It is said that “a country is poor because it is poor.” This idea has
come down from Ragnar Nurkse who pinpointed the problem of the vicious
circle of poverty. Low level of saving reduces the scope for investment;
low level of investment yields low income and thus the circle of
poverty goes on indefinitely.
Rural poverty is a multi-dimensional social problem. Its causes are varied. They are as follows:
Demographic factors:
The following demographic factors are accountable for poverty in India.
(i) Rapid growth of population:
Rapid growth of population aggravates the poverty of the people. The growth of population exceeds the rate of growth in national income. Population growth not only creates difficulties in the removal of poverty but also lowers the per capita income which tends to increase poverty. The burden of this reduction in per capita income is borne heavily by the poor people. Population growth at a faster rate increases labour supply which tends to lower the wage rate.
(ii) Size of family:
Size of the family has significant bearing on rural poverty. The larger the size of family, the lower is the per capita income, and the lower is the standard of living. The persistence of the joint family system has contributed to the health and earning capacity of the ruralities.
Lack of motivation is an important cause of rural poverty. Some ruralites do not have a motive to work hard or even to earn something. This accounts for the poverty of the ruralities.
(ii) Idleness:
Most of the rural people are lazy, dull and reluctant to work. Hence they rot in poverty.
Poverty and real income are very much interrelated. Increase in real income leads to reduction of the magnitude of poverty. So far as agricultural sector is concerned, the farmers even today are following the traditional method of cultivation. Hence there is low agricultural productivity resulting in rural poverty.
(ii) Unequal distribution of land and other assets:
Land and other forms of assets constitute sources of income for the ruralites. But, unfortunately, there has been unequal distribution of land and other assets in our economy. The size-wise distribution of operational holdings indicates a very high degree of concentration in the hands of a few farmers leading to poverty of many in the rural sector.
(iii) Decline of village industries:
At present consequent upon industrialization new factories and industries are being set up in rural areas. Village industries fail to compete with them in terms of quality and price. As a result they are closed down. The workers are thrown out of employment and lead a life of poverty.
(iv) Immobility of labor:
Immobility of labor also accounts, for rural poverty. Even if higher wages are offered, laborers are not willing to leave their homes. The joint family system makes people lethargic and stay-at-home.
The ruralities are mostly illiterate, ignorant, conservative, superstitious and fatalistic. Poverty is considered as god-given, something preordained. All these factors lead to abysmal poverty in rural India.
(v) Lack of employment opportunities:
Unemployment is the reflection of poverty. Because of lack of employment opportunities, people remain either unemployed or underemployed. Most of these unemployed and underemployed workers are the small and marginal farmers and the landless agricultural laborers.
Education is an agent of social change and egalitarianism. Poverty is also said to be closely related to the levels of schooling and these two have a circular relationship. The earning power is endowed in the individual by investment in education and training. But this investment in people takes away money and lack of human investment contributes to the low earning capacity of individuals.
In this way people are poor because they have little investment in themselves and poor people do not have the funds for human capital investment.
(ii) Caste system:
Caste system in India has always been responsible for rural poverty. The subordination of the low caste people by the high caste people caused the poverty of the former. Due to rigid caste system, the low caste people could not participate in the game of economic progress.
A Shudra was not allowed to become a trader and a Vaisya could earn his bread only by trade.
Birth would decide their occupation and their economic fate. K. V. Verghese rightly observes, “Caste system acted as a springboard for class exploitation with the result that the counterpart of the poverty of the many is the opulence of the few. The second is the cause of the first.”
(iii) Joint family system:
The joint family system provides social security to its members. Some people take undue advantage of it. They live upon the income of others. They become idlers. Their normal routine of life consists in eating, sleeping and begetting children.
In this way poverty gets aggravated through joint family system.
(iv) Social customs:
The ruralities spend a large percentage of annual earnings on social ceremonies like marriage, death feast etc. As a result, they remain in debt and poverty.
(v) Growing indebtedness:
In the rural sector most of the ruralities depend on borrowings from the money-lenders and land-lords to meet even their consumption expenses. Moneylenders, however, exploit the poor by charging exorbitant rates of interest and by acquiring the mortgaged land in the event of non-payment of loans.
Indebted poor farmers cannot make themselves free from the clutches of moneylenders. Their poverty is further accentuated because of indebtedness. Such indebted families continue to remain under the poverty line for generations because of this debt-trap.
