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Growth Rate of Per Capita Income

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Growth Rate of Per Capita Income:

  • Per Capita Income =  \(= \frac{Total\, national \,income }{ Total\, population }\)
  • This indicator takes into account the population of the country too, hence, it is superior to the national income as an indicator.
  • If the country’s per capita income rises at a faster rate, development is said to be fast and if per capita income rises at a slow rate, development is slow.
  • If per capita income does not rise, the development is stagnant.
  • If per capita income falls development is negative.
  • Rise in per capita income improves physical welfare of an individual and hence it is the real indicator of ED.

Limitations of Per Capita Income:

  • In India population census is held once in 10 years, hence the figures of per capita income are only estimates.
  • It is difficult to calculate per capita income.
  • Per capita income shows only an average.
  • As real’ exchange rate cannot be known the real comparison is not possible amongst countries.
  • Per capita income of the country is not actual income that a citizen gets, hence it is not a correct indicator of ED. „

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