Causes of Poverty in India

Causes of Poverty in India

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Because of its scope and intensity, policy analysts and academic researchers are particularly concerned about the prevalence of poverty in India. Given that approximately half of the world's poor live in South Asia and that more than 300 million of the 534 million South Asians who lived on less than $1 per day in 2003 lived in India, the significance of India in the context of global poverty is clear. Based on a variety of factors, the Suresh Tendulkar Committee estimated that over 430 million people, or 37.2%, live below the poverty line. According to the multi-dimensional deprivation index (MPI), approximately 645 million Indians, or 55.4%, live below the poverty line. Below are a few significant factors that contribute to India's poverty:

1. Absence of comprehensive economic Growth -India's inadequate economic growth is the first major factor contributing to widespread poverty. The first three decades of planned development in India, from 1951 to 1981, saw an average annual increase of 3.6% in national income. During this time, despite a population increase of 2.1% per year, per capita income only increased by 1.5% per year. Additionally, the rise in per capita consumption expenditure from about 9% of GDP in 1950-1951 to 20% of GDP in 1979-1980 was insufficient to significantly address the issue of poverty.

2. Poverty and Sluggish Agricultural Output - The poverty ratio decreases in a year with high agricultural output, according to numerous economists. A rise in employment opportunities and a decrease in the cost of food grains are the outcomes of good agricultural performance. The poverty ratio decreases as a result of increased employment opportunities and lower food prices. However, new high-yielding technology has not been widely adopted in a number of states across the nation, including Orissa, Bihar, Madhya Pradesh, Assam, and East Uttar Pradesh, where the poverty rate is still very high. As a result, agricultural performance has not been good. Because of this, a lot of the country is still semi-arid and rain-fed, and agricultural productivity, income, and employment alone will not be enough to significantly reduce poverty.

3. Land Reforms that were not carried out - An important factor in reducing poverty is equitable land access. For members of an agricultural household to be able to work full-time, they need to have access to sufficient land, a productive asset. The majority of the poor in rural areas are self-employed small farmers with less than two acres of land and agricultural laborers, who typically lack land. Throughout the year, they are unable to find employment. As a result, they are underemployed or unemployed for many days each year.

4. Rapid Growth in Population - India's persistent poverty can also be attributed to the country's explosive population growth since 1951.India's population has grown from 36 crores in 1951 to 102.7 crores in 2001, or 66 crores people in the roughly 50 years since independence. Holdings become excessively subdivided and fragmented as a result of rapid population growth. Because of this, the amount of land that is available to each person has drastically decreased, leaving households without enough land to meet their needs and generate sufficient income. Additionally, the ratio of dependents to earning members rises as the population expands at a rapid rate. This results in lower consumption expenditures per person, which are insufficient to meet even the most fundamental needs.

5. Joblessness and Under-employment - Another factor that contributes to India's poverty is the economy's high rate of underemployment and unemployment. Casual workers, whose share of the workforce has been rising, are more likely to be unemployed, and poverty is common among them. Rapid population and labor force growth, on the one hand, and a relatively low rate of capital formation and economic expansion, on the other, have both contributed to unemployment. Additionally, the organized sector's contribution to the creation of employment opportunities has been negligible. As a consequence of this, there has been an increase in land-based population, which has resulted in unemployment, as well as hidden unemployment in the informal sector and agriculture.

6. Employment is growing slowly - At the start of the planning era, it was thought that the organized sector would provide enough jobs for the poor who were unemployed for 20 years. These expectations have come to nothing in reality. Take, for instance, the development of the economy over the past ten years, from 1990 to 2000.The total number of people employed in the organized sector—which includes both the public and private sectors—is estimated to have increased from approximately 26.4 million in 1990 to approximately 28 million in 2000. In other words, the organised sector—which includes the industrial and services sectors as well as organized agriculture—was only able to generate employment for 1.6 million people over a ten-year period, whereas the number of people employed increased by 66 million from approximately 340 million in 1990 to 406 million in 2001.

7. Inflation - Poverty is largely caused by the rate of inflation and the cost of food. The minimum expenditure required to meet one's basic needs is impacted by inflation, particularly the rise in food prices. Because of this, the Public Distribution System was created to provide food grains and other essentials like Kerosene oil, standard cloth, and pulses at subsidised prices—that is, at prices that are lower than the prices that are available on the free market. The majority of Public Distribution Ration Shops, on the other hand, are situated in urban areas.

In conclusion, it is important to note that although economic growth is a potent tool for reducing poverty, the extent to which higher growth reduces poverty depends significantly on the pattern of growth and inequality levels. The Indian economy has also undergone significant structural changes as a result of its rapid growth in recent years. As a result, inclusive growth has emerged as a major policy priority and is defined as the process by which a large number of people share in the benefits of growth.