Poverty in India Essay

With 44 percent (44%) of the global outsourcing market in the off shore sector for software and other business process currently being hosted by India, it has fast gained global recognition as the premier global destination for business process outsourcing.   With generated revenues totaling over US$ 17.2 billion and employment related to outsourcing at 1.05 million as of March 2005, India has greatly increased its economic output and per capita GDP.   This economic growth of India has been heralded as one of the most amazing success stories of the 20th century.   The growth rates that India has been posting over the past five years have made it one of the reasons why investments have risen in the area. The problem is that even with the robust economic growth of India the schism between the rich and the poor continues to grow.   Outsourcing, while creating a boon for the Indian economy, has also intensified that gap by creating new social classes and spawning new cultural changes.   Therefore, because of the weak economic fundamentals of the Indian Economy, instead of narrowing the gap between the rich and the poor, it is instead widened and fewer jobs are created thus leading to more widespread poverty. The greatest problem that these poor fundamentals present to society however is the widening of social divisions that are already existent in society.   In the Indian model the social rifts that are created deal with the differences from within the family unit in relation to the outside society.   The creation and birth of a new type of middle class society which is predominantly comprised of members of the youth sector is creating a class that is being socially and culturally alienated from the rest of society, particularly in the traditionally conservative Indian society. New work habits and consumer patterns have created a new class that enjoys the more expensive and extravagant lifestyle that is supported by the relatively high wages that receive as compared with the rest of Indian society.   There is very little time to spend in the household where more solid and fundamental values are instilled and nurtured and instead the constant exposure to western society has resulted in a degradation of whatever morals were created or instilled in the first place.   For others, the pressure of keeping the job and maintaining the accustomed lifestyle isolates them from other members of society in their efforts to generate more income. In India where the economic disparity was historically at lower levels, the introduction of higher paying jobs as a result of business process outsourcing has increased the rift between social and economic classes as well.   The newly emancipated and empowered women as well as the new rich employees of outsourcing firms are now experiencing things that their parents could never have enjoyed in their lifetimes such as televisions, ipods, cars and cellular phones.   The rift would not be so great however were the opportunity available equally to all sectors of society.    As it is however, only those with certain qualifications and training are allowed those opportunities and this has created a new resentment for those who have gained so much in so little time. While this has certainly generated more income for the Indian government to utilize in other social welfare projects, the income from taxes is not spent on decreasing the economic divide that exists but has actually been spent on infrastructure projects in IT designed to drum up more business and thus increasing the social gap even more.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Another reason for the widespread poverty in India lies in the failure of the government to enact programs to ensure that the economic developments that benefit certain sectors of society also trickle down to the masses.   The Indian Planning Commission has estimated that as of the year 2004 and 2005 nearly 27.5% of the Indian population was living below the poverty lines. Nearly 75% of all those living below the poverty line are located in the rural areas of India.   This shows that while most of the developed cities in India are beginning to grow, the rural areas of India are not able to benefit from this economic development.   With over 836 million citizens living on less than US$ 0.50 cents, it seems that the poverty problems of India are more rooted on the poor economic structure than anything else. Another reason for this is because of the different social, religious and economic groups that are in India.     The fact that the caste system was encouraged until the early 20th century has also added to the poverty rate in India because of the special rights and privileges that were given to others.   Coupled with the lack of property rights, since the right to property is not constitutionally declared in India, these barriers effectively prevent those from the lower economic classes of India from entering the middle class. There are a number of other reasons that can be cited as the cause for poverty in India.   Most of these theories are based on the poor economic fundamentals that were established during the British Regime and during the resulting political turmoil that resulted immediately after the transfer of power in 1947.   Be that as it may, such poor fundamentals have also given birth to other economic problems such as the growing divide between the different economic classes in India. The recent economic growth of India due to its growing role as a major player in the outsourcing industry has indeed granted a number of benefits to Indians but at the same time it has served to increase poverty in certain areas because of the failure of the government to ensure a more equitable distribution of income among the masses.   Lack of government infrastructure projects and rampant corruption remain to be the deterrents for India’s true economic growth.   Until India is able to address these problems, poverty will remain to be synonymous with the Indian Economic system for years to come.    References: Agrawal, A. N.: Indian Economy. Problems of Development and Planning. 18th edition, New Delhi: Wiley Eastern Limited 2002 Ahluwalia, Isher Judge: New Economic Policies. 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