Poverty is widespread in India, with the nation estimated to have a third of the world's poor.

According to a 2005 World Bank estimate, 41.6% of the total Indian population falls below the international poverty line of US$ 1.25 a day (PPP, in nominal terms 21.6 a day in urban areas and 14.3 in rural areas).[1] According to 2010 data from the United Nations Development Programme, an estimated 37.2% of Indians live below the country's national poverty line.[2] A recent report by the Oxford Poverty and Human Development Initiative (OPHI) states that 8 Indian states have more poor than 26 poorest African nations combined which totals to more than 410 million poor in the poorest African countries.[3][4] According to a new UN Millennium Development Goals Report, as many as 320 million people in India and China are expected to come out of extreme poverty in the next four years, while India's poverty rate is projected to drop to 22% in 2015.[5] The report also indicates that in Southern Asia, however, only India, where the poverty rate is projected to fall from 51% in 1990 to about 22% in 2015, is on track to cut poverty in half by the 2015 target date.[5] The latest UNICEF data shows that one in three malnourished children worldwide are found In India 42 percent of children under five were underweight. It also showed that A total of 58 percent of children under five surveyed were stunted. Rohini Mukherjee Of the Naadi foundation one of the Ngos which published the report stated India is "doing worse than sub-Saharan Africa,".[6] The 2011 Global Hunger Index (GHI) Report ranked India 45th, amongst leading countries with hunger situation. It also places India amongst the three countries where the GHI between 1996 and 2011 went up from 22.9 to 23.7, while 78 out of the 81 developing countries studied, including Pakistan, Nepal, Bangladesh, Vietnam, Kenya, Nigeria, Myanmar, Uganda, Zimbabwe and Malawi, succeeded in improving hunger condition.[7]

Contents
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1 Poverty estimates 2 Impact of poverty 3 Causes o 3.1 Caste system o 3.2 India's economic policies o 3.3 Liberalization policies and their effects 4 Reduction in poverty 5 Efforts to alleviate poverty o 5.1 Outlook for poverty alleviation o 5.2 Controversy over extent of poverty reduction o 5.3 Persistence of malnutrition among children 6 See also 7 References 8 Further reading 9 External links

[edit] Poverty estimates

There has been no uniform measure of poverty in India.[8][9] The Planning Commission of India has accepted the Tendulkar Committee report which says that 37% of people in India live below the poverty line(BPL).[10] The Arjun Sengupta Report (from National Commission for Enterprises in the Unorganised Sector), based on data between the period 1993-94 and 2004-05, states that 77% of Indians live on less than 20 a day (about $0.50 per day).[11] The N.C. Saxena Committee report states, on account of calorific intake apart from nominal income, that 50% of Indians live below the poverty line.[12] A study by the Oxford Poverty and Human Development Initiative using a Multi-dimensional Poverty Index (MPI) found that there were 650 million people (53.7% of population) living in poverty in India, of which 340 million people (28.6% of the population) were living in severe poverty, and that a further 198 million people (16.4% of the population) were vulnerable to poverty.[13] 421 million of the poor are concentrated in eight North Indian and East Indian states of Bihar, Chattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal. This number is higher than the 410 million poor living in the 26 poorest African nations.[14] The states are listed below in increasing order of poverty based on the Multidimensional Poverty Index.[15] Population Number of [show]MPI Proportion Average Contribution to States (in millions) MPI MPI poor rank of poor intensity overall poverty 2007 (in millions) Estimates by NCAER (National Council of Applied Economic Research) show that 48% of the Indian households earn more than 90,000 (US$1,795.5) annually (or more than US$ 3 PPP per person). According to NCAER, in 2009, of the 222 million households in India, the absolutely poor households (annual incomes below 45,000) accounted for only 15.6% of them or about 35 million (about 200 million Indians). Another 80 million households are in income levels of 45,000 90,000 per year. These numbers also are more or less in line with the latest World Bank estimates of the below-the-poverty-line households that may total about 100 million (or about 456 million individuals)[16]

