POVERTY AN INSIGHT
Poverty is not a phenomenon limited to the third world countries; under development and even developed nations have a significant number of people living below the average income line. As a matter of fact poverty is not a subjective thing though at times people feel it is; for a lower middle class family living in countries like India the definition of poverty may slightly differ than those who are practically homeless. In an economic context if an individual or family is significantly below the average earnings per person of the nation than he or she is classified as poor. Even countries like UK or USA have a population of more than 3 to 5% that can be economically classified as poor.
|Poverty an insight
Now what about the causes of Poverty; different nations have diverse issues that actually cause poverty. If we go deep into the details I believe the causes would merit a 300 page comprehensive report often written and presented by leading financial and economic institutions. However in general I will be listing some of those causes that can give you some perspective on this issue which plagues most of the world today.
1-INFLATION: if you cannot fathom this concept in pure economic terms than in layman style inflation is a phenomenon when prices of goods rise at a level much higher than that of the earnings of an average person. We are certainly not talking about ‘Ambanis’ or ‘Tatas’ but a common man. Thus continuous inflation is definitely one of the causes of poverty.
2-UNEMPLOYMENT: no need to acquire a PhD in Economics to understand this cause of poverty. If you are unemployed obviously it puts you in a position where you are not able to feed yourself or your dependents. When you do not have an income you can be poor sooner or later. The unemployment rate in countries like India is well above 15% of the entire population though the official figures may not be so dismal.
3-ECONOMIC RECESSION: This particular one is tough to understand or digest; countries have an ‘economy’ and if government policies are not planned carefully or executed diligently the result is a slow down in the overall economy of the country which definitely has its impact on other people. Income levels tend to fall and you are bound to get poorer day by day.
4-GLOBAL SCENARIO: countries do not live exist in isolation; they trade with each other and this leads to FDI or what we call Foreign direct invest. Then there is the balance of trade; these technical terms may make the issue cumbersome but simply put if your major trading partner countries are suffering from economic slowdown it is bound to have an impact on your country and consequently on an individual as well.
5-LIVING BEYOND YOUR MEANS: this one may catch you a bit off guard; but trust me when I tell you this, if you are spending more than what you earn or even equal to it. You are definitely not saving a dime; this results in no investments in any business ventures. You have an income of 20,000 and you are saving 0 Rupees from it; the result is that you have nothing to rely on neither anything to make an investment. Savings make up investments; and when investments are made it generates revenues for people by creating employment opportunities and poverty is bound to reduce.
I have barely touched the tips of the iceberg; the causes of poverty can be multitudinous and may differ a bit according to each nation. Even political instability can cause poverty for all these elements are linked together in a vicious circle.