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Main Causes of Poverty in India


(i) Heavy pressure of population:

Population has been rising in India at a rapid speed. This rise is mainly due to fall in death rate and more birth rate.

India’s population was 84.63 crores in 1991 and became 102.87 crores in 2001. This pressure of population proves hindrance in the way of economic development.


(ii) Unemployment and under employment:

Due to continuous rise in population, there is chronic unemployment and under employment in India. There is educated unemployment and disguised unemployment. Poverty is just the reflection of unemployment.

(iii) Capital Deficiency:

Capital is needed for setting up industry, transport and other projects. Shortage of capital creates hurdles in development.


(iv) Under-developed economy:

The Indian economy is under developed due to low rate of growth. It is the main cause of poverty.

(v) Increase in Price:

The steep rise in prices has affected the poor badly. They have become more poor.


(vi) Net National Income:

The net national income is quite low as compared to size of population. Low per capita income proves its poverty. The per capita income in 2003-04 was Rs. 20989 which proves India is one of the poorest nations.

(vii) Rural Economy:

Indian economy is rural economy. Indian agriculture is backward. It has great pressure of population. Income in agriculture is low and disguised unemployment is more in agriculture.

(viii) Lack of Skilled Labour:

In India, unskilled labour is in abundant supply but skilled labour is less due to insufficient industrial education and training.

(ix) Deficiency of efficient Entrepreneurs:

For industrial development, able and efficient entrepreneurs are needed. In India, there is shortage of efficient entrepreneurs. Less industrial development is a major cause of poverty.

(x) Lack of proper Industrialisation:


Industrially, India is a backward state. 3% of total working population is engaged in industry. So industrial backwardness is major cause of poverty.

(xi) Low rate of growth:

The growth rate of the economy has been 3.7% and growth rate of population has been 1.8%. So compared to population, per capita growth rate of economy has been very low. It is the main cause of poverty.

(xii) Outdated Social institutions:


The social structure of our country is full of outdated traditions and customs like caste system, laws of inheritance and succession. These hamper the growth of economy.

(xiii) Improper use of Natural Resources:

India has large natural resources like iron, coal, manganese, mica etc. It has perennial flowing rivers that can generate hydro electricity. Man power is abundant. But these sources are not put in proper use.

(xiv) Lack of Infrastructure:


The means of transport and communication have not been properly developed. The road transport is inadequate and railway is quite less. Due to lack of proper development of road and rail transport, agricultural marketing is defective. Industries do not get power supply and raw materials in time and finished goods are not properly marketed.

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