National Savings = Public savings + Private Savings

Public Savings = T – G (tax – spending by government)

Private Savings = Y – T –C
S = T-G + Y-T-C
S = Y – C- G
 Savings & Investment
Output can be either consumed or invested. Investment is essential as it
increases the capital stock available for future production. National
Income Accounting recognizes relation between ‘savings’ and
‘investment’.
Measured savings is equal to measured investment.
Assumption no govt spending , govt or foreign sector.
Investment that part of national output that is not consumed.
Savings are that part of national income which is not consumed.
Since national income and national output are equal , means ‘savings
equal investment’.
I product-approach GDP-C
S earnings-approach GDP-C hence I = S
On totality
National Savings = private savings by private earnings by households and
business. Government savings equals the govt business surplus or the
difference between tax revenue and expenditures.
National Investment = gross private domestic investment plus net foreign
investment the same as net exports.
Hence complete savings-investment identity:
National investment = private investment + net exports = private savings
+ govt savings = National savings