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Why is India poor? What can be done to change this?

I am looking to go beyond the obvious reason which is quality of institutions (including corruption) and infrastructure. For a nation of 1.2 billion, even if the institutions aren't that good, it should be possible to fix things, right?

I think we can learn a lot from history and evolution of distribution of wealth in the world. Look at this chart: http://2.bp.blogspot.com/-V_zsRrVZd4w/T_B-rIF6v7I/AAAAAAAAGhE/JdlSo4iwtGU/s1600/Economic+history+of+world.png

This shows a shocking shift of wealth off India in only as much as past 300 years. Caste system and all have been here since ever, so there has to be a deeper reason. Also, as much as I agree with Technology being the reason, I don't really see it as the reason, unless we want to be developed EXACTLY in the way as the west is - there CAN be multiple other ways of being wealthy - and the tech way of using minimal human capital and mechanization while may be the best for the west where humans resources are scarce, it may not be the best way for our human-capital rich society - wonder how much we can do with sooo many hands! And still, we are just struggling to feed those mouths :(

So I guess the question is calling for a critical analysis of what has brought about the condition shown in this graph, where India houses the max poor in one country: http://3.bp.blogspot.com/-cXku0S7O-N0/UA1lK_DhtbI/AAAAAAAAAgE/0FduwIJQhZ4/s1600/regional-ineq.JPG

By the way, a disclaimer here is a must on my background so that you do not think this is coming from a very narrow mind - I am not casteist, am highly educated, and am IIT B.Tech. grad - so a big promoter of tech (tech I think is awesome for me and the likes who like it, but still don't see mechanization as the solution to human state).

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    Apr 8 2013: the chart is misleading, as it shows data in percentage of global wealth. if you look at absolute numbers, turns out that india never went back, the progress is continuous. the reason why india lost its lead in terms of world percentage is the fast progress of europe and USA in the centuries before 1900, and then in a decelerating pace up to now. this growth wasn't any faster than what india has today, in fact it was slower.

    economic growth requires time. it works through accumulation of capital. capital, in turn, accelerates the accumulation even further. there is no skipping of this. the path has to be walked. we can only control to some degree the speed of progress. if we hinder the economy with stupid regulations, war, instability, etc, we can slow down progress or even turn it into negative. but we can not artificially speed up the economy above its natural rate. if we can speed it up at all, maybe the best we can is to educate the people about the significance of economic freedom and property rights. if you look at the numbers, india performs very good at the moment. the growth is impressive. but it is questionable if the intention is good, or it is just happens out of luck. related talk is http://www.ted.com/talks/niall_ferguson_the_6_killer_apps_of_prosperity.html

    from the above, it is clear that wealth is mostly based on history. even if you adopt the best methods possible, you won't get rich next year. it just puts you on a trajectory that makes you rich in the future, 50 or 100 years later. on the contrary, if you do terribly, it is still possible that you are rich. 400 years of steady progress can be followed by a stupid neo-marxist neo-fasist neo-mercantilist neo-luddite neo-expansionist state control. it effectively shuts down progress, but will not eliminate all the wealth at once. people can enjoy the fruits of their ancestors' labor for a long time before the entire thing collapses. this is what is happening in the USA and the EU.
    • Apr 8 2013: I agree overall, it is probably just the capital game. I am not sure enough to deny the existence of another route, but this way, it makes sense.

      One small point -
      Regarding the graph, I don't think India didn't go back in absolute numbers. In fact I think, and that is the common belief in the country, that it did indeed go back in wealth even in absolute terms, during the colonial rule. Do you have data supporting your claim (made in the first line, where you say that the chart is misleading)?
    • Apr 8 2013: Oh interesting - maybe you are both right and wrong! Hear this: India did not go back in absolute terms, but the 'term' changed. Ofcourse, it was all trade, the colonialization. BUT, food got replaced with metallic arms, which were 'valued' more highly, and disparity/ concentration of wealth increased. That pushed the 'country' into poverty.

