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Causes of poverty in India

There are at least two main schools of thought regarding the causes of poverty in India.

The Developmentalist View

Colonial Economic Restructuring

Jawaharlal Nehru noted, "A significant fact which stands out is that those parts of India which have been longest under British rule are the poorest today." The Indian economy was purposely and severely deindustrialized (especially in the areas of textiles and metal-working) through colonial privatizations, regulations, tariffs on manufactured or refined Indian goods, taxes, and direct seizures.

In 1830, India accounted for 17.6% of global industrial production against Britain's 9.5%, but by 1900 India's share was down to 1.7% against Britain's 18.5%. (The change in industrial production per capita is even more extreme due to Indian population growth).

Not only was Indian industry losing out, but consumers were forced to rely on expensive (open monopoly produced) British manufactured goods, especially as barter, local crafts and subsistence agriculture was discouraged by law. The agriculutural raw materials exported by Indians were subject to massive price swings and declining terms of trade.

Mass Hunger

British policies in India exacerbated weather conditions to lead to mass famines which, when taken together, lead to between 30 to 60 million deaths from starvation in the Indian colonies. Community grain banks were forcibly disabled, land was converted from food crops for local consumption to cotton, opium, tea, and grain for export, largely for animal feed.

In summary, deindustrialization, declining terms of trade, and the periodic mass misery of man-made famines are the major ways in which colonial government destroyed development in India and held it back for centuries.

The Neoliberal View

• Unemployment and underemployment, arrising in part from protectionist policies pursued till 1991 that prevented high foreign investment. Poverty also decreased from the early 80s to 1990 significantly however
• Lack of property rights. The right to property is not a fundamental right in India.
• Over-reliance on agriculture. There is a surplus of labour in agriculture. Farmers are a large vote bank and use their votes to resist reallocation of land for higher-income industrial projects. While services and industry have grown at double digit figures, agriculture growth rate has dropped from 4.8% to 2%. Neoliberals tend to view food security as an unnecessary goal compared to purely financial economic growth.

There are also a variety of more direct technical factors:

• About 60% of the population depends on agriculture whereas the contribution of agriculture to the GDP is about 28%.
• High population growth rate, although demographers generally agree that this is a symptom rather than cause of poverty.

And a few cultural ones have been proposed:

• The caste system, under which hundreds of millions of Indians were kept away from educational, ownership, and employment opportunities, and subjected to violence for "getting out of line." . British rulers encouraged caste privileges and customs were encouraged, at least before the 20th century.

Despite this, India currently adds 40 million people to its middle class every year. Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an estimated 300 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. At the current rate of growth, a majority of Indians will be middle-class by 2025. Literacy rates have risen from 52 percent to 65 percent in the same period.

Poverty in India

Though the middle class has gained from recent positive economic developments, India suffers from substantial poverty. The Planning Commission has estimated that 27.5% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 36% in 1993-1994. The source for this was the 61st round of the National Sample Survey (NSS) and the criterion used was monthly per capita consumption expenditure below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas. 75% of the poor are in rural areas, most of them are daily wagers, self-employed householders and landless labourers. Although Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas.

Wealth distribution in India is fairly uneven, with the top 10% of income groups earning 33% of the income.[3] Despite significant economic progress, 1/4 of the nation's population earns less than the government-specified poverty threshold of $0.40/day. Official figures estimate that 27.5% [4] of Indians lived below the national poverty line in 2004-2005.[5] A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees per day[6] with most working in "informal labour sector with no job or social security, living in abject poverty."

Income inequality in India (Gini coefficient: 32.5 in year 1999- 2000)is increasing. In addition, India has a higher rate of malnutrition among children under the age of three (46% in year 2007) than any other country in the world.

Policies have widened rich-poor gap

In a clear indication of the strident stand that the Left is likely to take on the Budget, CPM distanced itself from all claims of achievements made by the government in President Pratibha Patil's address to a joint session of Parliament on Monday.

CPM leader Sitaram Yechury said Patil's speech made wrong claims about inclusive growth. Instead, he said, government policy was creating two Indias — a shining India and a suffering India.

Yechury also criticized the President's speech for not referring to women's reservation. He said Patil's optimism on nuclear deal was just a reiteration of the government's position.

"Dispute between Left and government stands. There is a written agreement between us that the result of IAEA talks will be discussed in the UPA-Left committee," he added.

Yechury claimed that on the one hand, 36 Indian billionaires constituted 25% of India’s GDP while on the other, 70% of Indians had to do with Rs 20 a day.

"A farmer commits suicide every 30 minutes. The gap between the two Indias is widening," he said, criticizing even the targets Patil spoke about.

"It is an erroneous target. All these are staggered increase over the next five years. Unless drastic measures are taken, the gulf between suffering and shining India will increase," he said.

Yechury said much of the suffering was in rural India. He said the President claimed that rural credit had doubled, but two-thirds of farmers did not have access to institutional credit. He added that lack of access had resulted in farmers relying on moneylenders who charged exorbitant interest rates, which led to farmers committing suicide. "We demand spread of rural credit at 4%. Unless it is done urgently, agrarian distress will continue," he said.

Yechury also did not think much of the 50% increase in minimum support price of wheat and 33% increase of paddy. "MSP is still Rs 200-600 less than what the government pays in international market. It is not in consonance with reality," he said.

‘Poor sanitation indices in India’

India is just above Afghanistan and Pakistan in sanitation indices among developing countries in the world. Even Bangladesh is above India in this crucial social index, according to Renu Gera, programme officer (water and sanitation), the United Nations Children’s Fund, Hyderabad. The child malnutrition rate of 50 per cent in India is much higher than Eritrea, an African nation, where it is only 35 per cent. Improvement

While these figures may disappoint Indians, there is no need for despair, she said. “Although India was once a laughing stock for other nations, various government programmes, including total sanitation campaign undertaken by the Ministry of Rural Development, aimed at ameliorating rural poverty and improving sanitary conditions, have resulted in considerable improvement in living conditions, she added.

Interacting with media persons on the sidelines of a visit by a 20-member international learning exchange team from UNICEF to Ira and Kurnad gram panchayats in the taluk on Monday, Ms. Renu said the sanitation index of Karnataka, which was a poor two per cent when the campaign was launched in 2004, is now a healthy 38 per cent. Although this is lower than the national average of 45 per cent, it is a positive achievement, she added.

Terming this jump in the State’s index as worth appreciating, she said: “The sanitation index in a ‘literate’ Dakshina Kannada is 90 per cent.

This is a clear indicator that when there is a right mixture of government policies and human initiative, along with resolve of a government official to implement a mandate given to him/her, one can see the programmes end up in transforming human lives, especially in rural areas for the better.”

On the visit by the team, Ms. Renu said, “Most of them are health, water and sanitation officers in their respective countries, or they work as project officers with UNICEF. They will assess the success of the campaign in these gram panchayats and strive to implement a similar model back home.”

The 20-member team comprises delegates from six nations — Indonesia, Nigeria, Zimbabwe, Djibouti, Mozambique and Sudan.