Question : Assertion: Lack of access to financial services and credit facilities contributes to poverty.
Reason: Access to credit enables individuals and businesses to invest, generate income, and improve their standard of living.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
The assertion is true. Financial exclusion and limited access to financial services can hinder economic opportunities and perpetuate poverty. Without access to formal financial institutions, individuals and businesses may struggle to save, invest, and access credit for productive activities. This can limit their ability to generate income, expand their businesses, and improve their standard of living, thus perpetuating the cycle of poverty.
The reason is the correct explanation of the assertion. Credit plays a vital role in poverty alleviation by providing individuals and businesses with the necessary financial resources to invest in income-generating activities, education, healthcare, and other essential needs. By accessing credit, individuals can start or expand businesses, acquire assets, and invest in productive ventures, which can lead to increased income and improved living conditions.
Therefore, both the assertion and reason are true, and the reason is the correct explanation of the assertion. Lack of access to financial services and credit facilities can indeed contribute to poverty, and access to credit plays a crucial role in empowering individuals and businesses to improve their economic circumstances and break the cycle of poverty.
