Limitations of per Capita Income are :
(i) Per capita income is an average and this average may not represent the standard of living of the people, if the increased national income goes to the few rich instead of giving to the many poor. Thus unless national income is evenly distributed, per capita income cannot serve as a satisfactory indicator of development.
(ii) 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.
(iii) National income rises but its distribution makes the rich richer and the poor poorer.
(iv) It excludes all non-marketed goods and services, even though they may be important for human happiness and better quality of life.
(v) If the 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.
(vi) Contribution of commodity to economic welfare may be higher than its money value e.g., money value of salt, needle, thread, etc. included in national income is lower than their contribution to economic welfare.
