(1) Colonial Exploitation:During the British administration, the industrial sector of the economy was completely destroyed. The people were bound to depend on agriculture. The man-land ratio declined giving rise to widespread underemployment and disguised unemployment.Further the Britishers compelled the poor farmers to sell their product at a lower price and sold the British industrial product at a higher price in Indian soil, and accordingly exploited the Indians. Gradually the country became pauperized and the extent of poverty increased with the passage of time during colonial administration.
2. Underdevelopment:Due to under-development and non-economic utilisation of natural and human resources, people in the country are not able to get a square meal per day.
3. Inequality:Inequality in the distribution of wealth and income is another factor responsible for the abject poverty situation in the country. While large sections of the people are poor, wealth and productive assets have been concentrated with a few hands.
4. Unemployment:Lack of employment opportunity is one of the basic causes of poverty. Due to unemployment, there is lack of purchasing power, effective demand with the people. This in turn results in low investment, low production and again in low income. So Nukes has rightly said: "A country is poor because it is poor."
5. High Growth Rate of Population:Growth of population is another factor responsible for poverty in India. The slow growth of income accompanied by a higher population growth reduces the per capita income and consumption expenditure and thus increases poverty.