In view of the big size and the serious nature of the problem of poverty, it is necessary to find out its causes.
1. Little Trickle-down Effect:
An important set of factors responsible for this situation is that the beneficial effects of growth did not reach large masses of the people. The major reasons for this may be identified as those which kept the poor out of the development process. The emphasis all along since the Second Plan and until recently has been on the building of the capacity for capital goods.
This meant two things:
Investments in capital-intensive projects or less employment generating schemes; and lesser resource availability for consumption/wage goods, as also for labour intensive industries.
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Together these resulted in slower growth in employment or wage-income for the masses and small growth in the availability of consumption goods. The progress in small and cottage industries was not sufficient to absorb the backlog of unemployment and the rising labour force. Other significant factor which prevented the poor from benefitting from growth has been the widening inequalities of incomes.
In the capital intensive projects the proportion of income going as wages is bound to be low. But equally important is the unequal distribution of assets, partly helped by the strategy which places premium on non-wage incomes.
It has enabled the few at the top to corner a large proportion of the national income from year to year. For this reason even a smal1 rise in per capita income could not reach the poor.
2. Little Strengthening of Poor:
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The strategy and the progress made under it could make sense, if it had been accompanied by large transfers to favour the poor and also the efforts aimed at raising the capabilities of the poor. Neither of these happened to the extent required to uplift the poor who were below the poverty line.
The institutional credit and the technology transfers too have remained much less than needed for expansion and modernisation of their activities. Their earning capabilities to have remained weak with illiteracy and ill-health rampant among them.
3. Inadequacies of Anti-poverty Programmes:
Another supplement to the transfer could have been the various special programmes to ameliorate the conditions of the poor. These, however, are yet to make a substantial impact on the poverty.
Some of them have come in late and or have been inadequately implemented. Despite some success to their credit, these programmes are yet to make a marked dent on the poverty situation.
4. Fast Population-rise Among the Poor:
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The incidence of poverty is to an extent also caused by the population growth which is larger among the poor than the all-India rate. The close relation between high fertility and poverty is caused by the degeneration of some vital-organs that raise fertility.
Again, poor people are steeped in illiteracy and much attached to the old unscientific attitudes. As such they abhor birth control, or are ignorant of birth control devices or do not want to use them or are unable to use them. With little employment and large- sized families, the incomes are low and consumption inadequate.