Poverty in India

May 29: Even after 55 years of independence from the British rule, the large scale poverty remains the most embarrassing thing on the face of India. India is inhabited by world’s largest number of poor people. An estimated 350-400 million out of its 1 billion inhabitants are still below the poverty line. Ironically 75 per cent of them belong to rural areas that mainly depend on agriculture, whose labour contributes heavily to the overall GDP of our country.

More than 40 per cent of the population is still illiterate including women, tribal and scheduled castes sections. However it would be incorrect to say that all poverty reduction programmes have failed. The growth of the middle class indicates that economic prosperity has indeed been impressive in India, but the distribution of wealth has been very uneven.

This high rate of poverty can be attributed to:

• High level of dependence on primitive methods of agriculture
• Rural urban divide
• 75 per cent of Indian population depends on agriculture whereas the contribution of agriculture to the GDP was 22 percent
• While services and industry have grown at double digit figures, agriculture growth rate has dropped from 4.8 per cent to 2 percent
• High level of inequality arising from rural-urban divide
• High population growth rate
• High Illiteracy, about 35 percent of adult population
• Unemployment and under-employment
• Protectionist policies pursued till 1991 that prevented high foreign investment

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. Still India is adding 40 million people to its middle class every year. Growing at the current rate, a majority of Indians will be belonging to the middle-class by 2025. Literacy rates have risen from 52 percent to 65 percent in the same period.

No one will deny that the main causes of poverty are illiteracy, population growth which far exceeds the economic growth, powerlessness of the women, protectionist policies pursued since 1947 to 1991 which prevented large amounts of foreign investment in the country.

Post-economic reform period evidenced both progress and setbacks. Rural income poverty increased from 34 per cent in 1989-90 to 43 per cent in 1992 and then fell to 37 per cent in 1993-94. Urban income poverty went up from 33.4 per cent in 1989-90 to 33.7 per cent in 1992 and declined to 31 per cent in 1993-94.

The NSS recorded poverty rates are:

However, poverty alleviation is expected to make better progress in the next 50 years than in the past, as a trickle-down effect of the growing middle class. Increasing stress on education, reservation of seats in government jobs and the increasing empowerment of women and the economically weaker sections of society, are also expected to contribute to the alleviation of poverty.

While total overall poverty in India has declined, the extent of poverty reduction is often debated. The economic reforms of the early 1990s were followed by rates of high economic growth. The effects on poverty remain controversial, and the official numbers published by the Government of India, showing a reduction of poverty from 36% (1993–94) to 26% (1999 – 00), to 22% (2004 - 05), have been challenged both for allegedly showinag too little and too much poverty reduction.

While there is a consensus on the fact that liberalization has led to a reduction of income poverty, the picture is not so clear if one considers other dimensions such as health, education, crime and access to infrastructure. With the rapid economic growth that India is experiencing, it is likely that a significant fraction of the rural population will continue to migrate toward cities, making the issue of urban poverty more significant in the long run.

Economist Pravin Visaria has defended the validity of many of the statistics that demonstrated the reduction in overall poverty in India. He insisted that the 1999-2000 survey was well designed and supervised and felt that just because they did not appear to fit preconceived notions about poverty in India, they should not be dismissed outright. Nicholas Stern, vice president of the World Bank, has published defenses of the poverty reduction statistics. He argues that increasing globalization and investment opportunities have contributed significantly to the reduction of poverty in the country. India, together with China, has shown the clearest trends of globalization with the accelerated rise in per-capita income. No doubt India is striving hard to overcome poverty as it has been the biggest hurdle in its development process. It is good to know the causes but it is worth only if those causes are targeted to alleviate poverty. Let us hope that India has a bright future coming with all its inhabitants secure enough to earn their living and meet their ends.

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