In his classical work entitled The Wealth of Nations, Adam Smith, the Father of Economics, in the 18th century projected India, particularly Bengal, as one of the most prosperous regions on the globe. Subsequently, economic decline began. Adam Smith attributed the beginning of the economic decline of the British domain in India to “some injudicious restrains imposed by the servants of the East India Company”. The decline continued throughout the nineteenth century, along with many other changes taking place in British India. Economic descent and decline were quite relentless right into the first the half of the twentieth century.
The British economic historian Angus Maddison has precisely demonstrated that at the beginning of the 18th century India’s share of the world economy was 23 per cent, as large as all of Europe put together. By the time the British departed India, it had dropped to just over 3 per cent. The reason was simple: India was governed for the benefit of Britain. Britain’s rise for 200 years was financed by its depredations in India.
On the eve of the departure of the British, on 14 August 1947, Jawaharlal Nehru, the first Prime Minister of independent India, reminded the country that the task ahead included “the ending of poverty and ignorance and diseases and inequality of opportunity.” But after more than seven decades of developmental plans and programmes, India holds the distinction of having the most numbers of poor of the world. As a result, South Asia has become the world’s biggest centre of extreme poverty.
In 2010, the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI), an economic research centre at the University of Oxford, developed the Multidimensional Poverty Index (MPI) to determine the incidence and intensity of poverty experienced by a given population. Besides economic poverty it looks at three other indicators namely health, education, and standard of living ~ and assesses countries based on 10 indicators (nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing and assets). MPI 2020 says that of the world’s 5.9 billion people, 1.3 billion are multidimensionally poor. About 84.3 per cent of are in Asia (530 million). According to Global MPI 2020, India is 62nd among 107 countries with MPI score of 0.213 and 27.92 per cent headcount ratio (around 364 million MPI poor).
India is well-endowed with land, good climate and plenty of natural resources. The country has also 62.5 per cent of its population in the age group of 15-59 years which is ever increasing. The window of demographic dividend opportunity in India is available for five decades from 2005-2006 to 2055-2056, longer than any other country in the world. A vibrant and enduring democracy and the rule of law prevail here. So why does India continue to be dirt poor after more than seven decades of independence? Given the multitude of languages, cultures, customs and castes in India, the reasons for poverty in India are also numerous. An attempt is made to highlight six important reasons for the persistent poverty prevailing in India.
Social inequality: Societies cannot progress if certain sections are left out simply because they happen to be from the ‘wrong‘ class, caste, ethnic group, race or sex. A study of the World Economic Forum (WEF) reveals that India’s social inequality keeps a significant section of the population poor forever despite the country’s impressive economic growth. Interestingly, according to a latest report of the WEF entitled Global Mobility Report 2020: Equality, Opportunity and a New Economic Imperative, Indians born in low-income families would take seven generations to approach even the country’s mean income. Some 220 million Indians are sustained on an expenditure level of less than Rs 32 per day ~ the poverty line for rural India ~ going by the last headcount of the poor in India in 2013.
Education: Education provides a foundation for eradicating poverty and fostering economic development. Adam Smith called for the public provision of education: “an instructed and intelligent people … are more disposed to examine, and more capable of seeing through, the interested complaint of faction and sedition…” Smith argued, therefore, that the whole society is at risk when any segment of society is poorly educated. Nobel laureate Amartya Sen observed that the social opportunities “offered by market-based economy economic growth are severely limited in a society in which very large numbers cannot read or write or count, cannot follow printed or hand-written instructions, cannot operate comfortably in a modern industry, and so on. Inequality in basic education thus translates into inefficiency as well as further inequality in the use of economic opportunities.” Education promotes economic growth because it provides skill that increase employment opportunities and income. Nearly 60 million people escape poverty if all adults had just two more years of schooling, and 420 million people could be lifted out of poverty if all adults completed secondary education, according to UNESCO. Status India’s literacy reveals an overall literacy rate of 77.7 per cent (urban: 87.7 per cent and rural: 73.5 per cent); male literacy rate of 84.7 per cent and female literacy rate of 70.3 per cent. India is paying a quite heavy price for her faulty education system. Identifying the serious inadequacy in our education system Prof Sen said: “India does have many achievements in the success of a relatively small group of privileged people well trained in higher education and specialised expertise. Yet our education system remains deeply unjust. Among other bad consequences, the low coverage and low quality of school education in India extracts a heavy price in the pattern of our economic development.”
