Poverty Rate in India


  • It’s true that India lost its position as one of the great trading areas of the world, and was a poor country after British rule.
  • The real culprit in my view was market forces that tilted during the colonial era to favor the west.
  • Political instability is never good for the economy. During that time, local warlords became very powerful.
  • As a result bankers and merchants focused more on giving loans to these warlords instead of investing in merchants and trade for income.
  • India was largely an agricultural country with small urban areas where specialized and increasingly out of business artisans served the decking aristocracy.
  • The vast majority of the Indian population scratched out a hard existence in the agricultural hinterland. Interestingly, Europe was not that far ahead either.
  • In the current decade, India has become the fastest-growing major economy in the world.
  • Despite this development, India still has widespread poverty. as per the United Nations MDG program, 22% of Indians live under extreme poverty by earning less than $1.25 a day and as many as 58% of Indians earn less than $3.1 a day. Israel, South Korea and the Netherlands have a high population density compared to India but these countries are highly developed. Overpopulation is not the reason for poverty.
  • The real reasons behind poverty in modern India are bad governance, misplaced priorities of development and failure of providing quality healthcare and education to the poor.
  • Doing business is very difficult in India due to regulatory hurdles and a complex tax system. If you are unsure about what greater economic freedom does to a country just look at the example of east and West Germany. While West Germany developed very quickly due to open markets and simple rules, East Germany remained poor due to less economic freedom. Distrust of foreigners has kept Indian markets closed for far too long.
  • Another reason for poverty is bad infrastructure India’s 40% population does not have proper access to health care, drinking water and sanitation.
  • India does not have robust political and legal institutions. India’s poor, lack access to formal financial institutions and have a bad credit system in place.
  • The path from developing to the developed economy goes from agriculture to manufacturing and then to service-based economy. India leapfrogged directly from agriculture to a service-based economy.
  • The service-based economy can provide lesser employment compared to a manufacturing-based economy which is more labor intensive. As the result India s 60% workforce is still employed in agriculture .this number is only 5% for developed countries.
  • India needs to tick three boxes if it wants to reduce poverty. Health and sanitation, education and capitalism.

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