Consider the following statements: 1. Poverty line estimation in India has been based on the consumption expenditure and not on the income levels. 2. It is difficult to assess incomes of self-employe…

Question

Consider the following statements: 1. Poverty line estimation in India has been based on the consumption expenditure and not on the income levels. 2. It is difficult to assess incomes of self-employed people, daily wage laborers etc., and there may be large fluctuations in income due to seasonal factors Which of the following is correct in respect of the above statements?

PYQPulse · Accepted Answer

Both 1 and 2 are correct, and 2 is the correct explanation of 1

PYQPulse · Answer

Explanation: In India, poverty lines have historically been estimated based on consumption expenditure rather than income levels. The method used is known as the consumption-based approach. The official poverty line in India is determined by the Planning Commission (now NITI Aayog) and is based on the methodology recommended by various expert groups. The poverty line is set by estimating the minimum level of consumption expenditure required to meet basic needs such as food, education, health, and other essential expenses. Assessing the incomes of self-employed individuals, daily wage laborers, and others in the informal sector can be challenging.

Answer: B. Both 1 and 2 are correct, and 2 is the correct explanation of 1

Explanation