Define Poverty. Explain the Causes of Poverty.


Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Poverty means that the income level from employment is so low that basic human needs can’t be met.

Types of Poverty: 

  • There are two main classifications of poverty:

Absolute Poverty: 

  • A condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing).
  • This condition makes it possible to compare between different countries and also over time.

Relative Poverty: 

  • It is defined from the social perspective that is living standard compared to the economic standards of population living in surroundings.
  • Hence it is a measure of income inequality.

Causes of Poverty in India

Population Explosion:

  • India’s population has steadily increased through the years. This also increases the demand for consumption goods tremendously.

Low Agricultural Productivity:

  • A major reason for poverty in the low productivity in the agriculture sector. The reason for low productivity is manifold.

Inefficient Resource utilisation:

  • There is underemployment and disguised unemployment in the country, particularly in the farming sector.
  • This has resulted in low agricultural output and also led to a dip in the standard of living.

Low Rate of Economic Development:

  • Economic development has been low in India especially in the first 40 years of independence before the LPG reforms in 1991.

Price Rise:

  • Price rise has been steady in the country and this has added to the burden the poor carry.


  • The ever-increasing population has led to a higher number of job-seekers. However, there is not enough expansion in opportunities to match this demand for jobs.

Lack of Capital and Entrepreneurship:

  • The shortage of capital and entrepreneurship results in low level of investment and job creation in the economy.

Social Factors:

  • social factors hindering the eradication of poverty in India. Some of the hindrances in this regard are the laws of inheritance, caste system, certain traditions, etc.

Colonial Exploitation:

  • Colonial Policies transformed india to a mere raw-material producer for european industries.

Climatic Factors:

  • Most of india’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, odisha, Jharkhand, etc.
  • Natural calamities such as frequent floods, disasters, earthquake and cyclone cause heavy damage to agriculture in these states.

Poverty Trap:

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