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Causes of Poverty – Indian Economy Notes

Poverty is defined as a state or condition in which an individual or a group lacks the financial means and necessities for a basic level of living. Poverty is one of India's most serious social problems. It affects a large portion of India's population. The Causes of poverty, includea lack of access to essentials such as water, food, shelter, education, and healthcare. Poverty is also caused by inequities such as gender or ethnic discrimination, bad governance, conflict, exploitation, and domestic violence. For the UPSC Exams, you should understand the causes of poverty. This article will provide you with an overview of the major causes of poverty in India.

UPSC CSE IAS
Poverty

What is Poverty?

  • Poverty is defined as a state or condition in which an individual or a group lacks the financial means and necessities for a basic level of living. Poverty is defined as a situation in which one's earnings from work are insufficient to meet fundamental human requirements.
  • Poverty, according to the World Bank, is a severe lack of well-being that has various dimensions. Low earnings and the inability to obtain the essential commodities and services required for a dignified existence. Poverty also includes poor health and education, a lack of access to safe drinking water and sanitation, a lack of physical security, a lack of voice, and a lack of capacity and chance to improve one's life.
  • In 2011, 21.9 percent of India's population was living below the national poverty threshold.
  • In 2018, about 8% of the world's workers and their families were living on less than $1.90 per day (international poverty line).
  • Using World Bank data, the Pew Research Center estimates that the number of poor people in India (those with an income of $2 per day or less in purchasing power parity) has more than doubled in a year, from 60 million to 134 million, as a result of the pandemic-induced recession. This means that after 45 years, India is once again referred to as a "nation of mass poverty."
Causes

Causes of Poverty

The causes of poverty are multidimensional and they can be categorised as:

Economic Causes

  • Poor economic growth and development: Poverty is widespread in countries with slow economic growth as a result of faulty government policy. Poverty is also caused by stagnant or slow-moving economic progress.
  • Increasing unemployment: An imbalanced population-to-jobs ratio can result in mass unemployment, which is a significant source of poverty. Increased and uncontrolled population is the most serious threat to unemployment-related poverty in any country.
  • Reduced agricultural output: Unpredictable weather patterns may be to blame. Inflationary pressures are exacerbated by lower agricultural output. Without a solid agricultural backbone, no country can achieve economic equilibrium. Agriculture accounts for a large portion of a country's economy, and it must be in surplus to keep poverty at bay.
  • Inadequate infrastructure: Infrastructural development promotes economic growth and, as a result, determines a place's poor position.
  • Inadequate industrialization in some areas: Industries generate jobs for the people who live in the area. Concentration of industries in a single state or location boosts employment in that area, but disadvantaged areas suffer from severe poverty. Inadequate industrialization leads to poverty since work prospects in that location are restricted. When compared to part-time occupations, industries also provide higher-paying opportunities.
  • Inadequate production of basic essentials: Any insufficiency in the production of basic necessities results in poverty across the country. To avoid poverty, food and non-food necessary production must always be sufficient.
  • Resource deprivation: Natural resource deprivation, as well as imposed or situational deprivation, can result in poverty. People are deprived of their desired lifestyle and work possibilities due to a lack of enough resources and opportunity, which pushes them into poverty.
  • Uneven distribution of wealth and resources: A country with an uneven distribution of wealth and resources is more likely to be poor than one with a uniform distribution. Uneven concentration results in an extreme situation in which people are either neo-rich or poor. The whole economy and growth of a country are harmed by this imbalance.
  • Natural resources that are underutilised: Natural resources are a gift from God, and a location with abundant natural resources is blessed. As a result, every location's natural resources must be fully explored and exploited in order to reap the full economic value. This should be a government initiative to ensure that no one suffers from poverty as a result of under-utilization of natural resources in any location.
  • Inflationary economics: Inflationary economics impacts not only the impoverished but even the middle class of society. This means that more people are living on the edge of poverty. Economic inflation is tremendously harmful to a country's economy and affects people from all walks of life. A country's economy may also take a long time to recover from economic inflation, resulting in years of hardship.

