Some of the reasons why poverty is endemic in India and the Third World


What accounts for the disparity in lives of the rich and poor in most “third world” countries ? 

Most westerners can’t get their head around the idea of visible poverty in the Third world.  I know, some people will instinctively cringe at the sight of the word “Third World”, but lets face it, “Developing world” is simply a politically correct version of the same insult.  Lets call spade a spade and face facts.

People brought up in the west are shocked by the sight of visible poverty in the third world.  How can such inequalities exist ?  Why aren’t the rich of the third world embarrassed about the grinding poverty of their neighbours, servants and workers ?  What prevents the desperately poor from snatching the riches that are within their grasp, but always out of their reach ?  Why do people accept inequality as an integral part of life ?

What most westerners do not realise is, this IS the reality of life – east or west ! 

There are three main reason why we don’t see visible signs of poverty in the West.

1) State helps the poor –
Government hand-outs in the west helps hide the visible signs of poverty.  In Europe, governments spend huge sums of money to help their poor.  They provide housing, education, unemployment benefits, money for raising children, health service, pension, home for the elderly and much much more.  The tax paying public in these countries pays a significant proportion of their earnings to support the young, elderly, unemployed and ill of their country.   

2) Old money –
On the whole, most European countries were colonial powers before the second world war.  Over the centuries, they have accumulated resources to last a number of generations.  Most European countries set up the machinery of their “welfare sate” from proceeds of their colonies. 

3) High self-worth –
Other reason is, Europeans value their products and skills over and above that of others.  A farmer in France expects to be paid far more than a farmer in Cambodia, though a Cambodian farmer may work longer hours.  Products of the West also cost more, because the producer and labourer in the west expects to be paid more !  No matter what the product is, pizza or a plane, they insist on being paid top price.  As a result their products are “valued” higher than similar products produced by people in Third world.

These are the primary reasons why we don’t see visible signs of poverty in Europe. 

In the third world, there are several reasons for visible signs of poverty. 


Poor governance

Governments do not have the sort of money they need to tackle poverty.  Having been looted for several generations, most of these governments are cash poor.  They also lack the infrastructure – in terms of physical resources and government functions to tackle poverty.   

Most of these governments are still running on governance models they inherited from their colonial masters.  These models were obviously set in place to benefit the ruler, not the ruled.  Hence, there was an inbuilt inequality which most of them have not corrected. 

In many third world countries, cronyism is rife.  It served colonial powers to have native sycophants to rule natives on their behalf.  But an independent nation is crippled by sycophants, meritless promotion of bureaucrats and political interference of government cronies.  Most third world countries are still plagued by this and in some, government rules are bent to set up political dynasties.  For example, in India, political dynasties expect to take over entire states or political parties, generation after generation.  Entire machinery of government and even democracy is bent-out-of-shape to convince the masses that dynastic politics is somehow “good” for the country ! 


Lack of resources – government

Most third world governments do not have enough tax receipts to put a welfare state in place.  This is not due to lack of money in the country.  Often these countries are resource rich in terms of minerals, natural resources, intellectual talent of its people etc.  But, everyone tries to avoid paying tax !  Often what the state collects is a miniscule proportion of the state’s true wealth.  In these countries, many people work for themselves as small individual businesses.  The people they employ are usually on “cash payment” basis with little or no tax being sent to the government.  Even bigger businesses manipulate their balance books to pay as little in terms of tax as possible.

Even other tax receipts are manipulated to defraud the state.  For example, property prices are deliberately deflated so as to pay as little in terms of stamp duty to the government.  Hence, the real price of their real estate is never disclosed !  Same happens to natural resources of the nation – its true value is not disclosed and the state is paid pennies instead of pounds in terms of “duty”.

Governments in these countries often borrow heavily at disadvantageous rates to pay for their “policies”.  However, their badly formed polices, leaky organisational infrastructure and cumbersome & ineffectual bureaucracies keep them in a poverty trap of their own making.  How can these governments help the poor of their country when they can’t get out of the poverty trap themselves ? 

Poverty elevation policies of many countries are badly organised and funded.  For example, India wants to offer “guaranteed employment” to its rural poor.  But, where are the jobs ?  How is the money distributed ?  Its politicians openly accept that over 50 % of the allocated money disappears amongst corrupt bureaucrats !  How can any policy be effective when such waste is taken for granted ?


