National Disposable Income

National Disposable Income = Net National Product at market prices
+ Other current transfers from the rest of the world

The idea behind National Disposable Income is that it gives an idea of what is the maximum amount of goods and services the domestic economy
has at its disposal. Current transfers from the rest of the world include
items such as gifts, aids, etc.

National Disposable Income for a country is in the same way as Personal Disposable Income (Personal Income – Personal taxes) is for an individual. How it disposed off Rs It is disposed off as (i) final consumption expenditure of the government, (ii) private final consumption expenditure and (iii) savings.

Symbolically:

National disposable income = NNP at MP + Net current transfers from rest of the world

= National Income + net indirect taxes + net current transfers from rest of the world.

Remember actual income available to a country for disposal on final consumption and saving may be higher or lower than national income. If a country gives a part of its nation income to other countries byway of charity or donation, its capacity to consume and save will fall. Contrary to tills, if rest of the world transfers income to tills country country’s capacity to spend and save will increase.