What is NFIA? explain briefly
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Posted by Aman Jaiswal 5 years, 8 months ago
- 3 answers
Yogita Ingle 5 years, 8 months ago
Net Factor Income from Abroad (NFIA)
Simply put, NFIA is the difference between factor income received from abroad and factor income paid abroad. Simply put it is the difference between the factor income earned from abroad by normal residents of a country (say India) and the factor income earned by non-residents (foreigners) in the domestic territory of that country (i.e. India). CSO defines it as "Income attributable to factor services rendered by the normal residents of the country to the rest of the world, less factor services rendered to them by the rest of the world." Symbolically :
NFIA = Factors income earned from abroad by residents - Factor income of non-residents in domestic territory
The normal residents of a country earn factor income not only within the domestic territory of a country but outside it also. Income from outside can be earned mainly in two ways, namely, (i) income from work, and (ii) income from property and entrepreneurship as shown below. Mind, it is a two-way affair since foreigners also earn similar income by working in domestic territory of other country.
(i) Income from work (Compensation of employees). Income from work can be earned by working in the domestic territories of other countries earning thereby wages and salaries (or compensation of employees). For instance, suppose in 2006-2007, Indian resident scientists, engineers, doctors, dancers, masons, carpenters employed abroad earned factor income of र 10,000 crores whereas similar payments made to non-resident workers employed in domestic territory of India was to the tune of र 8,000 crores. Net compensation of employees from abroad to India would be र 2,000 (10,000 - 8,000) crores.
(ii) Income from property and entrepreneurship (Rent, interest, profit). Factor income from abroad is also earned by owning property (like buildings, shops, factories, financial assets like bonds and shares in foreign countries) earning thereby rent and interest, Also profit is earned for undertaking entrepreneurial activities of producing goods and services. For instance suppose in 2006-2007, normal residents of India living temporarily abroad earned र 25,000 crores by way of rent, interest and profit and similar payments made to the rest of world were, say र 20,000 crores. Net income from property and entrepreneurship from abroad would be र 5,000 (25,000 - 20,000) crores.
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Tushar Sharma 5 years, 8 months ago
0Thank You