[edit] Impact of poverty

Since the 1950s, the Indian government and non-governmental organizations have initiated several programs to alleviate poverty, including subsidizing food and other necessities, increased access to loans, improving agricultural techniques and price supports, and promoting education and family planning. These measures have helped eliminate famines, cut absolute poverty levels by more than half, and reduced illiteracy and malnutrition.[17]

Presence of a massive parallel economy in the form of black (hidden) money stashed in overseas tax havens and underutilisation of foreign aid have also contributed to the slow pace of poverty alleviation in India.[18][19][20] Although the 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.[17][21] Between 1999 and 2008, the annualized growth rates for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).[22] Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme.[23] Despite significant economic progress, one quarter of the nation's population earns less than the government-specified poverty threshold of 32 rupees per day (approximately US$ 0.6)[24]. According to a recently released World Bank report, India is on track to meet its poverty reduction goals. However by 2015, an estimated 53 million people will still live in extreme poverty and 23.6% of the population will still live under US$1.25 per day. This number is expected to reduce to 20.3% or 268 million people by 2020.[25] However, at the same time, the effects of the worldwide recession in 2009 have plunged 100 million more Indians into poverty than there were in 2004, increasing the effective poverty rate from 27.5% to 37.2%.[26] As per the 2001 census, 35.5% of Indian households availed of banking services, 35.1% owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a bicycle, 11.7% a scooter, motorcycle or a moped, and 2.5% a car, jeep or van; 34.5% of the households had none of these assets.[27] According to Department of Telecommunications of India the phone density has reached 33.23% by December 2008 and has an annual growth of 40%.[28] This tallies with the fact that a family of four with an annual income of 1.37 lakh rupees could afford some of these luxury items.

[edit] Causes
Global wealth inequality is the main cause of poverty in India.[citation needed] The inseperability of corruption and the economy of third world countries is ignored by those who single corruption out as the main problem in India. There is also a high population growth rate, although demographers generally agree that this is a symptom rather than cause of poverty. While services and industry have grown at double digit figures, agriculture growth rate has dropped from 4.8% to 2%. About sixty percent of the population depends on agriculture whereas the contribution of agriculture to the GDP is about eighteen percent.[29] The surplus of labour in agriculture has caused many people to not have jobs. Farmers are a large vote bank and use their votes to resist reallocation of land for higher-income industrial projects.

[edit] Caste system

Further information: Caste system in India

According to S. M. Michael, Dalits constitute the bulk of poor and unemployed.[30] According to William A. Haviland, casteism is widespread in rural areas, and continues to segregate Dalits.[31] Others, however, have noted the steady rise and empowerment of the Dalits through social reforms and the implementation of reservations in employment and benefits.[32][33] Caste explanations of poverty fail to account for the urban/rural divide. Using the UN definition of poverty, 65% of rural forward castes are below the poverty line.[citation needed]

[edit] India's economic policies

A rural worker drying cow dung in Bihar. In 1947, the average annual income in India was US$619, compared with US$439 for China, US$770 for South Korea, and US$936 for Taiwan. By 1999, the numbers were US$1,818; US$3,259; US$13,317; and US$15,720, respectively.[34] (numbers are in 1990 international Maddison dollars) In other words, the average income in India was not much different from South Korea in 1947, but South Korea became a developed country by 2000s. At the same time, India was left as one of the world's poorer countries. License Raj refers to the elaborate licenses, regulations and the accompanying red tape that were required to set up and run business in India between 1947 and 1990.[35] The License Raj was a result of India's decision to have a planned economy, where all aspects of the economy are controlled by the state and licenses were given to a select few. Corruption flourished under this system.[36] The labyrinthine bureaucracy often led to absurd restrictions - up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced, how much, at what price and what sources of capital were used. BBC[37] India had started out in the 1950s with:[38] high growth rates, openness to trade and investment, a promotional state, social expenditure awareness and macro stability but ended the 1980s with:[38] low growth rates, closure to trade and investment, a license-obsessed, restrictive state (License Raj), inability to sustain social expenditures and macro instability, indeed crisis.

