Mention the limitation of per capita income as an indicator of development.

In the method of using per capita income, the income of a country is divided by the total population which gives the average income of a country. The limitation in using per capita income as an indicator of development can be explained as below:

1. It does not tell anything about the distribution of income. There might be a concentration of a maximum part of wealth in the hands of a few. A poor society with equal distribution of wealth is better than a richer country with unequal distribution of income.

2. The per capita income does not take into consideration various facilities which influence the quality of life, such as, education, health facilities.

3. It is affected by the size of the population. Per capita income will be low even if the national income is high, but the country has a large population.