Gender inequality: The most famous saying of Jawaharlal Nehru is: ‘To awaken the people, it is the women who must be awakened. Once she is on the move, the nation family moves, the village moves, the nation moves.” Woman is both a core concern and an essential part of human development. Indian social fabric is highly patriarchal which has left women significantly exploited and discriminated. If the caste-based biases work only outside home in open society, exploitation against women operates both in and out of homes. Attitude of men towards women is largely patronising. The weak status of women in society is at the root of all chronic problems which result in high mortality rate, undernutrition among children, overpopulation and lower education. All these factors are enough to feed and sustain poverty. To track progress on relative gaps between women and men on health, education, economy and politics, the World Economic Forum (WEF) publishes the Global Gender Gap report annually. India has ranked 112th among 153 countries in the Global Gender Gap report 2020.
Population: India is the second most populated country in the world with nearly a fifth of the world’s population. While the growth rate of population has decreased significantly over the decade, India’s current growth rate is 1.2 per cent. Around 15 million people are added every year. Population growth is likely to reduce per capita income growth and well-being which increases poverty.This apart, in densely populated nations with pressure on land, population growth increases landlessness and hence the incidence of poverty. In the words of Jeffry Sachs: “High fertility rates, in turn, are a factor in causing the poverty trap.”
Corruption: Gunnar Myrdal once commented that “the prevalence of corruption provides strong inhibitions and obstacles to development.” Corruption and leakage in governmental schemes are widespread in India.
Late Prime Minister Rajiv Gandhi had famously admitted that only about 15 per cent of government’s loan subsidy actually reaches ultimate beneficiaries. Even if we discard the figure as highly pessimistic and assume that 30-40 per cent of welfare funds reach designated targets, the rest is siphoned off by people connected to the implementing government machinery.
Another common form of corruption in schemes designed for the poor is the inclusion of non-poor people with political connections in the list of beneficiaries. The end result is that the eligible poor are denied benefits. The scale of corruption has increased steadily since the economic reforms were started in 1952.Political system: Poverty rules in all polities. Even democracy does not automatically guarantee equal opportunities for people. There is enough evidence to prove that poverty and income inequalities in most democratic countries are increasing. Why are democracies so tolerant of poverty? Mainly because democracies favour direct rather than indirect attacks on poverty. Direct attacks include subsidies, job reservation, transfer of assets and benefits of poverty alleviation programmes. Doles neither assuage the psychological frustrations of poverty-stricken people nor are they economically sustainable.
Indeed, democracies today are majoritarian rather than egalitarian. The middle classes, caught between the high-income group (around 15 per cent) and the working class (around 30 per cent of population), have more votes. There is no reason at all for democracy to favour the bottom 30 per cent and upper 15 per cent. Thus poverty alleviation programmes, paraded in the name of the working class, fail to alleviate poverty. Benefits are reaped by the middle class due to mismanagement and corruption. Poverty continues.Aristotle said ‘poverty is the parent of revolution and crime.’ Indeed, poverty eradication is an ethical, social, political and economic imperative of mankind. An integrated strategy is needed. In the words of then UN Secretary-General Kofi Annan, “The campaign to make poverty history ~ a central moral challenge of our age ~ cannot remain a task for a few, it must become a calling for the many … I urge everyone to join this struggle. Together, we can make real and sufficient progress towards the end of poverty.”