Hello everyone welcome to edit up so in today's session we are going to discuss a very important topic and we are going to discuss about the personal income and the personal disposable income we will understand the meaning as well as the differences between the two okay and before starting with the session please subscribe to our youtube channel if you.
Are new to the channel and join our telegram channel for the pdf of this session and you can get the link of the telegram channel in the description box below so now see uh in the question in the previous year question of rbi great view disposable income were mentioned in the uh options okay and next time it might.
Be that there might be a question directly about these so you need to understand even the options you need to understand and have the knowledge of even the options so that you can also apply the elimination method so today we will understand the differences and the meaning of the two so that you have the clarity that what.
This is and the question was that which of the following term denotes the average income earned by a person in india i hope many of you know that average income earned by a person in india is the per capita income that is the national income we can say that total income of the country divided by the total population.
That is a formula of per capita income that is if the country has the income of 200 and the country has 10 people so we can say that each person will have 20 rupees this is the average income earned by a person in india we can say 20 rupees okay so this is the per capita income so now let's understand about the personal income first see personal.
Income is derived from the national income okay that is let's understand with the example or with the concept that the households have the factor services okay the households are providing the factor services okay they are providing their land they are providing their labor they are providing the rent and the.
Sorry they are providing the entrepreneurship and the capital so these are the factor services that the household or individuals are providing of course the robot is not doing all the work the person has the land the person is providing the labor entrepreneurship and the capital so for this the person is.
Getting the individual is getting the factor payments we can say or the incompetency so against the land the person is getting the rent against the labor the person is getting the wages against the entrepreneurship the person is getting the profits and against the capital the person is.
Getting the interest okay so we need to see the personal income is the income that is received per say income is the income that is received by the households or the individuals okay so personal income is the income received by the households or the.
Individuals but is it that all the profits are going to the households or all the profits are going to the uh individuals no there is some profits that is kept by the firms there is some profits that is going to the government so not all everything is going from here to the households or individuals so we have.
To see that what is not going to the households or what is not going to the individuals okay so this is plus net factor income from abroad this whole is the this is the national income we can say okay this is the national income that is how much rent is generated in the economy how much wages are earned in the.
Economy how much profits are earned how much interest is on plus net factor income from abroad that how much are factors are earning from abroad so this whole is net is national income now let's say that from the profits are all the profits going to the individuals no there are some profits.
That are undistributed profits that is the profits that is kept by the firms for the further like unforcing emergencies or something so this is the undistributed profit that is not distributed to the individuals or households okay here we have to see now what is going to the households what is going to the individuals so this.
Undistributed is profit is not going to the households so we are deducting it from the national income to take out the personal income as well as the corporate tax that is the tax on profit we can say corporate profit tax we can say so this tax is going uh from the profits to the government okay this is not going to the household this is not going to the.
Individual so this is going to the government so this is also deducted from the national income from this okay from the profits next is net interest payments made by households we can say that is why we are deducting it okay that is how much interest payments the households are doing outside okay how.
Much interest payments we are doing to the banks we can say to the firms maybe we have taken some uh loan from the firms or we have taken some loans from the banks so the interest payments that is made by the households that is going out from the households that is also deducted but we are adding okay here net is there we are.
Adding the interest payments that is coming to the household because maybe households has lent the money okay so we are adding the uh interest payments that is coming to the households while we are deducting the interest payments that is going out of the households that is going to the banks that is going to the firms next is transfer payments are.
Added because trust see the subsidies given by the government the uh benefits given by the government that is transfer payments coming to the households okay coming to the households means that it is added whatever is coming to the household is added okay the rent the wages the profits and the interest that is coming.
To the households are added while the undistributed profit that is not coming to the households corporate tax the interest payment that is going out of the household these all things are deducted okay so anything that is going out of the household or households or not get by the households are deducted while anything that is got by the.
Households is added so received okay remember this everything that is received by the households or individuals is added so this is the personal income i hope this was very easy once you understand what is personal income income received by the households are individuals that's why we are deducting.
The income that is left with the firms that is left with the government okay or the banks or anything so now personal disposable income now let's say that you have earned your personal income was 200 rupees can you spend it all okay you have received i have received 200 rupees but the government is saying give me the uh.
Income tax okay give me the uh property tax so no this all 200 rupees that is received by the households or individuals is not spent okay from this the personal tax payments are done or any uh non-text payments are done so that is let's say income tax is given okay the property taxes are given belt taxes.
Was given so personal tax payments the income tax personal tax uh the property tax that is the person tax payments okay from the income that is received how much you are actually holding or how much you how much actually belongs to you okay how much actually belongs to the households or the individuals that is the personal disposable income that.
Is from this income we can see the consumption and the saving of the households okay person disposable income we can also write the consumption and saving because now the income that is left with the uh households and individuals after they have given the tax payments after they have given the fines and all okay so that
Non-tax payment we can say the fines are not so after they have given the tax payments what is actually left with them that belongs to them that they can use they will either consume or save so this is the personal disposable income that is the income that is they are holding or belong actually belonging to the households and individuals okay.
So this was the person disposable income i hope you have understood this now it will be very clear with you all once you see the differences between the two so personal income is the sum of all incomes actually received by all individuals or households that they are getting okay during a given year while personal disposable income is the part.
Of the income which actually belongs to the households okay which uh the household will actually hold after giving all the taxes themselves okay so this is the income that they are receiving that 200 they have received from the forms they have received okay but from this 200 the government has taken the.
Tax of 20 rupees so actually they are having 180 rupees okay so pi is the broader concept it is a bigger concept that includes the pia the pdi actually okay it includes the person disposable income and the taxes that is being the person taxes that is being paid so this formula can also be seen pdi.
Equal to pi minus the taxes now personal taxes we can say so if you leave the pi here and take the taxes there so pdi plus texas is equal to pi okay so pi is a the personal income is a broader concept and the pdi is a the percent disposable income is a narrower concept pdi is a.
Part of pi and is calculated from pi so pdi is calculated from pi while pi is calculated the personal income is calculated from national income and the personal disposable income is calculated from personal income okay remember this that personal income is calculated from national income and percent disposable income is calculated from.
Personal income pdi is either consumed or saved so the money that is going to the households now you have given the taxes now you have given all the fines that you have okay that you have to give so everything now that is left you will either consume or you will either save so this is for your consumption and saving so pdi.
Directly you it can be written that which type of income is directly consumed or saved is it national income is it the pi or pdi so you will say that the pdi personal disposable income is directly consumed or saved by the households so which of the following statement is incorrect you have to tell this and now i hope you will be easily.
Able to tell the incorrect statement okay regarding the incomes so these were the people that have given the right answer for the foreign exchange regimes uh session and they were so these are the people that have given the right answer for the foreign.
Exchange determination okay so that were very good regarding the depreciation and appreciation that what india should do or should india be depreciating the currency or appreciating the currency so there were some very good answers so uh yosh has given good answer mean to and many other people have given the good.
Answers okay so thank you very much and if you have any query you can mail us here or you can contact us through this number thank you very much