Social causes

  • Untouchability: is an unfair social practise in certain of the country's most backward areas that denies individuals of the lower castes their democratic rights. They are rejected by society and forced into poverty. They are not permitted to seek general employment and are compelled to work in low-wage jobs.
  • Unethical abuse of authority: When power is abused, it has a skewed perspective and never aids the poor and disadvantaged. A corrupt administration would constantly seek to maintain the status quo in order to maintain greater influence over the populace. Another major source of poverty in corrupt countries is this.
  • Ignorance and illiteracy are widespread: Illiteracy is another important source of poverty. People who are uneducated are unable to realise their full potential, and as a result, their earning opportunities are limited. They are unable to compete with their educated counterparts in a competitive culture, and as a result, they remain poor. People's ignorance is also caused by illiteracy. They are completely uninformed of all of the possibilities that modern civilization has to offer, and they live their lives in ignorance.
  • Densely populated areas: Densely populated areas boost competition in the labour market. As a result, poverty emerges in any overcrowded area as competition rises and opportunities decline.
  • Using the caste system: The caste system divides people in society (depending on their occupation) and prevents them from seeking work outside of their caste. A person from a lower caste, for example, will not be permitted to work as a businessman or dealer. The poor become poorer as a result of this system, while the wealthy become wealthier. Another major source of poverty is an imbalanced and unfair system.
  • High divorce rates and feminization of poverty: To eliminate feminization of poverty, the female gender in society should be given equal employment chances. Furthermore, high divorce rates result in poverty for women who are unable to sustain themselves due to gender inequity.
  • Using the caste system: The caste system divides people in society (depending on their occupation) and prevents them from seeking work outside of their caste. A person from a lower caste, for example, will not be permitted to work as a businessman or dealer. The poor become poorer as a result of this system, while the wealthy become wealthier. Another major source of poverty is an imbalanced and unfair system.
  • High divorce rates and feminization of poverty: To eliminate feminization of poverty, the female gender in society should be given equal employment chances. Furthermore, high divorce rates result in poverty for women who are unable to sustain themselves due to gender inequity.
  • Inequality of accessible opportunities: Poverty can be caused by societal inequality for a variety of reasons. In a society, all available options should be made available to everyone. Inequality causes the weaker members of society to be denied equal chances.

Geographical Factors

  • Population density: The poverty graph of a location is also determined by the population density of the area. When it comes to poverty, densely populated areas turn a bright red.
  • Selective soil fertility: Soil fertility varies from place to place and is not the same in every region of a country. While the fertile parts have abundant agricultural produce, the infertile lands are naturally forced into poverty.
  • Uneven distribution of fertile land: Fertile lands are spread unevenly around the globe, which is a major cause of poverty in naturally unfertile areas. Local people benefit from fertile grounds since they can work in agriculture and do not have to look for work to make a living. Unfertile lands cut off the locals' access to the agricultural sector and eliminate this source of work, which is one of the most popular among the village's ignorant residents.
  • Varying farm output: Farm output changes from year to year and from season to season. A good year will yield a lot of fruit, but droughts and other natural disasters might limit the harvest. In difficult times, this variability also leads to poverty.
  • Differences between rural and urban poverty: There are numerous differences between rural and urban poverty. The disparity between rural and urban lifestyles has various consequences in terms of poverty. For example, due to the high cost of living under the latter scenario, poor people are more likely to survive in rural areas than in metropolitan ones.

Environmental and climatic factors

  • Land flooding: Natural disasters such as floods can entirely devastate farms and have a negative impact on agricultural output. This will result in unwelcome poverty that a government will rarely be able to address.
  • Droughts: Drought is another climatic hardship that leads to poverty. Droughts last for long periods of time, wreaking havoc on farms and agricultural productivity. Droughts are a constant source of poverty in the majority of countries.
  • Inadequate seasonal rainfall: Any irregularities in seasonal rainfall might lead to major poverty issues. Due to the lack of forecasted rainfall, agricultural produce is disrupted, resulting in inflation-related poverty.
Causes of Poverty: In a nutshell
Economic Causes Social causes
  • Poor economic growth and development.
  • Increasing unemployment
  • Reduced agricultural output
  • Inadequate infrastructure
  • Inadequate industrialization in some areas
  • Inadequate production of basic essentials
  • Resource deprivation
  • Uneven distribution of wealth and resources
  • Natural resources that are underutilised
  • Inflationary economics.
  • Untouchability
  • Unethical abuse of authority
  • Ignorance and illiteracy are widespread
  • Densely populated areas
  • Using the caste system
  • High divorce rates and feminization of poverty
  • Using the caste system
  • High divorce rates and feminization of poverty
  • Inequality of accessible opportunities
Geographical Factors Environmental and climatic factors
  • Population density
  • Selective soil fertility
  • Uneven distribution of fertile land
  • Varying farm output
  • Differences between rural and urban poverty
  • Land flooding
  • Droughts
  • Inadequate seasonal rainfall
Conclusion

Conclusion

Poverty is a condition or state in which a person or a community lacks the financial resources and necessities to maintain a minimum standard of living. Poverty is defined as a situation in which one's earnings from work are insufficient to meet fundamental human requirements. The main reasons for poverty are accelerating population growth, declining agriculture output and inefficiently used resources. Economic progress at a snail's pace, Price rises steadily, Unemployment, In the absence of sufficient finance and qualified entrepreneurship, Factors such as social, political, and economic are all important. Income distribution is unequal.

FAQs

FAQs

Question: What are the main economic causes of poverty in India?

Answer: The main economic causes of poverty include unequal distribution of wealth, unemployment, underemployment, and low agricultural productivity. Additionally, inflation and lack of access to quality education and healthcare also contribute to poverty.

