Causes of Poverty in India

  • The main causes are high population growth rate, agrarian form of economy, primitive agricultural practices, illiteracy, ignorance, unemployment, underemployment, caste based politics, urban rural divide, social inequity and discrimination, regional disparities and lack of proper implementation of PDS.
  • Poverty is also associated with structural factors such as low wages; insecure, casual employment; low-productivity small holder agriculture; and low social status of SC and especially ST households living in the poorest and most multi-dimensionally deprived states and regions.
  • Sudden onset of a long term and expensive illness, a disaster such as earthquake or flood, a failed crop, a failed investment or a policy change that leads to a loss of livelihood or reduction in come. This is a driver forcing people into poverty.
  • Failure of land reforms – particularly two components of land reforms played an important role in perpetuating poverty in India.
    • Redistribution of land as a component
    • Tenancy reforms as a component.
    • India didn’t show any interest on land reforms after the 6th five year plan. As after this, the interest has been shifted to the development of secondary sector.
  • In India, poverty has persisted because of inadequate development and growth of economy.
    • 1% of the GDP can reduce poverty by 2-3%. Rural economy growth has been slow and hence the poverty rate has not been decreased in rural areas.
    • If inequalities are large, economic growth will not have any impact on reducing poverty. Hence in rural areas poverty has persisted.
  • Poverty in India has persisted and worsened because of the development of backwardness in India’s agricultural system.
    • 69% of population that lives in rural areas will have links with agriculture either directly or indirectly.
    • Falling per capita size holding
    • More number of households becoming agricultural households as there is less development in other agricultural sectors.
    • Non-farm income has become more important to the agricultural households.
    • 43% of rural population (poor) depends on non-farm income which suggests the collapse of agricultural systems in creating livelihood for rural poor.
    • Low yields of agricultural holdings don’t help the poor people to come out of the poverty.
    • GDP growth in agriculture is twice as effective as in reducing poverty rather than in non-agricultural households.
  • Manufacturing sector has not been able to reduce poverty significantly.
    • Unorganized sector has been responsible for 50% of GDP, but 90% of employment.
    • Lot of manufacturing in India happens in village cottage households/industries.
    • The output is very low and quality is very poor. Hence, there will be low marketability. Hence, these households are not able to come out of poverty.
    • Structurally there are problems in India’s manufacturing sector.
      • Capital intensive manufacturing and less absorption of labor force
      • Not oriented towards rural economy. Has urban bias in terms of raw materials used, locations and products.
    • Poverty persists in India because of the poor quality of governance.
    • Governance is about quality of institutions, political systems and leaders, commitment of public servants, implementation of property rights and legal systems.
    • Neo liberal reforms
    • Five year plans oriented more towards FDI, FII and corporate sectors.
    • Inadequate social development.
      • Well developed health care system and education systems help the poor to be out of poverty.

Economic aspects of poverty relate to material needs – necessities of daily living.

Social aspects of poverty relate to easy access to education, healthcare and political empowerment.

Factors that ‘maintain’ people in poverty:

  • Illiteracy
  • Living in a remote geographic location that provides few livelihood opportunities
  • Poor access to health care facilities
  • Forced sale of assets to meet a crisis
  • Indebtedness and bonded labor

Interrupters are factors that can enable escape from poverty. The interrupters are:

  • Access to diversified income sources
    • Intensive farming and crop diversification
  • Linkages with urban areas
  • Improvements in rural infrastructure
  • Accumulation of human, physical and financial assets
    • This decreases dependencies.
  • Access to water for irrigation
  • Increase in wages
  • Access to credit
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