Read the following passage and answer the item(s) that follow, your answers to these item(s) should be based on the passage only.
The existence/establishment of formal financial institutions that offer safe, reliable, and alternative financial instruments is fundamental in mobilizing savings. To save, individuals need access to safe and reliable financial institutions, such as banks, and to appropriate financial instruments and reasonable financial incentives. Such access is not always available to all people in developing countries like India and more so, in rural areas. Savings help poor households manage volatility in cash flow, smoothen consumption, and build working capital. Poor households without access to a formal savings mechanism encourage immediate spending temptations.
With reference to the above passage, consider the following statements:
Which of the statements given above is/are correct?
Statement 2 is correct. The passage explicitly states that "Poor households without access to a formal savings mechanism encourage immediate spending temptations." This directly supports the assertion that a lack of access to appropriate financial instruments or mechanisms leads poor households to spend their earnings rather than save them.
Statement 1 is incorrect. The passage indicates that access to safe and reliable financial institutions and appropriate financial instruments is "not always available to all people in developing countries like India and more so, in rural areas." This implies that while access may be limited or not universal, it does not mean that Indian financial institutions offer no financial instruments at all to rural households. The phrasing "not always available" suggests a limitation in availability or reach, rather than a complete absence of offerings.