The term economic growth is defined as the process whereby the country’s real national and per capita income increases over a long period of time.
This definition of economic growth consists of the following features of economic growth:
1. Economic Growth implies a process of increase in National Income and Per-Capita Income.
The increase in Per-Capita income is the better measure of Economic Growth since it reflects increase in the improvement of living standards of masses.
2. Economic Growth is measured by increase in real National Income and not just the increase in money income or the nominal national income.
In other words the increase should be in terms of increase of output of goods and services, and not due to a mere increase in the market prices of existing goods.
3. Increase in Real Income should be Over a Long Period.
The increase of real national income and per-capita income should be sustained over a long period of time. The short-run seasonal or temporary increases in income should not be confused with economic growth.
4. Increase in income should be based on Increase in Productive Capacity.
Increase in Income can be sustained only when this increase results from some durable increase in productive capacity of the economy like modernization or use of new technology in production, strengthening of infrastructure like transport network, improved electricity generation, etc.