Question

Give reason "Old age pension is transfer income".

Answer 1

(i) It is not a part of domestic factor income of India, because it is a transfer payment.
(ii) It is not a part of domestic factor income of India, because it is not generated within the domestic territory of India.
(iii) It is not a part of domestic factor income of India, because Russian Embassy in India is not a part of … domestic territory of India.
(iv) It is a part of domestic factor income in India, because the company is within the domestic territory of India.


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Answer 2

An old age pension is received by a person after their retirement, thus old age pension is transfer income.

• Old age pension is income from transfers. It's because transferring income refers to a person's income in the period when a person gets it without contributing anything to the production.
• These contributions are revenue from taxes as they do not obtain services in return. The government provides the public with these services for the purposes of welfare
• Old age pension is also not a part of the domestic factor income of a country, as it is a transfer payment.