Approach:

1. Introduction: Give an introduction by defining what is National Income.  
2. Body:
   1. In the First part Write about the methods of calculating National Income: 1. Income Method 2. Expenditure Method 3. Production Method

1. 2. In the second part mention the Problems with calculation of National Income:  Such as National Income Calculation 1.

3. Conclusion performance and well-being of the country

Ans: National income refers to the total value of all goods and services produced within the borders of a country over a specific period, usually a year. It is a critical measure of a nation’s economic performance and is used to assess the standard of living, economic growth, and overall welfare of its citizens.

National income is calculated using three primary methods:

1. Income Method: This method adds up all incomes earned by individuals and businesses within the country. It includes wages and salaries, profits of businesses, rents from land and property, and interest earned on investments. This method is also known as the “factor income method.”
2. Expenditure Method: This method calculates national income by summing up all expenditures made on final goods and services within the economy. It includes consumption expenditure by households, investment expenditure by businesses, government spending on goods and services, and net exports (exports minus imports). This method is also known as the “expenditure method.”
3. Production Method: This method calculates national income by summing up the total value added at each stage of production across all industries within the economy. It accounts for the value of goods and services produced minus the value of intermediate goods and services used in the production process. This method is also known as the “value-added method.”

Limitations of calculation of national income:

1. Excludes certain non-market activities: national income calculations often exclude certain non-market activities, such as household work or volunteer services, which can be substantial contributors to societal welfare. This exclusion can lead to an underestimation of the true value of economic activity within a nation.
2. Informal sector not captured in national income calculations: the informal sector, which is significant in many economies, is often not fully captured in national income calculations. This sector includes unregistered businesses and informal employment, which may not be reported to tax authorities or captured through official surveys 
3. Not accounting for the depreciation of capital goods: While gross domestic product (GDP) measures the total value of goods and services produced, it does not consider the wear and tear or obsolescence of capital assets used in production. Failure to adequately account for depreciation can lead to an overestimation of the economy’s productive capacity.
4. Does not capture the environmental degradation: Economic activity that leads to environmental harm, such as pollution or deforestation, is not deducted from national income figures. Consequently, economic growth may be overestimated while the longterm sustainability of that growth is compromised.
5. Does not reflect Income distribution accurately: While GDP per capita provides an average income figure, it does not indicate how income is distributed among different segments of the population.

It’s important to note that calculating national income accurately requires dealing with several challenges, including data collection, measurement errors, and accounting for informal sector activities. However, despite these challenges, national income figures provide valuable insights into the economic performance and well-being of the country, aiding policymakers in making informed decisions