The correct option is 1 and 3 only.
Explanation
In India, poverty has historically been estimated using the Monthly Per Capita Expenditure (MPCE) method based on data collected by the National Sample Survey Office (NSSO). This method determines a monetary threshold (Poverty Line) to distinguish the poor from the non-poor based on consumption levels rather than income.
Statement-wise Analysis
Statement 1 is Correct.
The MPCE-based poverty line approach primarily calculates the Head Count Ratio (HCR), which estimates the percentage of the population living below the poverty line. A major criticism of this mechanism is that it groups all poor people together. It does not differentiate between the "very poor" (those far below the line) and the "marginal poor" (those just below the line), thereby failing to capture the intensity or severity of poverty.
Statement 2 is Incorrect.
The MPCE mechanism relies on expenditure (consumption) data, not income data. In developing economies like India, with a large informal sector and seasonal earnings, income data is often difficult to capture accurately and fluctuates significantly. Consumption expenditure is considered a smoother and more reliable proxy for standard of living than income.
Statement 3 is Correct.
The MPCE is a purely monetary metric (uni-dimensional). It assumes that meeting a minimum expenditure threshold implies well-being. However, it ignores critical social indicators and non-monetary dimensions of poverty, such as illiteracy, lack of access to healthcare, sanitation, drinking water, and lack of civil or political freedoms. This limitation led to the development of multidimensional measures like the Multidimensional Poverty Index (MPI).
Key Takeaway
Key Takeaway: The MPCE method estimates poverty based on consumption expenditure, not income. Its primary limitations are that it treats all poor equally (ignoring the depth of poverty) and fails to account for non-monetary deprivations like health and education.