Nature and causes of poverty in India
Poverty and Unemployment in Developing Countries
The two big problems faced by several developing countries are poverty and unemployment. These two things are interconnected. The reason why people are poor is that they do not have income, and its reason is unemployment.
In some cases, employed people are also poor. Reducing poverty is one of the main goals of Planning in India. In order to reduce poverty, we need to have precise data about people’s social and economic circumstances.
These data are highly useful for the state to adopt effective policies to eradicate poverty.
World Bank Definition of Poverty
Poverty Meaning – The World Bank in 1990 defined poverty as “the inability to attain a minimal standard of living.”
Thus, lack of adequate income to purchase the basic goods for subsistence living is an important element in the definitions of poverty.
Types of Poverty
Poverty can be classified into two types: Absolute and Relative Poverty.
Absolute and Relative Poverty
Absolute Poverty occurs when people do not have enough food, clothes, and a house to live in.
Relative Poverty arises when there is a difference in income among various groups of people. For example, poverty in one country may be different from that in another country.
Temporary or Chronic Poverty
In some countries, people fall into poverty temporarily. For example, a farmer may suffer poverty due to poor rainfall or a bad harvest.
When poverty lasts for a long time, it is known as Chronic or Structural Poverty.
Primary and Secondary Poverty
Primary Poverty, as said by Rowntree (1901), refers to “families whose total earnings are insufficient to obtain the minimum necessities for the maintenance of merely physical efficiency.”
Secondary Poverty, according to Rowntree, is when “earnings would be sufficient for the maintenance of merely physical efficiency were it not that some portion is absorbed by other expenditure, either useful or wasteful such as drink, gambling, and inefficient housekeeping.”
Rowntree further noted that secondary poverty prevents more people from meeting the “Human Needs Standard” than primary poverty.
Rural and Urban Poverty
In villages, the majority of people are poor due to lack of assets like land. They work as agricultural labourers with seasonal employment and very low wages.
They depend on landlords for food and benefits and are often exploited.
In urban areas, the poor work long hours with low income, mainly in informal and unorganised sectors.
They are often “sub-employed”, which means:
- People who work part-time but actually need full-time jobs.
- Family heads working full-time but not earning enough to lift their families above the poverty line.
- Discouraged workers who have stopped looking for employment.
The Poverty Line in India
The monthly per capita consumption expenditure of Rs. 972 in rural areas and Rs. 1407 in urban areas is considered the poverty line in India.
People spending below these thresholds are considered Below the Poverty Line (BPL).
Causes of Poverty in India
- High Population
- High dependence on Agriculture
- Underutilization of Resources
- Slow Economic Development
- Inflation
- Unemployment
- Caste System
- Lack of Inclusive Growth
- Poor Implementation of Land Reforms
- Underemployment
- Inadequate Access to Resources
- Lack of Infrastructure
| Cause of Poverty | Key Aspects and Implications |
|---|---|
| High Population |
– Strains limited natural resources and infrastructure. – Puts pressure on public services (education, healthcare). – Creates challenges in generating sufficient employment. |
| High Dependence on Agriculture |
– Vulnerability to monsoon failures and climate change impacts. – Low productivity due to traditional methods and small landholdings. – Prevalence of disguised unemployment. – Limited diversification into allied income-generating activities. |
| Underutilization of Resources |
– Inefficient exploitation of natural resources. – Underemployment and lack of skill development in human resources. – Insufficient investment leading to underutilization of capital resources. |
| Slow Economic Development |
– Historical factors and initial policy choices. – Persistent structural issues (bureaucracy, corruption, infrastructure gaps). – Uneven distribution of the benefits of growth. |
| Inflation |
– Erosion of purchasing power, especially for the poor. – Impact on food security due to rising food prices. – Limited coping mechanisms for low-income households. |
| Unemployment |
– Insufficient job creation in the formal sector. – Skill mismatch between the workforce and job requirements. – Dominance of the informal sector with low wages and job insecurity. |
| Caste System |
– Historical social and economic marginalization of certain groups. – Persistent social discrimination limiting opportunities. – Restricted access to education, land, and other resources for lower castes. |
| Lack of Inclusive Growth |
– Unequal distribution of economic growth benefits. – Development strategies that don’t adequately empower the poor. – Insufficient investment in the social sector (education, health, social security). |
| Poor Implementation of Land Reforms |
– Failure to effectively redistribute land and improve tenancy rights. – Creation of fragmented and economically unviable landholdings in some cases. – Lack of security of tenure for many small and marginal farmers. |
| Underemployment |
– Working fewer hours than desired or in jobs below skill level. – Low productivity and income despite being employed. – Vulnerability to economic shocks and job losses. |
| Inadequate Access to Resources |
– Limited financial inclusion and reliance on informal, exploitative lending. – Lack of access to quality education and healthcare. – Digital divide and limited access to information and technology. |
| Lack of Infrastructure |
– Poor connectivity (roads, transport) hindering economic activity. – Unreliable power supply and inadequate irrigation affecting productivity. – Lack of access to basic sanitation and adequate housing impacting health and quality of life. |