What is per capita income? Mention …

Per Capita Income is not an adequate indicator of economic development for the following reasons : It is an average amount of the total income which means it can't show the actual income status of a country. ... It needs other criterion to judge the economic development like literacy rate .

Limitations:

1.It does not indicate the disparities in the distribution of income. E.g. the wide gap between the incomes of extremely rich and very poor people. 2. It does not indicate long-term sustainability as non-renewable resources are liable to be exhausted.

Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population.  Limitations of per capita income are : (i) 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. (ii) National income rises but its distribution makes the rich richer and the poor poorer.

Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population. Limitations of per capita income are : (i) 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. (ii) National income rises but its distribution makes the rich richer and the poor poorer.

PER capita income is calculated on the total income of a country divided by its total population.
Money cannot buy all the goods and services that are needed to live well. So, income by itself is not completely adequate indicator of material goods and services that citizens are able to use.
Limitations of Per capita income as an indicator of development:

1. It does not indicate the disparities in the distribution of incomes .

Example:The wide gap between the incomes of the extremely rich and very poor people.

2. It does not indicate long term sustainability as non renewable resources are liable to be exhausted.

3. The method of calculting per capita income also varies among different countries.Thus,it is not highly reliable for comparison.

4.The data represented by per capita income is only theoritically possible and not practically.

5. It does not play a major part in classification of nation.