Causes of Poverty in India

Poverty in India is the result of several interacting economic, social, and historical factors. For a GSHSEB commerce-stream answer, causes are best organised under a few broad heads:

1. Rapid population growth — a fast-growing population increases the number of dependants faster than income and employment can grow, pulling down per-capita income and putting pressure on land, food, and public services.

2. Low productivity in agriculture — a large share of India's workforce still depends on agriculture, but small and fragmented landholdings, outdated techniques, and dependence on the monsoon keep farm incomes low and seasonal, pushing rural households toward poverty.

3. Unemployment and underemployment — open unemployment, seasonal unemployment in agriculture, and disguised unemployment (more people engaged on a task than actually needed) mean many households do not earn a stable, adequate income even when technically "employed."

4. Unequal distribution of income and assets — concentration of land, capital, and income in the hands of a relatively small section of society leaves a large proportion with very little productive asset base of their own.

5. Low rate of capital formation — low savings and investment slow down the creation of new productive employment opportunities, keeping the economy's overall growth — and job creation — below what is needed to absorb the growing workforce.

6. Social and historical factors — the historical caste system, gender discrimination, low levels of literacy and skill formation, and lack of access to credit and markets for disadvantaged groups all restrict economic mobility.

7. Regional imbalance — some states and regions (with poor infrastructure, rainfall-dependent agriculture, or limited industrialisation) lag behind others, so poverty is not evenly distributed across India. …