Poverty has decreased significantly since reforms were started in the 1980s.[39][40]

[edit] Liberalization policies and their effects

Other points of view hold that the economic reforms[clarification needed] initiated in the early 1990s are responsible for the collapse of rural economies and the agrarian crisis currently underway. As journalist and the Rural Affairs editor for The Hindu, P Sainath describes in his reports on the rural economy in India, the level of inequality has risen to extraordinary levels, when at the same time, hunger in India has reached its highest level in decades. He also points out that rural economies across India have collapsed, or on the verge of collapse due to the neo-liberal policies of the government of India since the 1990s.[41] The human cost of the "liberalisation" has been very high.[clarification needed] The huge wave of farm suicides in Indian rural population from 1997 to 2007 totaled close to 200,000, according to official statistics.[42] That number remains disputed, with some saying the true number is much higher. Commentators have faulted the policies pursued by the government which, according to Sainath, resulted in a very high portion of rural households getting into the debt cycle, resulting in a very high number of farm suicides. As professor Utsa Patnaik, Indias top economist on agriculture, has pointed out, the average poor family in 2007 has about 100 kg less food per year than it did in 1997.[42] Government policies encouraging farmers to switch to cash crops, in place of traditional food crops, has resulted in an extraordinary increase in farm input costs, while market forces determined the price of the cash crop.[43] Sainath points out that a disproportionately large number of affected farm suicides have occurred with cash crops, because with food crops such as rice, even if the price falls, there is food left to survive on. He also points out that inequality has reached one of the highest rates India has ever seen. In a report by Chetan Ahya, Executive Director at Morgan Stanley, it is pointed out that there has been a wealth increase of close to US$1 Trillion in the time frame of 2003-2007 in the Indian stock market, while only 4-7% of the Indian population hold any equity.[44] During the time when Public investment in agriculture shrank to 2% of the GDP, the nation suffered the worst agrarian crisis in decades, the same time as India became the nation of second highest number of dollar billionaires.[45] Sainath argues that Farm incomes have collapsed. Hunger has grown very fast. Public investment in agriculture shrank to nothing a long time ago. Employment has collapsed. Non-farm employment has stagnated. (Only the National Rural Employment Guarantee Act has brought some limited relief in recent times.) Millions move towards towns and cities where, too, there are few jobs to be found. In one estimate, over 85 per cent of rural households are either landless, sub-marginal, marginal or small farmers. Nothing has happened in 15 years that has changed that situation for the better. Much has happened to make it a lot worse. Those who have taken their lives were deep in debt peasant households in debt doubled in the first decade of the neoliberal economic reforms, from 26 per cent of farm households to 48.6 per cent. Meanwhile, all along, India kept reducing investment in agriculture (standard neoliberal procedure). Life was being made more and more impossible for small farmers.

As of 2006, the government spends less than 0.2% of GDP on agriculture and less than 3% of GDP on education.[46] However, some government schemes such as the mid-day meal scheme, and the NREGA have been partially successful in providing a lifeline for the rural economy and curbing the further rise of poverty.

[edit] Reduction in poverty

Despite all the causes, India currently adds 40 million people to its middle class every year.[citation needed] 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. Despite government initiatives, corporate social responsibility (CSR) remains low on the agenda of corporate sector. Only 10 percent of funding comes from individuals and corporates, and "a large part of CSR initiatives are artfully masqueraded and make it back to the balancesheet". The widening income gap between the rich and the poor over the years, has raised fears of a social backlash.[47]

[edit] Efforts to alleviate poverty

Since the early 1950s, govt has initiated, sustained, and refined various planning schemes to help the poor attain self sufficiency in food production. Probably the most important initiative has been the supply of basic commodities, particularly food at controlled prices, available throughout the country as poor spend about 80 percent of their income on food. The schemes have however not been very successful because the rate of poverty reduction lags behind the rapid population growth rate.[48]

