Causes of Poverty - A Multi Dimensional Challenge

The causes of poverty lie in the institutional and social factors that mark the life of the poor. The poor are deprived of quality education, they are unable to acquire skills which fetch better incomes, and lacks access to affordable health care. This article comprehensively cover the causes of poverty.
Aspirants would find this article very helpful while preparing for the IAS Exam.

Poverty – 5 Major Causes

The 5 major contributing factors that are responsible for Poverty are listed below.

  1. Social, economic and political inequality
  2. Social exclusion
  3. Unemployment
  4. Indebtedness
  5. Unequal distribution of wealth.

Aggregate Poverty

Aggregate Poverty is just the sum of individual poverty. Poverty is also explained by the following reasons.

  1. Low capital formation
  2. Lack of infrastructure
  3. Lack of demand
  4. Pressure of population
  5. Lack of social/welfare nets.

Increase in Poverty – During British Rule

There was substantial de-industrialization in India under the British rule. Imports of manufactured cotton cloth from Lancashire in England displaced much local production, and India reverted to being an exporter of cotton yarn, not cloth. As over 70 per cent of Indians were engaged in agriculture throughout the British Raj period, the impact on that sector was more important on living standards than anything else. British policies involved sharply raising rural taxes that enabled merchants and money lenders to become large landowners. Under the British, India began to export food grains and, as a result, as many as 26 million people died in famines between 1875 and 1900.

Britain’s main goals from the Raj were to provide a market for British exports, to have India service its debt payments to Britain, and for India to provide manpower for the British imperial armies. Resources were plundered, our industries worked to produce goods at low prices for the British and our food grains were exported. Many died due to famine and hunger. In 1857-58, anger at the overthrow of many local leaders, extremely high taxes imposed on peasants, and other resentments boiled over in a revolt against British rule by the sepoys, Indian troops commanded by the British.

Agricultural Land Redistribution – Limited Success

Even today agriculture is the principal means of livelihood and land is the primary asset of rural people; ownership of land is an important determinant of material well-being and those who own some land have a better chance to improve their living conditions.

Since independence, the government has attempted to redistribute land and has taken land from those who have large amounts to distribute it to those who do not have any land, but work on the land as wage labourers.
However, this move was successful only to a limited extent as large sections of agricultural workers were not able to farm the small holdings that they now possessed as they did not have either money (assets) or skills to make the land productive and the land holdings were too small to be viable. Also most of the Indian states failed to implement land redistribution policies.

A large section of the rural poor in India are the small farmers. The land that they have is, in general, less fertile and dependent on rains. Their survival depends on subsistence crops and sometimes on livestock. With the rapid growth of population and without alternative sources of employment, the per-head availability of land for cultivation has steadily declined leading to fragmentation of land holdings. The income from these small land holdings is not sufficient to meet the family’s basic requirements.

Cause of Poverty – Lack of Employment Opportunities

You must have heard about farmers committing suicide due to their inability to pay back the loans that they have taken for cultivation and other domestic needs as their crops have failed due to drought or other natural calamities . Most members of scheduled castes and scheduled tribes are not able to participate in the emerging employment opportunities in different sectors of the urban and rural economy as they do not have the necessary knowledge and skills to do so.

A large section of urban poor in India are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood. Industrialization has not been able to absorb all these people. The urban poor are either unemployed or intermittently employed as casual labourers. Casual labourers are among the most vulnerable in society as they have no job security, no assets, limited skills, sparse opportunities and no surplus to sustain them.

Poverty is, therefore, also closely related to nature of employment. Unemployment or under employment and the casual and intermittent nature of work in both rural and urban areas that compels indebtedness, in turn, reinforces poverty. Indebtedness is one of the significant factors of poverty.

Poverty – Unequal Distribution of Wealth

A steep rise in the price of food grains and other essential goods, at a rate higher than the price of luxury goods, further intensifies the hardship and deprivation of lower income groups. The unequal distribution of income and assets has also led to the persistence of poverty in India. All this has created two distinct groups in society: those who posses the means of production and earn good incomes and those who have only their labour to trade for survival. Over the years, the gap between the rich and the poor in India has widened. Poverty is a multi-dimensional challenge for India that needs to be addressed on a war footing.


The above details would help candidates prepare for UPSC 2020.

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