Poverty &its causes

1. Poverty & Its Causes
- Aastha Kalia

2. Poverty is associated with the undermining of a range of key human attributes,
including health. The poor are exposed to greater personal and environmental health
risks, are less well nourished, have less information and are less able to access health
care; they thus have a higher risk of illness and disability. Conversely, illness can
reduce household savings, lower learning ability, reduce productivity, and lead to a
diminished quality of life, thereby perpetuating or even increasing poverty.

3. Poverty in India is a historical reality. From late 19th century through early 20th century, under
British colonial rule, poverty in India intensified, peaking in 1920s. Famines and diseases killed
millions each time. After India gained its independence in 1947, mass deaths from famines were
prevented. Rapid economic growth since 1991, has led to sharp reductions in extreme poverty in
India. However, those above poverty line live a fragile economic life.
The World Bank reviewed and proposed revisions in May 2014, to its poverty calculation
methodology and purchasing power parity basis for measuring poverty worldwide, including India.
According to this revised methodology, the world had 872.3 million people below the new poverty
line, of which 179.6 million people lived in India. In other words, India with 17.5% of total world's
population, had 20.6% share of world's poorest in 2011. As of 2014, 58% of the total population were
living on less than $3.10 per day. According to the Modified Mixed Reference Period (MMRP)
concept proposed by World Bank in 2015, India's poverty rate for period 2011-12 stood at 12.4% of
the total population, or about 172 million people; taking the revised poverty line as $1.90.
The Asian Development Bank estimates India’s population to be at 1.28 billion with an average
growth rate, from 2010-2015, at 1.3%. In 2014, 49.9% of the population aged 15 years and above
were employed. However, there are still 21.9% of the population who live below the national poverty
line.
According to Global Wealth Report 2016 compiled by Credit Suisse Research Institute, India is the
second most unequal country in the world with the top one per cent of the population owning nearly
60% of the total wealth

4. Poverty in India
 Poverty was historically defined and estimated in India
using a sustenance food standard. This methodology has
been revised. India's current official poverty rates are based
on its Planning Commission’s data derived from so-called
Tendulkar methodology. It defines poverty not in terms of
annual income, but in terms of consumption or spending
per individual over a certain period for a basket of essential
goods. Further, this methodology sets different poverty
lines for rural and urban areas. Since 2007, India set its
official threshold at ₹ 26 a day ($0.43) in rural areas and
about ₹ 32 per day ($0.53) in urban areas. While these
numbers are lower than the World Bank's $1.25 per day
income-based definition, the definition is similar to China's
US$0.65 per day official poverty line in 2008.

5. Cause of Poverty
 It is said that “a country is poor because it is poor.”
This idea has come down from Ragnar Nurkse who
pinpointed the problem of the vicious circle of
poverty. Low level of saving reduces the scope for
investment; low level of investment yields low
income and thus the circle of poverty goes on
indefinitely.
1. Climatic factors
2. Demographic factors
3. Personal causes
4. Economic causes
5. Social causes

6. Climate
Climatic conditions constitute an important cause of
poverty. The hot climate of India reduces the
capacity of people especially the ruralites to work
for which production severely suffers. Frequent
flood, famine, earthquake and cyclone cause heavy
damage to agriculture. Moreover, absence of timely
rain, excessive or deficient rain affect severely
country’s agricultural production.

7. Demographic factors
1. Rapid growth of population- Rapid growth of
population aggravates the poverty of the people. The
growth of population exceeds the rate of growth in
national income. Population growth not only creates
difficulties in the removal of poverty but also lowers
the per capita income which tends to increase poverty.
The burden of this reduction in per capita income is
borne heavily by the poor people. Population growth
at a faster rate increases labor supply which tends to
lower the wage rate.
2. Size of family- Size of the family has significant
bearing on rural poverty. The larger the size of family,
the lower is the per capita income, and the lower is the
standard of living. The persistence of the joint family
system has contributed to the health and earning
capacity of the ruralizes.

8. Economic causes
Lack of employment
opportunities
Immobility of labour
Decline of village industries
Unequal distribution of land
and other assets
Low agricultural productivity

9. Social causes
 Education- Education is an agent of social change and egalitarianism. Poverty is
also said to be closely related to the levels of schooling and these two have a
circular relationship. The earning power is endowed in the individual by investment
in education and training. But this investment in people takes away money and lack
of human investment contributes to the low earning capacity of individuals.
 Caste system- Caste system in India has always been responsible for rural poverty.
The subordination of the low caste people by the high caste people caused the
poverty of the former. Due to rigid caste system, the low caste people could not
participate in the game of economic progress.

10. Joint family system- The joint family system provides social security to its members. Some people take
undue advantage of it. They live upon the income of others. They become idlers. Their normal routine of
life consists in eating, sleeping and begetting children.
Social customs- The ruralites spend a large percentage of annual earnings on social ceremonies like
marriage, death feast etc. As a result, they remain in debt and poverty.
Growing indebtedness- In the rural sector most of the ruralites depend on borrowings from the money-
lenders and land-lords to meet even their consumption expenses. Moneylenders, however, exploit the
poor by charging exorbitant rates of interest and by acquiring the mortgaged land in the event of non-
payment of loans.

11. The Functions of Poverty
fifteen sets of functions, as follows:
1. Poverty helps to ensure that dirty, dangerous, menial and undignified work gets done.
2. The poor subsidize the affluent by saving them money (for example, domestic servants, medical
guinea pigs, and the poor paying regressive taxes).
3. Poverty creates jobs in a number of professions (e.g. drug pedlars, prostitutes, pawnshops, army,
police).
4. The poor buy shoddy, stale and damaged goods (e.g. day-old bread, vegetables, second-hand
clothes) which prolongs their economic usefulness, and similarly use poorly trained and incompetent
professional people, such as doctors and teachers.
5. The poor help to uphold the legitimacy of dominant norms by providing examples of deviance (e.g.
the lazy, spendthrift, dishonest, promiscuous).
6. The poor help to provide emotional satisfaction, evoking compassion, pity and charity, so that the
affluent may feel righteous.

12. 7. The poor offer affluent people vicarious participation in sexual, alcoholic and narcotic behavior.
8. Poverty helps to guarantee the status of the non-poor.
9. The poor assist in the upward mobility of the non-poor. (By being denied educational opportunities or being
stereotyped as stupid or unteachable, the poor enable others to obtain the better jobs.)
10. The poor add to the social viability of non-economic groups (e.g. fund-raising, running settlements, other
philanthropic activities).
11. The poor perform cultural functions, like providing labor for Egyptian pyramids, Greek temples and medieval
churches.
12. The poor provide ‘low’ culture which is often adopted by the more affluent (e.g. jazz, blues, spirituals, country
music).
13. The poor serve as symbolic constituencies and opponents for several political groups (being seen either as the
depressed or as ‘welfare chiselers’)
14. The poor can absorb economic and political costs of change and growth in American society (e.g.
reconstruction of city centers, industrialization).
15. The poor play a relatively small part in the political process and indirectly allow the interests of others to
become dominant and distort the system.