[edit] Outlook for poverty alleviation

Eradication of poverty in India is generally only considered to be a long-term goal. Poverty alleviation is expected to make better progress in the next 50 years than in the past, as a trickledown 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. It is incorrect to say that all poverty reduction programmes have failed. The growth of the middle class (which was virtually non-existent when India became a free nation in August 1947) indicates that economic prosperity has indeed been very impressive in India, but the distribution of wealth is not at all even. After the liberalization process and moving away from the socialist model, India is adding 60 to 70 million people to its middle class every year. Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an estimated 390 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 during the initial decade of liberalization (19912001).[citation needed]

[edit] Controversy over extent of poverty reduction

The definition of poverty in India has been called into question by the UN World Food Programme. In its report on global hunger index, it questioned the government of India's definition of poverty saying: The fact that calorie deprivation is increasing during a period when the proportion of rural population below the poverty line is said to be declining rapidly, highlights the increasing disconnect between official poverty estimates and calorie deprivation.[49] While total overall poverty in India has declined, the extent of poverty reduction is often debated. While there is a consensus that there has not been increase in poverty between 199394 and 200405, the picture is not so clear if one considers other non-pecuniary 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.[50] Some, like journalist P Sainath, hold the view that while absolute poverty may not have increased, India remains at an abysmal rank in the UN Human Development Index. India is positioned at 132ond place in the 2007-08 UN HDI index. It is the lowest rank for the country in over 10 years. In 1992, India was at 122ond place in the same index. It can even be argued that the situation has become worse on critical indicators of overall well-being such as the number of people who are undernourished (India has the highest number of malnourished people, at 230 million, and is 94th of 119 in the world hunger index), and the number of malnourished children (43% of India's children under 5 are underweight (BMI<18.5), the highest in the world) as of 2008.[49] Economist Pravin Visaria has defended the validity of many of the statistics that demonstrated the reduction in overall poverty in India, as well as the declaration made by India's former Finance Minister Yashwant Sinha that poverty in India has reduced significantly. 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.[51] 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, have shown the clearest trends of globalization with the accelerated rise in per-capita income.[52] 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 (USD 0.50 nominal, USD 2.0 in PPP), with most working in "informal labour sector with no job or social security, living in abject poverty."[53][54] However, a new report from the UN disputes this, finding that the number of people living on US$1.25 a day is expected to go down from 435

million or 51.3 percent in 1990 to 295 million or 23.6 percent by 2015 and 268 million or 20.3 percent by 2020.[55] A study by the McKinsey Global Institute found that in 1985, 93% of the Indian population lived on a household income of less than 90,000 rupees a year, or about a dollar per person per day; by 2005 that proportion had been cut nearly in half, to 54%. Thus, according to the report, between 1985 and 2005, more than 103 million people have moved out of desperate poverty in urban and rural areas as well. They project that if India can achieve 7.3% annual growth over the next 20 years, 465 million more people will be lifted out of poverty. Contrary to popular perceptions, rural India has benefited from this growth: extreme rural poverty has declined from 94% in 1985 to 61% in 2005, and they project that it will drop to 26% by 2025. Report concludes that India's economic reforms and the increased growth that has resulted have been the most successful antipoverty programmes in the country.[56][57][58]

