs. 70