Question

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What are the limitations of per capita income..!?

Give relevant answer!​

Answer 1

Answer:

(i) Per capital income is the average income of a country.

(ii) Per capital income criteria takes into account only the economic aspect of life and ignores the social, aspect of life.

(iii) Per capita income criteria ignores education, health, life expectancy, sanitation etc.

(iv) Per capita income criteria also ignores non material things like peace, pollution free environment, democracy, etc.

(v) Though Punjab has higher per capital income as compared to Kerala but it has been ranked lower on Human Development Index because it is far behind than Kerala in literacy rate and has higher infant mortality rate than Kerala.

Answer 2

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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.

• (iii) It excludes all non-marketed goods and services, even though they may be important for human happiness and better quality of life.

• (iv) 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.

• (v) If rate of population growth, is higher than the rate of growth of national income, this will lead to fall in per capita availability of goods and services and economic welfare.

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