[edit] Persistence of malnutrition among children

According to the New York Times, is estimated that about 42.5% of the children in India suffer from malnutrition.[59] The World Bank, citing estimates made by the World Health Organization, states that "About 49 percent of the world's underweight children, 34 percent of the world's stunted children and 46 percent of the world's wasted children, live in India." The World Bank also noted that "while poverty is often the underlying cause of malnutrition in children, the superior economic growth experienced by South Asian countries compared to those in SubSaharan Africa, has not translated into superior nutritional status for the South Asian child."[60] A special commission to the Indian Supreme court has noted that the child malnutrition rate in India is twice as great as sub-Saharan Africa [61] Data from The World Bank shows that the percentage of underweight children in sub-Saharan Africa is 24% while India has almost twice the amount at 47%. Out of the 47%, 50 % were from rural areas, 38% from urban areas, 48.9% of the underweight are girls and 45.5% are boys.[62] Malnutrition is often associated with diseases like diarrhea, malaria and measles due to the lack of access in health care which are also linked to the problem of poverty. The United Nations had estimated that 2.1 million Indian children die before reaching the age of 5 every year four every minute.[63] The Indian government had come up with the Integrated Childhood Development Service (ICDS) in 1975 to combat the problem of malnutrition in the country. ICDS is the worlds largest child development program but its effects on the problem in India are limited.[64] This is because the program failed to focus on children under 3, the group that should receive the most help from the ICDS. This is due to the fact that most growth retardation would have developed during the age of 2 and are mostly irreversible.[65] With the lack of help, the chances that newborn babies are unable to develop fully would be higher. The quality of ICDS centers also varies from states to states and often, the states with the most serious problem of malnutrition have the lowest amount of help given.[64] Examples are Rajasthan, Uttar Pradesh, Bihar, Orissa and Madhya Pradesh, all rank in the bottom ten in terms of ICDS coverage.[65] Despite the poor distribution

of help, the ICDS is still considered to be efficient in improving the health of the children in the country.[66] Statistics from UNICEF shows that the mortality rate of children under 5 has improved from 118 per 1000 live births in 1990 to 66 in the year 2009.[67] However, malnutrition is still a problem for India; it has been found that micronutrient deficiencies alone may cost India US$2.5 billion annually.[68] Malnutrition can lead to children not being able to attend school or perform to their fullest potential, which in turn leads to a decrease in labor productivity, affecting Indias economic growth as a whole.

A new World Bank paper - The developing world is poorer than we thought but no less successful in the fight against poverty - indicates that the number of poor people in the world is higher than previously estimated but the pace of poverty reduction remains the same. Read Press Release Learn what this means for India Read Report and More

Video Interview with Martin Ravallion, Director of the Development Research Group at the World Bank

In this new paper, Martin Ravallion and 1. In India, the share of people living in Shaohua Chen produce a major update poverty has reduced over time, but the total of poverty numbers for the developing number of poor people has gone up with population growth. So is poverty rising in world between 1981 and 2005. The India, or falling? Has India's strong economic global poverty numbers have been growth been strong enough? updated because a new international View Video >> price survey conducted in 2005 has revised upwards the cost of living data from an earlier survey in 1993. Based on 2. Is the story different when you look at just the last 5 to 10 years as opposed to all the this new data, the old international way back to 1981? And is India on track to poverty line of $1.08 a day in 1993 Purchasing Power Parity (PPP) prices achieve the first MDG to halve the 1990 rate has been updated to a new international of poverty by 2015? poverty line of $1.25 a day in 2005 PPP View Video >> prices. The paper also produces estimates for poverty levels at a-dollar-a- 3. What was the estimate of poverty in India before the new, improved data on cost of day in 2005 PPP prices. To asses living allowed your recent revision, and what progress over time, the 2005 poverty lines have been adjusted back to 1981 is it now that you know more about the cost using the best available consumer price of living?

indices for each country.

View Video >>

Global Estimates: Using this new data, 4. How does the cost of living data from India the paper finds that poverty levels across in 1993 compare with 2005? How significant the globe have declined, with 1.4 billion is this difference? people (one in four) in the developing View Video >> world living below US$1.25 a day in 2005, down from 1.9 billion (one in two) 5. Do countries typically use the World in 1981. In other words, global poverty Bank's international poverty lines in their rates fell from 52% in 1981 to 26% in own reporting of poverty data? What's the 2005. difference between national poverty lines and the international poverty line? However, the paper also finds that the View Video >> number of poor people in the world in 2005 at 1.4 billion - was higher than 6. Which one is more frequently used, by the earlier estimates based on the then whom, and for what purposes? international poverty line of $1.08 in View Video >> 1993 PPP. This earlier estimate had pegged the number of global poor in 2005 at below 1 billion. India Estimates: Similarly, estimates for India also indicate a continuing decline in poverty. The revised estimates suggest that the percentage of people living below $1.25 a day in 2005 (which, based on Indias PPP rate, works out to Rs 21.6 a day in urban areas and Rs 14.3 in rural areas in 2005 ) decreased from 60% in 1981 to 42% in 2005. Even at a dollar a day ( Rs 17.2 in urban areas and Rs 11.4 in rural areas in 2005 ) poverty declined from 42% to 24% over the same period. Both the dollar a day and $1.25 measures indicate that India has made steady progress against poverty since the 1980s, with the poverty rate declining at a little under one percentage point per year. This means that the number of very poor people who lived below a dollar a day in 2005 has come down from 296 million in 1981 to 267 million in 2005. However, the number of poor people

