Economics


Chapter : 1. Development

Limitations of per Capita Income

Limitations of per Capita Income :
1. A rise in per capita income is due to rise in prices and not due to increase in physical output. It is not a reliable index of economic development.
2. National income rises but its distribution makes the rich-richer and poor poorer.
3. It excludes all non marketed goods and services, even though they may be important for human happiness and better quality of life.
4. Rise in per capita income may be due to use of modern capital intensive technology in production which may be labour displacing in nature thus adversely affecting the poor masses.
5. If the rate of population growth, is higher than the rate of growth of national income, this will lead to fall in percapita availability of goods and services and economic welfare.

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