Q.Write any four practical difficulties in national income estimation.

Practical difficulties include double counting, the non-monetised sector, unreported/black income, and inadequate reliable data.

Measuring a developing economy's national income accurately runs into several practical problems:

1. Problem of Double Counting — The value of the same good may be counted more than once at different stages of production. Unless only the value added or only final goods are counted, national income gets over-estimated.
2. Non-Monetised (Barter) Sector — In rural India many transactions and self-consumed farm produce never pass through the market and carry no money price, so this output is left out or only roughly estimated.
3. Unreported and Illegal Income — Income from the black economy, tax evasion and illegal activities is deliberately concealed and cannot be recorded, leading to under-estimation. …