living under $1.25 a day has increased from 421 million in 1981 to 456 million in 2005. This indicates that there are a large number of people living just above this line of deprivation (a dollar a day) and their numbers are not falling. To achieve a higher rate of poverty reduction, India will need to address the inequalities in opportunities that impede poor people from participating in the growth process.

Poverty in India is a major issue. Rural Indians depend on unpredictable agriculture incomes, while urban Indians rely on jobs that are, at best, scarce.
Since its independence, the issue of poverty within India has remained a prevalent concern. As of 2010, more than 37% of Indias population of 1.35 billion still lives below the poverty line. More than 22% of the entire rural population and 15% of the urban population of India exists in this difficult physical and financial predicament.

Poverty Situation
The division of resources, as well as wealth, is uneven in India - this disparity creates different poverty ratios for different states. For instance, states such as Delhi and Punjab have low poverty ratios. On the other hand, almost half the population in states like Bihar and Orissa live below the poverty line. A number of factors are responsible for poverty in the rural areas of India. Rural populations primarily depend on agriculture, which is highly dependant on rain patterns and the monsoon season. Inadequate rain and improper irrigation facilities can obviously cause low, or in some cases, zero production of crops. Additionally, the Indian family unit is often large, which can amplify the effects of poverty. Also, the caste system still prevails in India, and this is a major reason for rural poverty - people from the lower casts are often deprived of the most basic facilities and opportunities. The government has planned and implemented poverty eradication programs, but the benefits of these programs are yet to bear fruits.

Increasing Poverty in India

The phenomenal increase in population in the cities is one of the main reasons for poverty in the urban areas of India. A major portion of this additional population is due to the large scale migration of rural families from villages to cities. This migration is mainly attributed to poor employment opportunities in villages. Since 1970, the Indian government has implemented a number of programs designed to eradicate poverty, and has had some success with these programs. The government has sought to increase the GDP through different processes, including changes in industrial policies. There is a Public Distribution System, which has been effective to some extent. Other programs include the Integrated Rural Development Program, Jawahar Rozgar Yojana and the Training Rural Youth for Self Employment (TRYSEM), and other on-going initiatives.

Causes of poverty in India From traditions to globalization

Coming a long way...? The causes of poverty in India are nothing short of complex but a lot of progress has been made to tackle them. So, this article will focus more specifically whats been done to alleviate poverty so far and what is still holding things back. The economic reforms of 1991, despite spurring a huge growth of the economy, have left the country with terrible inequalities, within cities as well as between urban and rural areas. They were the best opportunity to seriously tackle the causes of poverty in India and more specifically rural poverty. With two thirds of the population living in rural areas and some 500 million poor (or more), even urban poverty stems from the rural migrations to the city.

Agriculture is the key This means that the government should have in priority overhauled the agricultural sector. By improving agricultural productivity it would have directly alleviated poverty by the hundreds of millions (just like in China did in the 1990s). But what happened it totally different. Governments gave a disproportionate priority to the cities and the services sector (notably banking, insurance, finance, real estate and IT services), thus trying to leapfrog the usual pattern of economic development: from agriculture to manufacture to services (in terms of importance in the economy).

