Why India is still a poor country?

India dreams to develop into a superpower but a third of the world’s poor still lives here. India is one of the fastest developing economies in the world but also a home to the largest number of malnourished children. Majority of India lives in villages and at the same time rural India is facing the hardship of poverty much harder than urban India. Though India is growing economically but the growth of this kind is creating two much demarcated societies – one poor and another rich. Prevailing poverty and hunger continue to haunt the economic growth and making it further slow.

International poverty line is US$ 1.25 per day (PPP) and as per the World Bank report 32.7% of the population in India lives below the poverty line whereas 68.7% survive on less than US$ 2 per day. 45% of children in India are malnourished. India has the worst infant mortality rate and it is even worse than Bangladesh and Sri Lanka. Although Gross Domestic Product (GDP) is showing an impressive growth over a period of time but because of poverty regional, economical and social disparity has increased to manifold. These are few of the daunting and much talked about facts related to poverty in India.

Number of poor are declining but only in few states such as Punjab, northern Haryana and Kerala and not in Bihar and Assam. Traditionally disadvantage sections of the society including schedule caste and schedule tribe, indigenous peoples and dalits are still poor in spite of many efforts.

But why despite all the efforts and schemes to eradicate poverty, India is still a poor country? Why does India continue to be poor after 66 years of independence?  Corruption, lack of education, distribution of wealth, population explosion, caste system, mentality, mismanagement are some of the widespread causes of poverty in India. For an example, India has the largest public food distribution system for the poor in the world. Yet 21% of adults and half of India’s children under five are malnourished. With inflation, price of all the essential commodities such as fruits and vegetables is increasing that is also increasing the number of people relying on subsidized food. Because of prevalent corruption, quantity of food grains recommended to be subsidized never reaches the needy and poor completely.   According to an Asian Development Bank study, “A sustained 10% increase in domestic food prices could push an additional 64 million people, or almost 2% of Asia’s 3.3 billion people, below the poverty line of $1.25 a day”.

Reasons why India is still a poor Country


India, if not completely but is almost synonymous with the word corruption. Numerous scams in the recent years explain the saga of corruption. Almost all the government departments are affected from it. Corruption is regarded as one of the biggest reasons of poverty in India.

Corruption in the Public Distribution System (PDS) is the worst of its kind.  The leading source of corruption in India is entitlement programmes and social spending schemes that are meant for the welfare of our society.  For an example – Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), a $9 billion program planned to offer 100 days of employment annually for the rural poor. But MNREGA failed because of corruption and mismanagement.  Just like MNREGA, the National Rural Livelihood Mission met the same fate. It was planned to empower.

Though government is putting efforts to have an “inclusive growth” but corruption is playing its role. So all such programs designed for poor and needy failed to impress and help them. Instead poor are even denied of their basic right and needs. Corruption is just like an endemic in India. It leads to social inequalities and hit economy of our nation. Funds granted to uplift the poor are misused. Poverty is further worsen by the administrative corruption. Even the simplest of the task is not performed without a bribe. Corruption also delays and diverts the economic growth.

As per the data compiled by Bloomberg, near about $14.5 billion in food was plundered by the corrupt politicians in the state of Uttar Pradesh. The loot resulted poor to survive without the required quantity of food and children to suffer from malnutrition. There are many other cases of administrative corruption further deterioration the situation and making poor poorer.

Economic policies

It is believed that economic reforms started in early 1990s are responsible for the fall down of rural economy in India. It also led to the agrarian crisis. Because of high debt, poor farmers are left with no other choice than to commit suicide. According to official statistics, number of farmers committing suicides has also increased since 1997. The new policies by the government encourage farmers to switch to cash crops in place of traditional crops. But this has led to a manifold increase in farm input cost which ultimate resulted in the economic burden and thus poverty. Also villages in India are not self sufficient like they used to be. The rural youth is mostly not well educated, lack skill and even not interested in farming. All these are enough for a disastrous and poor future. Government should come up with plans to make villages self-reliant. Skill based education must be provided to the youth.

Mismanagement and faulty development model

Much of the fund raised or allocated to the anti poverty schemes is consumed in administrative cost. So the entire chain that is formed to help the poor does not allow this to happen.

High population growth rate

Ever increasing population is not a direct cause of poverty but it is an effect. It is rightly said that excess of everything is bad. This is true in this case as well. More people mean the need of more resource, food etc. But if this surplus is trained in a right way then it can take part in the economic development of the country.

Ever increasing economic inequality

India’s growth model for sure has benefitted the businessmen but failed when we see that near about 213 million Indians go hungry every night. Rights of organized as well as unorganized workers are being violated. They are underpaid and not paid according to the industrial growth and ever rising inflation. Due to such a visible inequality each year millions of girls are sexually exploited and trafficked for money. At the same time child labour has also increased. Wealthy are acquiring more wealth. In such an inequal scenario, top 5% of households have 38% of the total assets of India whereas bottom 60% has merely 13% of the assets.

Lack of small scale sectors – Majority of economic policies and reforms are not friendly towards small scale industries. So these policies are making and creating bureaucrats but suppressing entrepreneurs.

Mentality of poor

Not only external factors but also the internal will of poor people to remain poor is an obstacle. You must have seen healthy beggars at red light. if they are asked to do task instead of begging then their simple answer is no. Even their kids do not go to school but just beg. They can never come out of this vivacious cycle of begging and poverty. To come out of poverty one has to change his or her mind. Poor must understand the importance of education and its lifelong benefits. There is no shortage of jobs in India. Even if you are not educated you have enough jobs like wrapping the color, adding buttons to the already stitched clothes and sweaters, making boards for electronic goods etc. I have seen people earning from these kinds of jobs and sending their kids to school to have a better future.

India needs great political leaders to push the nation in a forward direction. Productivity and how to use human resource for the productivity must be focused. India must educate its every child so that a resource can be added. India must have a clear economic vision and a great system is place to execute this. Confused ideologies must be separated from the clear-cut and result oriented ones. India must be free from corruption to become rich.

Related Information:

Family planning in India

Overpopulation in India

Human Trafficking in India

Child Trafficking

Child labour in India

Poverty and its causes

Why India is a poor Country ?