Economic factors for poverty:

1. Low agricultural productivity per labour:

• One of important reasons of high poverty in rural India is low agricultural productivity per labourer.
• Problems like poor irrigation facilities, insufficient technology, lack of education and training, low rate of investment, heavy load of population, etc. result in low agricultural productivity. So income of farmers remains low and poverty increases.

2. Unequal distribution of land and property:

Before and during the British in India, systems like Zamindari and land ownership were wide spread. As a result, land lied with handful of people like zamindars.

• Zamindars were neither directly associated with land cultivation nor had any interest to invest in agricultural sector. So the real cultivators i.e. farmers became landless and zamindars became land owners.
• The landless farmers had to then work in their own land as tenants and so they had no motivation of work.
• All such factors resulted in poverty among farmers.

3. Minimal development of small and cottage industry:

• India started giving importance to heavy and basic industries as a strategy for economic development after its second five year plan.
• India neglected small and cottage industries of rural regions which have great contribution in employment, production and income.
• Over and above agricultural and allied activities such as animal husbandry, dairy, fisheries, were growing slowly. This added to seasonal unemployment. As a result, poverty remains high.

4. Rapid increase in price:

• Events and situations of war, drought, low national production, rapid increase in demand, increase in production cost, price of goods and services as well as edible goods, etc. rise the price at a much faster rate.
• Price rise reduces purchasing power of low income group.
• It reduces standard of living and increases poverty. On the other side, increasing price benefits businessman, traders and big farmers.
• The society again falls in the trap of unequal distribution of income.

5. High rate of unemployment:

• Majority of rural India is dependent on agriculture and agriculture is dependent on monsoon. Hence, most people can grow only one crop in a year. This results in seasonal unemployment.
• To make things worse, population in India is quite high and they live jointly. During times of seasonal unemployment it becomes very difficult to bear the expense of the entire family. Majority all the members work in agriculture even when some of them are excess for the work. This results in disguised unemployment.
• Moreover, lack of alternate business opportunities in rural regions increase unemployment and poverty further.