India is among the ten fastest growing economies in the world, having a high GDP growth rate. But this gives us no reason to celebrate when we take poverty into consideration. Even though one can see the middle class having gained from India’s high GDP, we still have to grapple with substantial poverty. The Planning Commission has estimated that 27.5% of the population was living below the poverty line in 2004–2005.
Wealth distribution in India is fairly uneven as well, with the top 10 per cent of income groups earning 33 per cent of the total income. Despite significant economic progress, one-fourth of the nation’s population earns less than the government-specified poverty threshold of $0.40/day.
There are two schools of thought regarding the causes of poverty. The first view is called Developmentalist view. Jawaharlal Nehru had noted that those parts of India which had been longest under British rule were left the poorest. Through stiff regulations, tariffs of Indian goods, taxed and direct seizures, there was a concentrated effort to make the Indian economy deindustrialised. Problems such as price swings made export of agricultural raw material difficult. There were periods of massive famines where, due to weather conditions and stifling British policies, 30 to 60 million starvation deaths had been reported. Community grain banks were forcibly disabled, land was converted from food crops for local consumption to cotton, opium, tea, and grain for export, largely for animal feed. Hence, according to the developmentalist view, all these factors ensured that India was left a backward state.
The other view was neo-liberal view. In this the first argument is that while about 60 per cent of the population depends on agriculture, the contribution of agriculture to the GDP is about 28 per cent. Secondly, high population is also cited as a factor that affects poverty. Furthermore, poverty has also been propogated because of the caste system, under which hundreds of millions of Indians were kept away from educational, ownership, and employment opportunities.
What both schools of thought agree to is the idea that eradication of poverty in India can only be a long-term goal. It is expected that trickle down effect of the growing middle class should help alleviate poverty. 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.
Even though there might have been reduction in poverty in monetary terms, the picture is not clear about other dimensions such as health, education, access to infrastructure etc. Furthermore, as more and more people migrate to the cities, urban poverty also becomes an agenda which must be looked into. To reduce poverty, there must be adequate and equitable access to health care and education. Mostly, what happens is that most of these services are availed by the elite class leaving the poor in a miserable state. Therefore, steps must be taken to provide basic facilities to the poor and also there must be rural employment programmes for them. This will lead to substantial fall in poverty in India.