Question
What can be the possible reason for determining poverty
on the basis of consumption expenditure instead of income?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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