Transfer payments are …………….. (1) (a) …

 Payment which is received without rendering any service or good in return is called transfer payment (or transfer income). These are unilateral payments which have no obligation of any return. For recipients these are unearned incomes. These are received for free, without having to make any present or future payments in return. Transfer payments are basically welfare-oriented expenditure of the government. This is a receipt concept as compared to factor income which is an earning concept. Thus transfer payment is the payment which one gets without adding anything to the current flow of goods and services. Examples are : old age pension, unemployment allowance, gifts in cash, scholarship amount, subsidies, taxes (compulsory transfer payment), etc. All transfer payments (incomes) are kept out (excluded) of national income because no corresponding goods and services are produced against such payments.