Religious and Identity groups determine poverty?

Religious and Identity groups determine poverty?


According to the literature, poverty is affected by different categorical variables such as gender, geographical area, education, religious groups, etc. However, this article focuses only on how poverty is affected by the religious groups in India. As per the data collected by the Indian Human Development Survey, approximately 30% of the Indian poor-population belonged to backward classes. Hence, the main purpose of this research work is to understand the validation of major poverty determinants i.e., religious groups or identity over the poverty of India.


India is one of the fastest-growing economies. Officially known as the Republic of India is the second-most populous country. It homes approximately 135.26 crores following belonging to Hinduism (79.8%), Islam (14.2%), Christianity (2.3%), Sikhism (1.7%), Buddhism (0.7%), Jainism (0.4%), Unaffiliated (0.23%) and others. Intriguingly, it also homes 7.3 million people who are living in extreme poverty and comprises 5.5% of the country’s population.

Poverty is not having enough material possessions or income for a person’s needs. Poverty may include social, economic, and political elements. Absolute poverty is the complete lack of the means necessary to meet basic personal needs, such as food, clothing, and shelter. Extreme poverty has been defined by the World Bank as living on less than US$1.90 per day. (PPP), and moderate poverty as less than $3.10 a day. However, in India, a person is declared poor if the expenditure of a person per day is less than INR 47 in an urban area and INR 37 is the poverty line in a rural area.

Poverty in India is linked to gender, religion, education, geographical location, occupation, and other qualitative factors. A deep dive into the literature is required to understand the dynamics and associations of these categorical variables with Indian poverty. As per the UNDP, poverty depends on three crucial factors; 1) longevity of life, 2) basic education and, 3) access to essential economic services like safe drinking water, provision of medical and healthcare treatments so on.

According to World Bank, the Indian rural population is poorer compared to the Indian urban population since they suffer a lack of education, employment opportunities, proper healthcare treatments, and sufficient public expenditures. This paper tries to elucidate Indian poverty concerning Indian religious groups.

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The data was downloaded from the official website of the Indian Human Development Survey. The website has easy access to the household and individual data sets of 2004-2005 and 2011-2012. Due to the easy availability of the data sets, the two particular years were chosen for comparative studies.

The India Human Development Survey (IHDS) is an organization that conducts a national survey of 41,554 households in 1503 villages and 971 urban neighbourhoods across India. The team surveys and collects data that covers multitopic areas like education, income, health, employment, economic status, marriage, fertility, gender relations, social capital, and so on. The survey of 2004-2005 and 2011-2012 both covered all states and Union territories of India. However, there were exceptions:

· Andaman & Nicobar and

· Lakshadweep.

The individual data sets were used throughout the study. Merging the individual data sets of 2004-2005 and 2011-2012 were difficult. Both the files had to be sort based on state Id,

district id, PSU id, household id, Household split id, and personal id. Overlapping data was difficult to extract. However, there are no household records without at least one individual record and no individual records without a household record.

The poverty line used for the survey was also mentioned by IHDS. The poverty line keeps fluctuating and hence, the poverty line was adjusted based on the month of interview by the IHDS team. These records were compiled and stored in STATA, SPSS, and other econometrics compatible formats. Henceforth, running STATA commands, and obtaining analysed results were easy.


The methodology used to understand overall poverty in India is the consumption expenditure measure. The poverty line was adjusted based on the month of interview by ICPSR. Whether a person is poor or not is decided based on the expenditure measure.

A person is declared below the poverty line if Expenditure per capita < poverty line

The formula used to calculate the poverty percentage is given as:

Pr    =      [categorical variable/Total poor-population] X 100%

To understand what is the probability of a religious/identity group falling below the poverty line in India, a PROBIT model is used.

Pi = βXi + ei

Where Pi is the probability that an individual falls below the poverty line.

Pi = Poor

X represents the vector of religious/identity group and

ei is the error term.

Descriptive Results

India had 23% of the population below the poverty line in the year 2004-05. Out of these about 69% resides in the rural area of the country. Lack of credit opportunity and education poverty pushes rural India below the poverty line. Even though Government has taken many initiatives to provide employment opportunities to this section of the society, the efforts to reap the benefits of such schemes have remained low.

Descriptive Statistics 2004-2005

An individual identity and belongingness to a community increases his sense of security and safety. Indian community has been very well divided in religions, castes and other stratifications. However, since the population has been pre-grouped by IHDS, there was not much of what we could had done regarding the stratification of poverty based on religion

and caste. The Indian poor population of 2004 had 36.26% from other backward classes. More than 16% belonged to the Muslim religion. Adivasis of the Indian country also saw poverty as 16% of the poor people belonged to their tribes. Dalits who are considered to be the lower caste of the Hindu religion made up the 25% of the poor Indian population.

The reason behind the high contribution of OBC to poor India is the late begin of progress in this section. OBCs, Dalits were prohibited from education, credit sources and other employment opportunities. Low scope of education, income or employment opportunities seem not a big issue when we speak of the orthodox Indian community prohibiting them to clean drinking water too. It was not until 1998 that this social group saw Government support and programmes such as scholarships to OBCs or Assistance to Voluntary Organizations for Welfare of OBCs. No wonder India yet has such extensive protective laws to educate and eradicate poverty from these sections of the society.