      Is that correct? What do you think, Krisztian? I think it is a nice conclusion.
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        Apr 8 2013: the data we have is quite weak. it is apparent that life expectancy for example went down in the colonial era, but not by much.

        hans rosling's famous gapminder shows this from 1800 to 1900: www.bit.ly/ZJlCNj

        the change seems very slow and not very significant. if you run the program forward, you can see that real progress started after 1950, which coincides the end of british oppression, but another milestone was around 1980, when india abandoned socialist views in favor of more economic liberalism.

        so my conclusion is that colonialism prevented progress, but did not cause negative growth. it is all economical though, the cultural changes can not be measured bu gdp.

        ps: keep in mind that preventing progress is the exact same crime as theft. do not interpret my words as i think colonialism did not hurt. it did. but the harm did not manifest itself in shrinking economy.
        • Apr 8 2013: well observed - 90's and 2k's have been good years
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    Apr 9 2013: I think it is the mentality of people that makes India look poor otherwise if we look at the resources India has, it should not be categorized as poor. Look at Singapore, Japan, Korea - small countries but they have bigger economy then that of India. What kind of natural resources they have compared to India ? Much much less in qty & variety, still they are ahead. Instead of looking into future we many times live in past & stick to it. Change is hard to come. We should not forget our past but for good progress of any society future vision is also as important as the past is.

    If we just change the mentality of pulling legs to supporting legs then this tag will be vanished automatically.
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    Apr 8 2013: Hi Divya!
    India is poor because Indians fashion prosperity and wealth looking at others and cannot redefine these. India is also poor because Indians neglect her rural population and their realities. I agree that India's material wealth has been stolen for centuries but that's hardly any excuse for laziness, corruption and lack of will.
    If I may ask what is your tread in B.Tech? And can you innovate a technology that is cheap, efficient and help average Indian villager to raise the quality of his life?
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      Apr 9 2013: Nothing manufacturers laziness, corruption and lack of will better than democracy.
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        Apr 9 2013: So that people can live the mistakes out, suffer and learn, all by themselves and that is what is great about democracy.
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          Apr 9 2013: not sure what you mean?

          But there is this esoteric concept that is foreign to most progressives called life in which a person gets to experience it without the nanny state telling him what is best for him.
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        Apr 9 2013: I mean that democracy is still the best political system in the world. I don't deny that it breeds certain vices, but it is an open system where there are possibilities of course correction.
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          Apr 9 2013: That is not true. What you end up with is the tyranny of democracy
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          Apr 9 2013: yeah, like vito corleone is still the best mob boss in the world. democracy can grant you one thing only: the exploited class never exceed 50%.
  • Apr 7 2013: Oh no, these people are really poor and unhappy. There's no doubt about it. And the logic looks funny from our side, did to me too when I first heard of it as a high school kid. But that is how life below subsistence level is. That's the reason why it is tough to abolish child labor too. Those kids actually support adults while themselves consume less resources. It is a completely different dynamics, needs some work to understand.
  • Apr 7 2013: 1.) People of India( including very poor ) spend a lot of money on social ceremonies ( like marriages ).

    2.) When India was not a free country, then the British discouraged industries and ruined traditional handicrafts. This low economical development continued even after its independence. It was followed by a sudden increase in population.

    3.) After the sudden increase in population, the number of job seekers increased. The Green Revolution and Industrialization did created some jobs but effects were limited. Then these people took up odd jobs like hawking, rickshaw pulling etc. and settled at the outskirts of cities ( usually slums ).
    • Apr 7 2013: But why did we not recover? Even the countries completely destroyed by world wars have recovered and are the most developed. We sure have resources and human capital.. why do we lag behind then?
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    Apr 9 2013: Why is India Poor?

    The Answer is simple :
    Its mainly corruption . The demon of corruption has literally destroyed our country economically, morally. Our so called 'Leaders' have no clue what they are doing and whats going except a few of them.

    Poverty leads to lack of education which inturn leads to more and more uneducated people choosing politicians from criminal backgrounds as their leaders . This results in more black money getting stashed. Poor judiciary reforms makes things even worse.

    Last but not the least , is when the educated class is not interested in National politics so either they don't go out to vote or even if they do they are outnumbered . I am not blaming the uneducated class. But this lack of awareness is the root cause of poverty in country. But the good signs is lot of movements are taking place , through social media awareness is slowly being created. So definitely our country will not remain poor for long:)
    • Apr 9 2013: It is tough to get to vote these days, as we keep changing residences and cities..
  • Apr 8 2013: Exactly. yes, to the last question, and infact a related observation is tht almost none of my engineer frineds actually invent things for use here - for all those reasons!
    It seems enterprise and will is the solution. I dont knwo it, but thta's what I am starting to do now.

