Limitations of per capita income could be understood by following points 1. its only a average so, its can't describe the standard of living of a person in a particular area. 2. It doesn't tell about others important things like Heath care, literacy rate, education system , environment many more which are pillars for good infrastructure of particular country ..

Per capita income is a commonly used measure to assess the level of development of a country. However, it has several limitations that need to be considered when evaluating a country's economic performance.


Per capita income is calculated by dividing the total income of a country by its population. This measure does not take into account the distribution of income among the population. A country with a high per capita income may still have a significant proportion of its population living in poverty, and income inequality can lead to social and economic instability.


Per capita income measures only the monetary value of goods and services produced in a country. It ignores non-monetary factors such as education, health care, and access to basic services like clean water and sanitation. A country with a high per capita income may still have poor social indicators, indicating that the population's quality of life is not improving.


Per capita income is affected by external factors such as exchange rates, inflation, and international trade. A country's economic performance may be influenced by its economic policies, but it can also be affected by global economic conditions that are beyond its control.


Per capita income calculations only consider formal economic activity, which means that it does not reflect the informal economy, such as cash-based transactions and activities that are not reported to the government. In many developing countries, the informal economy is significant, and it can account for a significant portion of economic activity.


Per capita income does not account for environmental sustainability. Countries with high levels of economic growth may also have high levels of pollution, deforestation, and other environmental problems. These issues can have long-term negative impacts on social and economic development.

In conclusion, while per capita income is a useful measure of economic development, it has several limitations that need to be considered. Policymakers and analysts should use a broader range of indicators to evaluate a country's economic performance and development.