Question: How does rapid population growth contribute to poverty in India?

Answer: Rapid population growth puts pressure on resources, infrastructure, and job creation, which leads to inadequate economic opportunities and contributes to the persistence of poverty.

Question: Why is unemployment a major cause of poverty in India?

Answer: Unemployment and underemployment prevent individuals from earning a stable income, which exacerbates poverty, especially in sectors where job opportunities are scarce, such as agriculture and informal employment.

Question: How do inflation and rising costs affect the poor in India?

Answer: Inflation increases the cost of basic necessities such as food, housing, and healthcare. The poor, who have limited income, struggle to cope with rising prices, which pushes them further into poverty.

Question: What role does access to education and healthcare play in reducing poverty?

Answer: Access to quality education and healthcare is crucial for economic mobility and improving livelihoods. Without education and proper healthcare, individuals are trapped in low-paying jobs and are unable to break the cycle of poverty.

MCQs

  1. Which of the following is a significant cause of poverty in rural India?

A. High industrial growth
B. Low agricultural productivity
C. High employment rates
D. Equal distribution of wealth

Answer: (B) See the Explanation

Low agricultural productivity is a significant cause of poverty in rural India, where the majority of the population depends on agriculture for their livelihood.

  1. How does rapid population growth affect poverty levels in India?

A. Increases job opportunities
B. Reduces pressure on resources
C. Increases demand for resources and jobs
D. Ensures equal wealth distribution

Answer: (C) See the Explanation

Rapid population growth increases the demand for resources and job opportunities, leading to higher levels of poverty due to inadequate infrastructure and economic opportunities.

  1. What impact does unequal distribution of wealth have on poverty?

A. It reduces poverty
B. It leads to economic equality
C. It exacerbates poverty by concentrating wealth in the hands of a few
D. It creates equal access to resources

Answer: (C) See the Explanation

Unequal distribution of wealth exacerbates poverty by concentrating wealth in the hands of a few, leaving the majority of the population with limited access to resources.

  1. Which sector's underemployment is a major cause of poverty in India?

A. IT sector
B. Agriculture sector
C. Service sector
D. Industrial sector

Answer: (B) See the Explanation

Underemployment in the agriculture sector is a major cause of poverty in India, especially in rural areas where the majority of people are employed in low-paying, unstable jobs.

  1. Why does inflation contribute to poverty in India?

A. It increases job opportunities
B. It raises the cost of living
C. It lowers the prices of essential goods
D. It distributes wealth equally

Answer: (B) See the Explanation

Inflation raises the cost of living, making it difficult for the poor to afford basic necessities, which pushes them further into poverty.

GS Mains Questions and Model Answers

Q1: Discuss the major economic and social causes of poverty in India and suggest measures to address them.

Answer: Poverty in India is driven by both economic and social factors. Economically, unequal distribution of wealth, unemployment, and low agricultural productivity are significant causes. Socially, lack of access to education and healthcare, caste-based discrimination, and gender inequality exacerbate poverty. Measures to address these issues include promoting inclusive economic growth, improving access to education and healthcare, and implementing social safety nets for vulnerable populations. Policy interventions such as skill development programs, agricultural reforms, and financial inclusion can also help reduce poverty.

Q2: Analyze the impact of unemployment and underemployment on rural poverty in India.

Answer: Unemployment and underemployment are major contributors to rural poverty in India. In rural areas, the lack of formal employment opportunities forces a significant portion of the population to engage in low-paying agricultural and informal sector jobs. Underemployment in agriculture, where productivity is low and income unstable, keeps rural households in a state of poverty. The seasonal nature of agricultural work further exacerbates the problem. Addressing rural poverty requires diversifying rural employment through non-farm activities, improving agricultural productivity, and providing access to skill training and financial services.

Q3: How does the unequal distribution of wealth affect poverty in India? Suggest policy measures to reduce economic inequality.

Answer: The unequal distribution of wealth in India concentrates resources in the hands of a small segment of society, while the majority struggle with limited access to economic opportunities. This disparity fuels poverty, as the wealthy continue to accumulate more resources, while the poor lack access to education, healthcare, and employment opportunities. To reduce economic inequality, policies should focus on progressive taxation, improving access to quality education and healthcare, and promoting inclusive economic growth through microfinance initiatives and skill development programs for marginalized communities.

Previous Year Questions on Causes of Poverty

1. UPSC CSE Prelims 2020

Question: Which of the following is considered a key factor in perpetuating poverty in India?
A. High literacy rate
B. Industrial growth
C. Unequal distribution of wealth
D. High foreign direct investment

Answer: C

Explanation: Unequal distribution of wealth is a key factor in perpetuating poverty in India, as it limits access to resources and opportunities for a large portion of the population.

*The article might have information for the previous academic years, please refer the official website of the exam.
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