what is the difference between national income and private income

National Income is the total market value of all the final goods and services (in terms of money) produced within the domestic territory during an accounting year.

Private Income is a narrower concept. It refers to the income accruing to the private sector from all the sources including both the productive sources (i.e. earned income) as well as the unproductive resources (i.e. unearned income/transfer payments from government or from the rest of the world).

Difference between the two can be traced from the components that are included in / excluded from each of them. 

National Income versus Private Income

National Income

Private Income

1. Transfer Payments are not included in the estimation of National Income.

1. Transfer payments are included in the estimation of Private Income.

2. Interest on National Debt is not a component of National Income.

2. Interest on National Debt forms a component of Private Income.

3. National Income includes the income accruing to both public sector as well as private sector.

3. Private Income includes income accruing only to the private sector.



A detailed explanation of  National Income and Private Income has been covered in our study material. Please follow the below mentioned link. 


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