Rural poverty is a multi-dimensional social problem. Its causes are varied. They are as follows:
Demographic factors:
The following demographic factors are accountable for poverty in India.
(i) Rapid growth of population:
Rapid growth of population aggravates the poverty of the people. The growth of population exceeds the rate of growth in national income. Population growth not only creates difficulties in the removal of poverty but also lowers the per capita income which tends to increase poverty. The burden of this reduction in per capita income is borne heavily by the poor people. Population growth at a faster rate increases labour supply which tends to lower the wage rate.
(ii) Size of family:
Size of the family has significant bearing on rural poverty. The larger the size of family, the lower is the per capita income, and the lower is the standard of living. The persistence of the joint family system has contributed to the health and earning capacity of the ruralities.
2. Personal causes:
(i) Lack of motivation:Lack of motivation is an important cause of rural poverty. Some ruralites do not have a motive to work hard or even to earn something. This accounts for the poverty of the ruralities.
(ii) Idleness:
Most of the rural people are lazy, dull and reluctant to work. Hence they rot in poverty.
3. Economic causes:
(i) Low agricultural productivity:Poverty and real income are very much interrelated. Increase in real income leads to reduction of the magnitude of poverty. So far as agricultural sector is concerned, the farmers even today are following the traditional method of cultivation. Hence there is low agricultural productivity resulting in rural poverty.
(ii) Unequal distribution of land and other assets:
Land and other forms of assets constitute sources of income for the ruralites. But, unfortunately, there has been unequal distribution of land and other assets in our economy. The size-wise distribution of operational holdings indicates a very high degree of concentration in the hands of a few farmers leading to poverty of many in the rural sector.
(iii) Decline of village industries:
At present consequent upon industrialization new factories and industries are being set up in rural areas. Village industries fail to compete with them in terms of quality and price. As a result they are closed down. The workers are thrown out of employment and lead a life of poverty.
(iv) Immobility of labor:
Immobility of labor also accounts, for rural poverty. Even if higher wages are offered, laborers are not willing to leave their homes. The joint family system makes people lethargic and stay-at-home.
The ruralities are mostly illiterate, ignorant, conservative, superstitious and fatalistic. Poverty is considered as god-given, something preordained. All these factors lead to abysmal poverty in rural India.
(v) Lack of employment opportunities:
Unemployment is the reflection of poverty. Because of lack of employment opportunities, people remain either unemployed or underemployed. Most of these unemployed and underemployed workers are the small and marginal farmers and the landless agricultural laborers.
4. Social causes:
(i) Education:Education is an agent of social change and egalitarianism. Poverty is also said to be closely related to the levels of schooling and these two have a circular relationship. The earning power is endowed in the individual by investment in education and training. But this investment in people takes away money and lack of human investment contributes to the low earning capacity of individuals.
In this way people are poor because they have little investment in themselves and poor people do not have the funds for human capital investment.
(ii) Caste system:
Caste system in India has always been responsible for rural poverty. The subordination of the low caste people by the high caste people caused the poverty of the former. Due to rigid caste system, the low caste people could not participate in the game of economic progress.
A Shudra was not allowed to become a trader and a Vaisya could earn his bread only by trade.
Birth would decide their occupation and their economic fate. K. V. Verghese rightly observes, “Caste system acted as a springboard for class exploitation with the result that the counterpart of the poverty of the many is the opulence of the few. The second is the cause of the first.”
(iii) Joint family system:
The joint family system provides social security to its members. Some people take undue advantage of it. They live upon the income of others. They become idlers. Their normal routine of life consists in eating, sleeping and begetting children.
In this way poverty gets aggravated through joint family system.
(iv) Social customs:
The ruralities spend a large percentage of annual earnings on social ceremonies like marriage, death feast etc. As a result, they remain in debt and poverty.
(v) Growing indebtedness:
In the rural sector most of the ruralities depend on borrowings from the money-lenders and land-lords to meet even their consumption expenses. Moneylenders, however, exploit the poor by charging exorbitant rates of interest and by acquiring the mortgaged land in the event of non-payment of loans.
Indebted poor farmers cannot make themselves free from the clutches of moneylenders. Their poverty is further accentuated because of indebtedness. Such indebted families continue to remain under the poverty line for generations because of this debt-trap.
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