Transfer Income
The income received by an individual without rendering any productive service in return is known as Transfer Income. Transfer Income is a unilateral concept and is not included in National Income, as it does not involve the production of goods and services. For example, Old age pension, pocket money, gifts, scholarship, etc. Transfer Income can be received either from abroad or within the domestic territory of a country. For example, Taxes paid to the government of a country are the transfer incomes, as they receive taxes without rendering any productive service in return. Similarly, subsidies provided to the citizens by the government are transfer payments, as they do not get any productive service in return.
Transfer can be of two types: Capital Transfer and Current Transfer.
Basis |
Current Transfer |
Capital Transfer |
|---|---|---|
| Meaning | A transfer that is made out of income is known as a current transfer. | A transfer that is made out of the wealth of the payer is known as a capital transfer. |
| Nature | Generally regular in nature. | Generally irregular in nature. |
| Meant for | These are meant for consumption purposes. | These are meant for capital formation. |
| Example | Gifts, Old age pensions, Unemployment allowance, etc. | War damages, Investment Grant, Capital Gains tax, etc. |
What is Factor Income and Transfer Income?
Macroeconomics is a part of economics that focuses on how a general economy, the market, or different systems that operate on a large scale, behaves. Macroeconomics concentrates on phenomena like inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.
“Macroeconomics is that part of economics which studies the overall averages and aggregates of the system”. – KE Boulding