Gross capital formation
1.16 Gross capital formation consists of the acquisition of fixed assets and
the accumulation of stocks. Fixed assets are physical productive assets,
examples of which are buildings, civil works, machinery, vehicles etc. The
stock accumulation is in the form of changes in stock of raw materials, fuels,
finished goods and semi-finished goods awaiting completion. Thus gross
capital formation is that part of country's total expenditure which is not
consumed but added to the nation's fixed tangible assets and stocks.
Saving
1.17 Saving represents the excess of current income over current
expenditure of various sectors of the economy. It is the balancing item on the
income and outlay accounts of the producing enterprises, households,
government administration and other final consumers. For the closed
economy savings equals capital formation during the year whereas for the
open economy savings equals capital formation plus net capital inflow from
abroad during the year.
Private Income
1.18 Some of the national income accrues to the government in the form of
property income of government departments and profits of government
enterprises. The government also makes transfer payments to private sector
in the form of grants, social security payments, gifts, etc. The government
pays interest on national debt which accrues to the private sector. Private
income is a measure of the income derived from national income by adding
the sum of government transfer payments and interest on national debt and
subtracting the property income of government departments and profits of
government enterprises.
1.19 Transfer payments result from transactions which do not give rise to
the exchange of commodities or factor services. A payment of money is
made without a corresponding flow of goods and services in the opposite
direction. It is the general practice to consider in national accounts only
payments which are in exchange for goods and services as contributing to
output. So transfer payments are not shown in the major accounts as an
addition to total product. The value of transfer payments to households is
included in the income aggregate of private income.
Personal Income
1.20 Personal income is a measure of the actual current income receipt of
persons from all sources. It differs from private income in that it excludes the
undistributed profits which accrue to Private Sector but are not received by
persons. It also excludes the expenditure tax paid to government by the
Private Corporate Sector. It is derived from private income by subtracting the
savings of the private corporate sector and the corporation tax.
Personal Disposable Income
1.21 Even the above subtractions are not sufficient to derive personal
income which is actually available for spending. Disposable personal income
is derived from personal income by subtracting the direct taxes paid by
individuals and other compulsory payments made to the government. It is a
measure of amount of the money in the hands of the individuals and available
for their consumption or savings.[Reproduced from CSO publication]
1.16 Gross capital formation consists of the acquisition of fixed assets and
the accumulation of stocks. Fixed assets are physical productive assets,
examples of which are buildings, civil works, machinery, vehicles etc. The
stock accumulation is in the form of changes in stock of raw materials, fuels,
finished goods and semi-finished goods awaiting completion. Thus gross
capital formation is that part of country's total expenditure which is not
consumed but added to the nation's fixed tangible assets and stocks.
Saving
1.17 Saving represents the excess of current income over current
expenditure of various sectors of the economy. It is the balancing item on the
income and outlay accounts of the producing enterprises, households,
government administration and other final consumers. For the closed
economy savings equals capital formation during the year whereas for the
open economy savings equals capital formation plus net capital inflow from
abroad during the year.
Private Income
1.18 Some of the national income accrues to the government in the form of
property income of government departments and profits of government
enterprises. The government also makes transfer payments to private sector
in the form of grants, social security payments, gifts, etc. The government
pays interest on national debt which accrues to the private sector. Private
income is a measure of the income derived from national income by adding
the sum of government transfer payments and interest on national debt and
subtracting the property income of government departments and profits of
government enterprises.
1.19 Transfer payments result from transactions which do not give rise to
the exchange of commodities or factor services. A payment of money is
made without a corresponding flow of goods and services in the opposite
direction. It is the general practice to consider in national accounts only
payments which are in exchange for goods and services as contributing to
output. So transfer payments are not shown in the major accounts as an
addition to total product. The value of transfer payments to households is
included in the income aggregate of private income.
Personal Income
1.20 Personal income is a measure of the actual current income receipt of
persons from all sources. It differs from private income in that it excludes the
undistributed profits which accrue to Private Sector but are not received by
persons. It also excludes the expenditure tax paid to government by the
Private Corporate Sector. It is derived from private income by subtracting the
savings of the private corporate sector and the corporation tax.
Personal Disposable Income
1.21 Even the above subtractions are not sufficient to derive personal
income which is actually available for spending. Disposable personal income
is derived from personal income by subtracting the direct taxes paid by
individuals and other compulsory payments made to the government. It is a
measure of amount of the money in the hands of the individuals and available
for their consumption or savings.[Reproduced from CSO publication]
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