Economic reforms & causes of poverty in India

Don't forget manufacturing The thing with manufacturing is that, when wellhandled, it literally provides hundreds of millions of jobs to workers coming from the rural exodus. After what you usually invest in education and bring the emergence of the services sector. Too small services sector Right now, at this stage of development the services and especially IT and finance sector typically dont employ a lot of people. Although the tertiary sector (services) represents 50% of Indias GDP, it employs only... 2 million people! So many Indians are quite right to complain that globalization and modernization benefit only the rich. Neglecting the poor, once more However the manufacturing sector is finally growing, so there are good prospects to reduce the massive unemployment and hence tackle one of the causes of poverty in India. But that leaves the problem of rural poverty. To compare once more with China, the Chinese government has the merit to have very gradually opened its country and markets to the outside world rather than a shock therapy. This means that it kept for more than a decade its rural safety nets, giving time to people to adapt to the transition and changes.

On the other hand India just left its rural poor on their own, and their opposition to globalization is in fact very typical: every developing country where social safety nets were quasi-absent has in general a defiant population to the global process. Lack of decent housing On the bright side, as manufacturing develops, so does the tertiary sector which now provides services supporting the former such as better infrastructure, transports, and personal services. Plus, the services sector has a much greater positive impact on poverty than manufacturing, so its growth and expansion is but good news for tackling the causes of poverty in India (unemployment, quality job and income in this case). Despite that and the development of real estate sector, hundreds of millions still lack a decent home so there should be incentives for the market to cater to the needs of the poor with social housing so that the country gets a chance to solve the problem of its gigantic slums. Market liberalization and globalization If you were to believe what international organizations have professed for years in the context of the "Washington Consensus" , then youd say (among other things) that pure economic growth systematically leads to less poverty. However plenty of examples now prove that (partly) wrong, including in this case where growth and liberalization have contributed to the causes of poverty in India. They have exacerbated inequalities within the population and reduced the role of the state while it was direly needed to develop the country. In this sense growth itself risks stirring some tensions within a country between those who got rich and those who were left out. Killing the state when you need it Theres nothing wrong with market liberalization in itself but in a developing country it can be disastrous because market forces will only invest in profitable areas which leaves plenty excluded in the country. The role of the state here is thus one of empowering citizens and making sure they can participate in the economy and growth of the country. Resisting globalization Another dilemma with the globalization-liberalization duo is that typically it wipes out the least competitive companies in a given market. While this is a necessary evil if India is to adapt to globalization, the country should have nevertheless focused on protecting its laid-off workers who didnt ask for anything and certainly didnt vote for that. Nurturing their capability to adapt and better absorb shocks should have been a priority of anti-poverty policies.

One way to do so would have been to invest in education, as the countrys share of GDP in education is far from enough and below that of other developing countries and regions such as China and Latin America. Education and training are by essence empowering tools that assist people for life, they develop their skills and ability to better respond to change.

Land ownership & rural poverty

Faith in growth vs. reality The example of India has shown many that if growth does give opportunities to some to get out of poverty, its also true that it doesnt prevent people from falling into poverty. The two trends getting out and into poverty seem completely unrelated, or at least becoming poor is not connected to growth. Health among the main causes of poverty in India Thus many experts have argued that to make the most out of economic growth, the government at all levels should have invested in protecting the people, that is to say invest in public services, for instance in health care. Diseases are one of the main causes of poverty in India, creating a major public safety disaster in India that contributes to keep and make millions fall into poverty. Its estimated that each year, the cost of health care pushes some 39 million people back into poverty, according to a recent CBS News report. Land inequality and social justice What the government needs is precisely to make sure that the people can also ripe the benefits of the economic growth. So even if the growth in the third sector is impressive, theres still a huge surplus of jobless or underemployed workers at the countryside. And over there, the issue of land inequality is an important bone of contention that if resolved could substantially alleviate poverty. The fact is that for each village, a few land owners have most of the land which they rent to other people to work on, at ridiculously high prices. Its a bit like the rent seekers in feudal societies: they prevent any real growth from happening and just suck up all the money - that they dont reinvest since they dont care all that much about the land itself. Not only is the situation stuck because of this, but land inequalities also reflect the huge imbalance of power carved in the rural society.