    Thanks, Pabitra.
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      Apr 8 2013: Welcome. After I read suggestions by others, I'd like to add that it's not entirely for lack of money. I mean it's better to redesign a rural husking pedal in India after having an IIT B.Tech than be an investment banker in Singapore. My opinion entirely.
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    Apr 8 2013: I think India is poor because it does not have enough money.

    This video explains why India is poor

    • Apr 8 2013: OK video. The analysis is little loose.
      I don't know why we want to compare India with China, and not any other country; the countries have very different past and mentality and govt. The biggest difference in the past (relatively recent) of the countries is that India was under colonial rule until only 65 years back! To get better insights, I wouldn't necessarily compare India to China.

      However, I agree with the overall point of the video, while there are many errors in the details:

      Let's look at minor errors first -
      1. Although it is foolish to say that just authoritarian govt ensures faster development, the point is that if the authoritarian govt is pro-progress, it will ofcurse be fater in growth. It is inadequate to put all types of authoritarian govts in one bucket - military rule in Pakistan obviousy hampers growth.
      2. The pictures of Shanghai and Mumbai, although minor, are biased :) I needed to point this out :) Mumbai has its own nice-building-skyline, and Shanghai ofcourse would have it own slums.
      3. Low women participation - I am not sure... from my observation, women work in India too. And especially in poor families, everybody - even kids - works.

      Now to the good and important points that have come out of this video and what I have thought of them -
      1.Participation of women in workforce has come out, that can probably be increased in India.
      2. I think democracy is indeed an expensive and slow form of govt. It does make decisions slow.
      Authoritarian rule would mean a faster growth - if it means growth - i.e. it is a high-risk high-gain thing. If you have a good king, you are great, a bad one will ruin the country. Anyway, given India, authoritarian rule is not a possibility, and democracy is here to stay. However, maybe the local level govts can be made faster and more authoritarian - a call for changes in existing imperial model of governance is in order. This is known as the idea of empowering the 'panchayats' in India.

      Any other takes
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        Apr 8 2013: It has been a while since I have seen that video. My take is that India's main problem was the tyranny of democracy and the inevitable corruption.

        Yes a monarchy is probably the most efficient but if your monarch is Mao it is not going to be good.
    • Apr 8 2013: And yes, above all, your conclusion is there - that it is a problem of capital. That seems very correct. ("India is poor coz it doesnt have any money").
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    Apr 8 2013: Hey Divya,

    India is a very complex country and you cannot compare it to any other country. What ever succeeds in India will not work elsewhere and Vice Versa. And I know its very easy to blame the Brits, Politicians, Bureaucrats, Corruption etc. But the culture and diversity of India itself is the reason why it takes long time to bring solutions and implement them effectively.

    It is not easy to bring change in a country with 200 languages, So many Cultures, Castes, Religions. And with the kind of democracy the people have been habitual to...It will make it even more tough.

    The only way you can fix things in India is to wait for people to respond and force the laws, force the change they want. The good news s that its begun now. The history says it all Divya. If you observe the history and how the technology merged with Indians today...There is a definite pattern.
    • Apr 8 2013: Well said. Let me add an observation - technology adoption in India is super high - I guess that's because tech is applicable in the same way to and does not clash with any religion or caste or linguistic or regional considerations. I guess other changes take time mostly because of the 'unruly' diversity, if I may add to what you say. What do you think, Chaitanya?
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        Apr 9 2013: Absolutely Divya. Technology adoption is very high and also very fast. The most amazing fact is that people who don not know how to read whats in the gadget still use it very efficiently. They are just laymen. I am not sure if this kinds adaptability happens elsewhere. So the country doesn't lack anything. It has everything what a developed nation needs to have, I mean the talent, the intent and the resources. The only thing needed at the moment is a push.And that push is what technology can help with.
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      Apr 8 2013: you understand india, and it makes you believe it is special. the thing is, every other country is special too. and despite all the differences, the way to prosperity is the same everywhere.

      you present diversity as an obstacle. i claim diversity is more an asset. only from a wide variety of ideas we can pick the ones that work.
      • Apr 9 2013: Diversity slows decisions, that's the only way it hampers growth.
        But it is an asset in countless ways. We Indians cherish that. If anything else, it makes life so much fulfilling because of the constant variety of ideas and thought schools.
        There is a saying about India - Whatever is true of the place, the exact opposite is also true :D
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          Apr 9 2013: on the contrary. diversity speeds up growth. the reason for that is this: if we know what is good, obviously diversity hurts, because it means that some solutions will not be the good solutions, hence the average is lower. but we don't, and we can't know what is the good solution. the only way to find it is trial and error. and in such an environment, the sheer number of ideas is what matters.

          btw that is how evolution works. and it came up with some crazy good stuff.
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    Apr 7 2013: Well it is a funny logic, Divya, to have many children so that they can work and contribute, because many children also represent bills to pay, mouths to feed, in other words, they take as much work as they contribute.

