Even after 74 years of Independence, India is still struggling with the problem of poverty. Many reasons can be attributed to the problem of poverty. Some of the Causes of Poverty in India are discussed below.
Causes of Poverty in India
Causes of Poverty in India #1
Low levels of economic growth
The economic growth rate measured in terms of the growth rate of GDP has been very low in India. The average GDP growth rate for the planning period has been 4%. The low level of economic growth rate coupled with the high population growth rate has resulted in a low growth rate of per capita income. The growth rate of per capita income during the planning period was a mere 2.4%.
UPDATE: According to World Bank, the Indian economy is expected to grow at 8.3 percent in the current fiscal and at 8.7 percent in the financial year 2022-23.
According to the UNO norms, the per capita growth rate in India is one of the lowest. A low level of economic growth can be attributed to factors such as lack of infrastructural facilities and a low level of capital formation in the country. A low level of economic growth implies low income and poverty.
Causes of Poverty in India #2
Low level of economic development
The level of economic development in India has not been remarkable. We are still not able to fully utilize our physical and natural resources. Thus, the productive capacity remains at a low level. This has resulted in low income and poverty in the country. Besides, a large section of the population is still dependent on agriculture for their livelihood.
Moreover, production in agriculture is based on primitive and backward techniques. Also, various other problems such as lack of infrastructural facilities, lack of credit facilities, lack of awareness, etc. have contributed to the backward state of agriculture. Such a state of agriculture has given rise to rural poverty. Moreover, the industrial sector, although growing at a rapid pace, has been unable to absorb the increasing labor force. This has left a large section of the population with low income and poverty.
Causes of Poverty in India #3
Lower levels of literacy and skills
Owing to low levels of literacy and skill, people find it hard to get employment opportunities. They often engage themselves in low-skilled jobs that are associated with less wages and salaries. Similarly, in the field of agriculture, a low level of literacy implies that the farmers fail to adopt new and modern techniques of production. As a result, the production and income remain low. Thus, illiteracy contributes to poverty.
Causes of Poverty in India #4
High inflationary pressure
Over time the prices of food grains and other essential commodities have tended to rise continuously. The cost of production of goods and services remains high due to inefficiencies and low levels of technology. The poor and the wage earners are worst hit by the soaring prices. Often due to high prices, they are not able to purchase even the basic and essential commodities. As a result, a large section of the population is compelled to live below the poverty line.
Causes of Poverty in India #5
Another important cause of poverty in India has been the rapid rise in population. There has been a sharp rise in the population due to the low death rate and high birth rate. The current population of India is 1,400,717,076 as of Wednesday, January 12, 2022, based on Worldometer elaboration of the latest United Nations data. A higher population implies a greater dependency burden.
Moreover, the population growth rate among the poor is even higher. For the poor, the greater number of members in the family implies greater earning hands. In addition to this, the bias in favor of the male child leads them to increase the family size irrespective of the consequences. A higher population implies lower per capita income. Also, it acts as a hurdle in the way of quality education, health care facilities, and other facilities necessary for a quality life. Thus, a high population leads to a low standard of living and aggravates poverty.
Causes of Poverty in India #6
Unemployment is one of the major causes of poverty in India. There exists a direct and positive relationship between unemployment and poverty. An unemployed person has no means to earn money and cannot fulfill his own and his family’s basic needs. The unemployment rate in India is at a staggering 7.4% as of 2022. The agriculture sector in the rural areas suffers from disguised unemployment and seasonal unemployment, while in urban areas there exists educated unemployment and under unemployment. An unemployed person cannot avail of quality education, medical facilities and has no means to create income-earning assets. Such circumstances often compel indebtedness exaggerates poverty.
Causes of Poverty in India #7
Unequal distribution of income
Although India has made substantial progress in terms of GDP growth this growth has not been shared equally by all the sections of the society. The rich are becoming richer while the poor are becoming poorer. The major share of the growth is shared by the rich section of India. The gap between the rich and the poor has tended to rise over time. This inequitable distribution of income further worsens the situation of poverty.
Causes of Poverty in India #8
Indian society is full of backward and outdated social beliefs and systems such as the caste system, law of inheritance, rigid religious beliefs, joint family system, etc. Such beliefs and systems obstruct the process of growth. For example, the caste system hinders the mobility of labor to take advantage of better employment and income-earning opportunities. Similarly, the joint family system encourages dependency. It is common to see a huge sum of money being spent on social obligations such as wedding ceremonies. In some instances, people even resort to loans and debt to fulfill these obligations. The net result of such social beliefs is poverty.
Economic Reforms in India
Economic reforms refer to a set of tools and policies initiated in an economy in order to facilitate the process of growth and development. After going through this lesson, you will understand the Economic Reforms in India
Poverty Alleviation in India
Poverty alleviation has been one of the prime objectives of the five-year plans in India. Poverty has plagued India for a long and thereby, measures are required for addressing the issue.
Globalization in India
Globalization in India was the third step under the New Economic Reforms of 1991. It is an extension of the liberalization and privatization policies.
Privatization in India
Accordingly, in the New Economic Reforms of 1991, privatization in India was initiated as an important measure. It was decided to gradually phase out the public sector and pave the way for privatization.