Lack of resources – people

Without government support, people have to do the financial planning themselves.  They have to “PAY” for everything themselves.  Education, housing, health, pension – everything has to be paid for by themselves.  A single serious illness can wipe out entire life-saving of a family !  Cancer, long term handicap, heart surgery etc is expensive to treat.  Without government aid, its prohibitively expensive.  Terminal illnesses are most painful as they cost the family money with no hope of recovery.  Long term illness or death of the bread winner often leaves the family destitute as there is no state support to help out in such circumstances.  Family and friends are the only support people can hope for.

Farmers in the third world have real fear of natural disasters.  There is no government safety net to protect them when things go wrong.  Western governments are happy to subsidise and financially support their farmers, but third world governments are unable to do the same.  Farmers in India routinely commit suicide when they can’t repay their debts, perpetuating the problems for the next generation.

Businesses and industry are equally prone to financial ruin.  Without government safety net, there is real danger of financial free-fall in a crisis.  Bad foreign policies often ruin businesses without much notice.



The rich and powerful send their children to study abroad.  They often live and holiday abroad.  They often spend a lot of money they make “back home” abroad.

Wealthy people of these third world countries often siphon off their real wealth to Swiss accounts.  Though they consume conspicuously, they do so outside their country and often this is to avoid the income tax officers of their country.

In 2009, along with the rest of the world, Indian government had the opportunity to get the Swiss to give them access to who had squirreled away “black money” in its banks.  Amazingly, the government declined !!  Indeed, this was because many culprits of this national crime were in the parliament itself !!



Unlike the west, religion often governs the day to day life of the people in the third world.

In South East Asia, the theory of “KARMA” plays an important part in subduing the society and for it to accept the status quo.  People accept that they are in the situation they are in due to their own actions – past or present.  This makes them meekly accept their lot in life.

In Africa and South America, where Christianity rules, poverty is seen as the wages of sin !  Pastors spend great deal of energy, thumping their pulpits to make their congregations understand that God is punishing them for being less devote, less committed and being children of pagan sinners !  Guilt makes the poor accept their lot with mournful resignation.

In Muslim countries, all calamities are the will and punishment of Allah for being less devote.  In Afghanistan, the Taliban blames the existence of ancient statues of the Buddha for their poverty and backwardness !  Statues which were given “World heritage” status, were blown to smithereens to placate Allah.  This did nothing to improve the lot of the ordinary citizen, but, it reinforced the idea that they were poor because of the presence of the Buddhas.  Nations run on Islamic constitution, blame non-muslims every-time any-thing goes wrong.  Kafirs (non-believers) are always punished to placate heaven.  Thus material poverty is constantly compounded by poverty of the mind and spirit.


 Cultural overload

In many third world countries, community and culture consume a lot of time, effort and resources.  Marriages, death, coming of age, graduation etc etc are costly affairs, often needing serious expenditure.  Families often have to save for decades to afford a single blow out at such functions.  Culture and custom demands no less !  Though aware of the financial madness of the situation, most families subscribe to the idea that “this is the way it is”.  Generation after generation they build up huge savings, waste them on a few days of feasting and go back to saving for the next big blow-out.  Often, the poorer the family, bigger the “demonstration of wealth” at such blow-out functions.

In India, buying gold is built into the cultural genetics of the nation.  India is world’s biggest consumer of gold.  Most of that gold is purchased by the public.  Much of this gold is hoarded, passed on and never actually utilised as currency or commerce.  Huge financial potential of the nation is held in abeyance and never realised. 


 Population explosion

Before modern medicines, families had to have many children just to guarantee that a few will survive to adulthood.  Children were the only insurance, pension and health care provision people had in those days.  With modern medicine and health care, child mortality is no longer so prevalent.  Even if you have 2 children, you can be sure they most probably will make it to adulthood.  Sadly, some people still adhere to old ideas and insist on having huge broods of children.  This is expensive if all of them grow up and you have to house, feed, clothe and educate them all.

Despite government education drives, some sections of the community, for religious reasons, do not use contraception and continue to have large families.  In its misguided attempt to placate the muslim voters, Indian government enshrined polygamy as an exclusive right of the muslims, despite the fact that Hindus were also culturally and religiously free to have multiple wives.  This has led to population explosion in the muslim community and it continues to grow at a pace much faster than the rest of the country.  This invariably leads to poverty amongst the muslim community, making them feel disenfranchised when they could easily deal with this by reducing their family size.


Things are changing – even in the third world. 

Politics, economics, education, globalisation etc are making big impacts on the lives of people.  Time will tell how far this will help lift the people out of poverty.


© Bhagwat    [email protected]


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