Difference between national income and private income

National income and private income are two different ways of determining income of a country.

National income is defined as the total value of goods and services produced in a country during an accounting period or a financial year.

In other words, National income can be said to be the total income generated from all the economic activities happening in the country and it serves as an important component of the progress of an economy.

Private income is referred to as the total of all the factors incomes and transfer earnings received by the private sector from all sources. Private income includes incomes generated from any type of occupational activities or any income that is received apart from salary or any type of commission.

Let us look at some of the points of difference between National Income and Private Income

National Income

Private Income


National income is the total income that is generated by all the economic activities taking place in an economy during a financial year

rivate income is the income generated by any private individual or a household from engaging in any occupational activities or any type of income that is not received as salary or commission

Sectors Involved

It includes income that is generated from both public and private sectors

It includes income that is generated from the private sector only


Consists of only factor incomes

Consists of transfer earnings along with factor incomes


National Income = Rent + Compensation + Interest + Profit + Mixed income

Private Income = Income from domestic product accruing to private sector + Net factor income from abroad + All types of transfer incomes

This concludes the topic of Difference between National Income and Private Income, which is regarded as an important topic for Commerce students. For more such informational articles, stay tuned to BYJU’S.

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