National disposable income
Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
National disposable income is the total income a country has available to spend or save, from all sources. It adds current transfers from the rest of the world to NNP at market prices. These transfers are receipts such as gifts, aid and remittances, for which no goods or services are given in return. It shows the maximum amount of goods and services the economy has at its disposal.
National disposable income = NNP_MP + other current transfers from the rest of the world
Example
Suppose India's NNP at market prices is ₹1,000 crore. It also receives ₹40 crore in foreign aid and gifts from abroad. Its national disposable income is then ₹1,040 crore.
Don't confuse with
- National income (NNP at factor cost): this counts only factor incomes such as wages, rent, interest and profit. It leaves out indirect taxes and transfers from abroad.
- Personal disposable income: this is the income of households only, not of the whole nation.
Related concepts
- Gross National Product
- Net factor income from abroad
- Normal residents
- Domestic territory
- Net Domestic Product
- NDP at factor cost
- Net National Product
- GNP at factor cost
- National income
- Personal income