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    Question

    What can be the possible reason for determining poverty

    on the basis of consumption expenditure instead of income?
    A All people consume but not all earn. Correct Answer Incorrect Answer
    B Presence of domination of the unorganized sector in India. Correct Answer Incorrect Answer
    C Hindrance in collecting income data. Correct Answer Incorrect Answer
    D All of the above. Correct Answer Incorrect Answer

    Solution

    The reason to determine poverty on the basis of consumption expenditure instead of income is that dependent people like childrens and senior citizens also consume even though they are not earning. One more reason is even though income is less people may consume more on the basis of their savings or borrowings. The Indian economy is dominated by an unorganized sector and it is difficult to collect income data, hence determination of poverty is done on the basis of consumption expenditure instead of income.

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