Per Capita Income Concept:

Per capita income can be used as a measure of household welfare. A threshold  level of  income  is used  to  differentiate the  poor from  the  non-poor.  There are three deficiencies with  this approach. First,  the  level of  income of a household may vary considerably during the course of a year under study. Second, income of households during a particular year may not be representative income over an  extended number of years. Third,  the  self-employed  and  informal  sector  may  pose  a  problem  as households may not report their true income for fear of being taxed.

In  addition  to  the above, there are certain other limitations  associated  with  the income  indicators of  poverty  particularly  in  the context of price  and commodity differentials, the exclusion of non-cash and "free"  items (such as publicly provided goods  and  services),  and  the  omission  of other factors,  such  as  time required  to obtain  a commodity. In  spite of these limitations, income  indicators continue 'to be the  most  widely  used  means of measuring poverty, partly because  of the relative abundance of data and partly because of its simplicity.