Define per capita income? Mention it s two limitations
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Meaning: Due to limitations of national income as an indicator of development, economists like Rostow, Baran and Leibenstein etc. favored the use of per capita income as an index of development. ... Similarly if both national product and population grow at the same rate, per capita national product will remain constant.
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.
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