    I would still ask people if they feel poor. Some people feel rich, emotionally rich, if they have many children, even if they don't have much money they are rich in people and relationships.

    Maybe people don't mind being hungry. At least when you're hungry you're slender, here in the states we have a problem with obesity, overweight.
  • Apr 7 2013: India's economic development is one of the fastest in the world right now. But its too late. The population is 1.2 billion which is still growing. So the 4th reason is illiteracy. Adolescents should be educated about unprotected sex.
  • Apr 6 2013: from the things i have read and learned the biggest thing is education that makes a difference a government funded education system almost forcing children to go to school and to be educated to the ways of the world and the desire to want change for the better and im not talking money but more to see the way there governmet and industry there has wronged them. i cam to this light from watching this farce of a war on terror our government is inflicting on other countrys for no matter how you want to look at it its just for profit because even just a lowly worker bee like me can see the only way to fight terror is through education and understanding
    • Apr 7 2013: Well said Daniel, I completely agree. I too think that education and awareness is what is needed. I think that's the way ahead.
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    Apr 6 2013: Well, Divya, have people you know said to you, "I feel I am poor, and I hate being poor"? Then it might be your job to help them improve their life. But if noone has ever said to you they dislike being poor, perhaps they don't feel poor, or they don't dislike it. Perhaps you are assuming people feel poor, or dislike it, when they don't.
    • Apr 7 2013: Well yes, we are not talking about I-don't-have-a-car or I-don't-have-a-house poor, we are talking about people who have to go hungry for days, or split a single piece of bread among multiple family members, or those who take drugs just so that they can go hunger-less for days at a stretch.. so I think it is a real problem, not an imagined one and one that the sufferers very much realize.
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        Apr 7 2013: Well, Divya, I've never been to India, so it's hard for me to say. Do people have large families in India? Maybe you need to have the government control the number of children as they do in China.

        I still believe you should ask people you think are poor whether they consider themselves poor, and how they feel about it. You "think" it is a real problem, but possibly the people you think are unhappy are not as unhappy as you think.
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        Apr 7 2013: Divya, if you are talking to people and you find that many of them feel poor and very unhappy about it, you could also ask them what they would like to do about it. I don't know, how does the caste system work, perhaps that is holding people back. Here in the U.S. we somewhat limit the inheritance each generation can collect, so that each generation has to prove itself anew.

        As I said above, perhaps the government has to limit the size of families. I don't know why, here in the states people naturally have small families, most that I know have one or two children.
        • Apr 7 2013: That's a very important point, and in fact the more educated families have like 1-3 kids, while the poor families have many children. The rationale is that while the well-to-do parents take care of their kids, in the extremely poor families, a very different logic is at play. They use kids to labor and earn bread for the family. Also, they are never sure how may of their kids will even survive for long (diseases, feuds), so they have ample to last their old age. This is for families that think. Otherwise, most have no hope and just don't care.

          But the most important thing that you have said is that maybe I am 'thinking' this, and maybe the reality is off. And above all - we must ask them what they would like to do about it! Thank you for that. If you give it one word - empowerment (or enterprise) it is.

          P.S. The caste system is on its way out. Me and my generation, for example, largely doesn't think of it at all. These days, once you are educated, caste doesn't matter. Schools are meritocratic. However, politicians do exploit it, and the poor, uneducated are suppressed by hooligans that happen to have a family name that suggests a higher caste.
  • Apr 6 2013: Compare China to India, and you'll see an important factor. Indira Gandhi tried to control out-of-control population growth - She was machinegunned by her own guards.
    • Apr 6 2013: That unfortunate incident was a repercussion of administrative emergency implemented by her.
      And about forced population control - that will never work here. It is not just enough to have the right intent, the means have to be right too in order to be implementable in India.
      So we don't see a straight reason or solution here.