National income and economic welfare have direct relation, which means economic welfare increases with the increase in national income and vice-versa. Economic welfare refers to that welfare which can be measured in terms of money. 

Increase in economic welfare by rise in national income can be clarified from the following points :

(i) Employment and development : Opportunities of employment increase due to rise in national income which increases effective demand. It increases the income of citizens which makes them capable to fulfil their needs. It increases economic welfare.

(ii) Effect of distribution of income : If the distribution of income is equitable in the country, the economic welfare increases, and unequal distribution of income reduces economic welfare.

(iii) Indicator of national prospertiy : Rise in national income is an indicator of national prosperity because it increases the purchasing power of citizens so that they can buy more goods which raises thier living standard.

(iv) Ways to spend the income : Economic welfare depends upon the way of spending income. If people spend most of their income on luxurious goods, then economic welfare reduces.

(v) Effects on environment: If the increased national income is spent on new goods, it has adverse affects on environment because pollution increases and it also adversely affects public health. Thus, economic welfare starts declining.