 Not Poor77%
Descriptive statistics of the poor population  
Group/ IdentityAdivasi16.05%
 High Caste7.12%
 Sikh, Jain0.19%
Table 1: Descriptive Statistics 2004-2005

Descriptive Statistics 2011-2012

Comparing the data sets of 2004-2005 and 2011-2012, it is evident that there was a drop in the poverty percentage since 2004-2005. Indian Government had taken up plenty measures to eradicate poverty since 2004. The focus of the public expenditure was to provide employment opportunities to the underdeveloped and underprivileged society. Employment opportunities like MNREGA and Pradhan Mantri Rojgaar Yojana, had a dominating role in lowering the poverty.  Also,

we must not ignore the fact that even in the educational sectors, seats in colleges and universities were reserved for the minorities, and OBCs.

Indian poor population didn’t see much change in the distribution among the group identity. 18% of the poor population came from the tribal or Adivasis, 31% belonged to the OBC, 28% belonged to Dalits, and Muslim population covered 13% of the poor Indian population.

 Not Poor84%
Descriptive statistics of the poor population  
Group/ IdentityAdivasi18.31%
 Christian/ Sikh, Jain0.65%
 High Caste7.23%
Table 2: Descriptive Statistics 2011-2012

Probit Model

To understand what are the determinates of poverty in India, a PROBIT model is used.

Pi = βXi + ei

Where, Pi is the probability that an individual falls below the poverty line.

Pi = Poor

Here, Poor can take two values

0 = not poor (not below the poverty line)

1 = poor (below the poverty line)

X represents the vector of religious/identity group and ei is the error term.

Group/ Identity: All religion and castes aren’t taken into consideration to run the Probit model. To keep it simple only those groups are considered which have higher share below the poverty line.

OBC = 0

Dalit = 1

Muslim = 2

Adivasi = 3

Graph 1 explains that Adivasis have higher probability to fall in the poverty trap as compared to the other groups. Adivasis have 0.26% chances of falling below the poverty line. Muslims have 0.07% chances of falling below the poverty line. Dalits have 0.03%, while OBCs have even lower chances to fall in the poverty trap.

Most Adivasis are born poor. They lack education and they consider more children as more helping hands. They forget if more children are more income opportunities, it also means higher food responsibilities. Due to their attitude most of them remain below the poverty line and are prone to poverty.

Graph 1: Groups _outcome

The access to employment and income to Dalits is limited and caste discrimination prevents them access or restricts/prohibits them to enter other sectors of employment and income opportunities. This shows that the caste discrimination is mainly responsible for strengthening the process of social exclusion of Dalits in the rural India. 


India has a population of 135.26 crores. IHDS (I and II) had reported individual data of approximately 2,04,569 individuals. The data could be biased or not true representative of the Indian population.

Many more tests could had been conducted had the same individuals were interviewed both in 2004-05 and 2011-12. Merging the data gave us only 1,27,333 observations which might not be the true image of the country.


Social inclusion is a sense of belongingness. Being part of a community gives access to material and social support along with a sense of identity and purpose. Adivasis, OBCs and Dalits are prone to fall below the poverty line. The caste discrimination is mainly responsible for strengthening the process of social exclusion in India. 

The descriptive statistics explained that rural India is poorer compared to the urban India. The low employment opportunities and credit sources results to poor rural India

which is mostly engaged in agriculture. Also, the probability to fall under the poverty line is higher for a person residing in rural area.

Concluding with a statement such as ‘more Government intervention and poverty eradicating programmes focusing on rural India is required to pull people above the poverty line’ will not do justice. Since the New Economic Policies in 1991, Indian Government paid special attention to poverty eradication. Growth and development are focus points for India. The country has a vast range of poverty alleviating programmes starting from poverty eradicating programmes like Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Gramin Awaas Yojana, Atal Pension Yojana, Pradhan Mantri Fasal Bima Yojana, Sarkari Yojana to employment opportunity enhancing programmes like National Rural Employment Programme, Jawahar Rozgar Yojana, Jawahar Gram Samridhi Yojana, Integrated Rural Development Programme, Swarana Jayanti Shahari Rozgar Yojana, Sampoorna Grameen Rozgar Yojana. Hence, policies targeting specifically the backward classes based on religious/ identity groups can be helpful. A total alleviation of caste and creed is required. Along with the prevailing yojanas a sense of awareness and a spread of word regarding public (Govt) support is extremely essential. 

Ms. Shreya Roy
Ms. Shreya Roy

Founder, Ecofunomics LLP
Ph.D. Research Scholar (Economics)
Indian Institute of Foreign Trade

This chapter was submitted to ECONOMIKA 2021 dated 16th February 2021. All rights reserved. No part of this publication can be reproduced or transmitted in any form or by any means, electronic, or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from Ecofunomics LLP.

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