What are the main causes of Poverty in India?



Poverty is a social phenomenon and can be defined as a situation in which a section of the society is unable to fulfill even its basic minimum requirement of life. The poverty has two concepts: (a) absolute poverty and (b) relative poverty.

In case of absolute poverty we include the people who have not reached a certain minimum standard of consumption and are regarded as poor.

On the other hand, relative poverty is a comparative concept in which a section of people are relatively poor in comparison to another section of the society. It deals with inequality in the distribution of wealth. The countries of the Third World show the existence of mass poverty although pockets of poverty are also found in the developed countries.


The Planning Commission set up a Study Group in July 1962 to examine the question of poverty in the country. The Study Group suggested a private consumption expenditure of Rs. 20 (at 1960-61 prices) per capita per month as a basic minimum requirement of life, below which are regarded as poor.

In 1979, following the recommendation of the Task Force on Projection of Minimum Needs and Effective Consumption Demand, the poverty line is defined as "the per capita monthly expenditure needed to obtain the consumption of 2,400 calories per-capita per day in rural areas and 2,100 in urban areas in the base year 1973-74." The poverty line so defined was Rs. 49.10 for rural areas and Rs. 56.60 for urban areas. The same poverty line was updated for subsequent years using stable indicators of changes in cost of living.

Causes of Poverty:

The basic causes of poverty in India are as follows:

(1) Colonial Exploitation:

During the British administration, the industrial sector of the economy was completely destroyed. The people were bound to depend on agriculture. The man-land ratio declined giving rise to widespread underemployment and disguised unemployment.

Further the Britishers compelled the poor farmers to sell their product at a lower price and sold the British industrial product at a higher price in Indian soil, and accordingly exploited the Indians. Gradually the country became pauperized and the extent of poverty increased with the passage of time during colonial administration.

2. Underdevelopment:

Due to under-development and non-economic utilisation of natural and human resources, people in the country are not able to get a square meal per day.

3. Inequality:

Inequality in the distribution of wealth and income is another factor responsible for the abject poverty situation in the country. While large sections of the people are poor, wealth and productive assets have been concentrated with a few hands.

4. Unemployment:

Lack of employment opportunity is one of the basic causes of poverty. Due to unemployment, there is lack of purchasing power, effective demand with the people. This in turn results in low investment, low production and again in low income. So Nukes has rightly said: "A country is poor because it is poor."

5. High Growth Rate of Population:

Growth of population is another factor responsible for poverty in India. The slow growth of income accompanied by a higher population growth reduces the per capita income and consumption expenditure and thus increases poverty.

6. Regional Disparity:

There are extreme regional disparities leading to a grinding poverty situation against the prosperity of others. States like Punjab and Haryana are richer in comparison to Bihar, Orissa and Madhya Pradesh.

7. Capital Deficiency:

Due to shortage of capital, better technique of production could not be implemented in the economy. Consequently the productivity and efficiency of labour became less leading to low income and poverty situation.

8. Low technology:

Due to adoption of a low level of technology, the volume of production and productivity is also equally low, leading to a mass poverty situation.

9. Social factors:

Due to socio-cultural factors, people in India spend a large portion of their income extravagantly. Expenditure on marriage, religious ceremonies etc. forces them to borrow from non- institutional sources at a higher rate of interest. The early marriage system, joint family system, low level of education also account for mass poverty situation.

Poverty Alleviation Programmes:

The authorities in the country have tried to reduce the incidence of poverty in the country even since independence. A large number of programmes have been experimented in the Indian soil to combat with poverty. Beginning with Community Development Programmes in 1950s and traversing through agriculture-oriented programmes (HYVP, MYGP, IADP) and target-oriented programmes (SFDA, MFAL, PIDEP, ITDP), programmes knows no bound. The most of the programmes have been designed either according to the suggestion of ILO or World Bank. Some of the major programmes recently undertaken are as follows:

1. IRDP:

The Integrated Rural Development Programme was implemented in the country during 1979, in this programme development is the objective, integration is the approach and the rural poor are the focus of attraction. The programme aimed at

(i) Bringing integration among different sectors (agriculture, industry, service) of the economy;

(ii) Bringing an integration among different regions (rural-urban) of the economy; and

(iii) Bringing integration among different governmental departments (education. health, agriculture) of the Govt. in order to provide systematically the gains from development to the rural poors.

The programme has been evaluated by different independent research institutions and also through CES (Concurrent Evaluation Studies) and necessary steps has been taken to increase its efficiency.


TRYSEM was also introduced in 1979 to provide technical skills and to upgrade traditional skills of rural youth belonging to rural families. The objective was to make the rural youth able to get self-employment through increased skill and efficiency.

3. NREP:

National Rural Employment Programme was launched in October 1980 to increase rural employment. It started as a centrally sponsored scheme with Centre providing 50% of expenses and the remaining half to be provided by the State in order generate gainful employment opportunity. Create durable community assets and to improve overall quality of the life of the people.

4. JRY:

Jawahar Rozgar Yojana started in 1989 by merging the NREP and RLEGP programmes. Basic objective of the programme is to generate additional employment opportunity in the countryside, strengthening the rural infrastructure and to have a steady rise in income of the people of rural areas.

5. PMRY:

The Prime Minister's Rozgar Yojana was launched in 1993-94 to provide employment to more than one million persons by setting up seven lakh micro-enterprises during the 8th Plan in industry, service and business. The scheme covered urban areas in 1993-94 and was subsequently extended to the rural areas. The scheme of Self-Employment for Educated Unemployed Youth (SEEUY) has been integrated with PMRY. The scheme provides concessional loans and training for the small entrepreneurs of the country.

6. Development of Women and Children:

Several programmes have been undertaken for the development of children and women in the economy. Their basic objective is to increase the employment for women and a better working condition for them. The schemes include Support to Training and Employment Programme for women (STEP), Integrated Child Development Services (ICDS), and etc.