Life Skill

How is the Per Capita income calculated?

Per capita income is the average income of the country. It is calculated by dividing the national income of a country by its total population.

The formula for per capita income :

Per Capita Income or PCI = National income of a country/ Total population of the country.

For example, the national income of country X is Rs, 5,00,000 and its total population is 5000.

So, PCI = 5,00,000/5,000

PCI = 100

It is used to compare the income level of different countries. It uses only the economic aspect of a nation and ignores other social aspects such as the education level and the health status of the country. So, PCI can be regarded as a single indicator of the economic development of a country.

The World Bank has divided the countries into rich and poor, on the basis of their PCI.