Education is an agent of social change and egalitarianism. Poverty is also said to be closely related to the levels of schooling and these two have a circular relationship. The earning power is endowed in the individual by investment in education and training. But this investment in people takes away money and lack of human investment contributes to the low earning capacity of individuals.
In this way people are poor because they have little investment in themselves and poor people do not have the funds for human capital investment.
(ii) Caste system
Caste system in India has always been responsible for rural poverty. The subordination of the low caste people by the high caste people caused the poverty of the former. Due to rigid caste system, the low caste people could not participate in the game of economic progress.
A Shudra was not allowed to become a trader and a Vaisya could earn his bread only by trade.
Birth would decide their occupation and their economic fate. “Caste system acted as a spring board for class exploitation with the result that the counterpart of the poverty of the many is the opulence of the few. The second is the cause of the first.”
(iii) Joint family system:
The joint family system provides social security to its members. Some people take undue advantage of it. They live upon the income of others. They become idlers. Their normal routine of life consists in eating, sleeping and begetting children.
In this way poverty gets aggravated through joint family system.
(iv) Social customs:
The rural people spend a large percentage of annual earnings on social ceremonies like marriage, death feast etc. As a result, they remain in debt
(v) Growing indebtedness:
In the rural sector most of the people depend on borrowings from the money theirlenders and land-lords to meet even Moneylenders, however, exploit the poor by charging exorbitant rates of interest and by acquiring the mortgaged land in the event of non-payment of loans
Indebted poor farmers cannot make themselves free from the clutches of moneylenders. Their poverty is further accentuated because of indebtedness. Such indebted families continue to remain under the poverty line for generations because of this debt-trap.