Distributed land - a marker of development Nearly all the developed countries have shown at some point a pattern of very well-distributed land ownership (at least within the rural population), where up to 70 to 80% of the population would own the land (rather than 5% for example). From then on, economic development happened on the basis of more equal societies. But owning land also has a huge impact on agricultural productivity as people are generally willing to invest only in land they own and exploit for themselves. This increase in agricultural productivity then means more growth and less poverty at the same time. Getting the foundations right After that, people start nurturing their physical and human capital, their kids can afford school, and the household gains higher social status, thus reducing social inequalities and problems of access to resources. So as you can see, land distribution is closely tied to economic power, social power and social status. The only little snag is that it takes a decade or two for the effects of land reforms to be felt in the economy, and long term prospect is usually a poor incentive in modern politics. Landowners and powerful pressure groups In fact theres another great hurdle: landowners. Ever since Indias independence, land reforms have been on and off the political agenda and every time successfully thwarted by the efforts of landowners, although sometimes rightfully as the state had plans to strip them of their land without any compensation. Then again local officials, working hand in hand with property developers, have often achieved to expel countless poor farmers of their house without compensation, or pay, or notice. It just happened overnight. But doing that to richer farmers would of course upset the power structure in the society, which remains one the causes of poverty in India by creating systemic discrimination. Land grabs in India In any case, big land owner or small poor one, you just dont go and take peoples land without paying compensation for what youre doing. And its not about paying a few symbolic rupees as it happens so often. It should be something more significant, up to an annual compensation - a real and fair incentive. In the end youre taking the land to generate a great deal of wealth, so you could at least play it fair. In a so-called democracy, if private property is not respected, if theres no law, then people have very limited incentives to invest in their land and make it more profitable. They distrust their government and politicians and make it even more difficult to implement any policy at the

end of the day. Today India still lacks the basic administrative and legal frameworks to make property transfers possible, or easier, in order to keep on implementing decades old land reforms.

Lack of institutions at all

The state is one more time responsible for contributing to poverty in India. It has failed to look beyond growth by leaving the rural exodus happen on its own, without planning whatsoever. That is to say, that even while Indians came to the city by tens of millions, there was hardly any institution present to help them make the transition and find a job in this whole new world. Or a house rather than some makeshift accommodation in the slums (but that would have implied planning housing for everyone, which requires a lot of work, so...). Overall those who have been doing better than others are overwhelmingly Indians who received help from personal connections from the city. Having a friend or a parent, someone who knows his way around the city is invaluable help for any newcomer and a life-changing advantage. As for the rest of the people thats just too bad for them.

Discriminations: hidden causes of poverty in India

Caste-based segregation The Constitution of India has officially abolished the system of caste in the country a while ago (1950), and yet its hard to get rid of an age-old system that organizes society. Its particularly for the dalits (150 million people) aka the Untouchables or Harijans that things prove difficult. Being the out-caste caste (i.e. so low in the social hierarchy that technically they don't belong to any caste), theyve never even got a chance to work in agriculture. Everyone from landowners to local farmers look down on them and refuse them jobs on the ground of stereotypes such as they dont work, they steal. Caste warfare Segregation can become quite intense when the whole society puts its mind to it. Indians are obviously not evil, but as in any society that struggles with huge poverty, social classes vie for resources. And the existence of very specific classes in India helps this process. Of course, the picture is not all black & white. Ever since the Constitution was introduced, huge efforts have been made to

provide the dalits with jobs and education, while certain groups lobby for their civic rights. But once again, given the size of India, it would really take the help of the whole population for things to change for good. Social, institutional discrimination ? In a way the causes of poverty in India partly rely on social structures and relations. This creates a discrimination that generates an artificial poverty: between castes and genders, between religions and tribes. Some are even more artificial considering for instance the knives-out hostility with Indian Muslims, whereas a century ago there were prejudices but certainly not as fierce as they are since the independence of Pakistan. Likewise, in many cases the situation of women and their bottom-low participation in the economy among Asian countries counts as one more issue among the causes of poverty in India. Their restricted access to education in rural areas also makes any kind of family planning and educative campaign on child diseases or education quasi ineffective.