The correct option is (d) 1, 2 and 3.
Explanation
There is a strong link between economic growth and poverty reduction. Economic growth enlarges the national income, providing the necessary resources for development, while simultaneously creating an environment that incentivizes investment in human capital.
Statement-wise Analysis:
- Statement 1 is Correct: Economic growth implies an increase in the production of goods and services within an economy. This expansion naturally widens opportunities for employment and entrepreneurship, allowing individuals to participate in economic activities and improve their standard of living.
- Statement 2 is Correct: Higher economic growth generates higher tax revenues for the government. These additional financial resources are essential for the state to invest in human development sectors such as education, healthcare, and sanitation, which are critical for long-term poverty alleviation.
- Statement 3 is Correct: Economic growth often leads to higher returns on skills and education. This creates a strong incentive for families to send their children to school, as they anticipate better economic returns and employment prospects in a growing economy. This behavioral shift supports the formation of human capital.
Key Takeaway:
Economic growth acts as a catalyst for poverty reduction by generating fiscal resources for social spending and creating market-based incentives for individuals to invest in education and skill development.