Causes of poverty in India

Caste system in India

A proportionally large share of poor are lower castes. According to S. M. Michael, Dalits constitute the bulk of poor and unemployed.


Many see the caste system as a system of exploitation of poor low-ranking groups by more prosperous high-ranking groups. In many parts of India, land is largely held by high-ranking property owners of the dominant castes that economically exploit low-ranking landless labourers and poor artisans, all the while degrading them with ritual emphases on their so-called god-given inferior status. According to William A. Haviland, casteism is widespread in rural areas, and continues to segregate Dalits. Others, however, have noted the steady rise and empowerment of the Dalits through social reforms and the implementation of reservations in employment and benefits.


British era

The reign of the Islamic dynasty of the Great Mughals had been an era of unprecedented prosperity in India. The Mughal era ended about 1800. Jawaharlal Nehru claimed "A significant fact which stands out is that those parts of India which have been longest under British rule are the poorest today." The Indian economy was purposely and severely deindustrialized (especially in the areas of textiles and metal-working) through colonial privatizations, regulations, tariffs on manufactured or refined Indian goods, taxes, and direct seizures, as noted by linguist and commentator Noam Chomsky. However, according to economist Angus Maddison, such explanation ignores the role of changes in demand and technology.


In 1830, India accounted for 17.6% of global industrial production against Britain's 9.5%, but by 1900 India's share was down to 1.7% against Britain's 18.5%. (The change in industrial production per capita is even more extreme due to Indian population growth). This is because Europe - particularly Britain - industrialized before the rest of the world.


Indian literacy rate rose almost tenfold during the British era. In 1947, India's literacy rate matched China's.