What is a major criticism of the 'Monthly Per Capita Expenditure' (MPCE) mechanism used to identify the poor? 1. It groups all the poor together without differentiating between the very poor and the other poor. 2. It relies on income data which is considered more accurate than expenditure data. 3. It ignores social factors like illiteracy, ill health, and lack of civil freedoms. Select the correct answer using the code given below:

What is a major criticism of the… - NCERT Class 11 Economics MCQ

NCERT Class 11 Economics — Chapter 4: Poverty

mcqmedium

What is a major criticism of the 'Monthly Per Capita Expenditure' (MPCE) mechanism used to identify the poor?

It groups all the poor together without differentiating between the very poor and the other poor.
It relies on income data which is considered more accurate than expenditure data.
It ignores social factors like illiteracy, ill health, and lack of civil freedoms.

Select the correct answer using the code given below:

NCERT textbook question

From NCERT Indian Economic Development · Page 65

Options

A1 and 3 only
B2 only
C1 and 2 only
D1, 2 and 3

Did you get this right?

Solution

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.

Your note

More from Chapter 4: Poverty

Consider the following statements regarding the categorization of poverty: 1. The 'Chronic Poor' category includes only those who are never poor. 2. The 'Churning Poor' are those who regularly move in and out of poverty. 3. The 'Transient Poor' category includes both the churning poor and the occasionally poor. Which of the statements given above is/are correct?

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Which of the following characteristics are associated with the rural poor in India? 1. Many are landless agricultural labourers. 2. They typically possess large tracts of fertile irrigated land. 3. They are largely engaged in low-productivity agricultural or non-agricultural activities. Select the correct answer using the code given below:

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In the context of poverty alleviation strategies in India, the approach focused on providing basic amenities envisages that:

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A critical assessment of poverty alleviation programmes reveals that: 1. The benefits from direct poverty alleviation programmes have often been appropriated by the non-poor. 2. The amount of resources allocated for these programmes is sufficient to eradicate poverty. 3. High growth alone is sufficient to reduce poverty. Which of the statements given above is/are correct?

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With reference to the Self-Help Group (SHG) linkage programme, consider the following statements: 1. SHGs are discouraged from saving money and must rely solely on government grants. 2. The government provides partial financial assistance to SHGs through banks. 3. The government decides the individual beneficiaries for loans, bypassing the SHG members. Which of the statements given above is/are correct?

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