The correct option is 1, 2, 3 and 4.
Explanation
Poverty in India is often analyzed through the framework of the "Vicious Circle of Poverty" (formulated by Ragnar Nurkse). This concept explains how an economy remains trapped in a low-income equilibrium due to circular forces acting on both the supply side (low savings and capital) and the demand side (limited market size).
Statement-wise Analysis
- Statement 1 is Correct: Low capital formation is a primary supply-side constraint. Low income levels lead to low savings, which results in insufficient funds for investment (capital formation). Without adequate capital, productivity remains low, perpetuating poverty.
- Statement 2 is Correct: Lack of infrastructure (transport, energy, communication) acts as a major bottleneck. It increases the cost of production, reduces the competitiveness of domestic industries, and hinders access to markets and basic services, thereby restricting economic growth.
- Statement 3 is Correct: Lack of demand is a demand-side constraint in the vicious circle. Low per capita income limits the purchasing power of the population. This small market size discourages private investment, leading to lower employment and income generation.
- Statement 4 is Correct: Pressure of population exacerbates poverty by increasing the dependency burden and reducing the per capita availability of resources and capital. Rapid population growth dilutes the gains of economic growth, making it difficult to break the poverty cycle.
Key Takeaway: Poverty in India is structural, driven by the interaction of economic factors like low capital formation and lack of demand, alongside demographic factors like population pressure, which collectively hinder inclusive growth.