Constitutionally, India is known to be a Welfare State having socialistic way of formulating and executing policies. This means that any social or economic policies are to be formulated by the State keeping in mind the larger interests of the society. However socialistic pattern of life has been deeply influenced by the government initiatives in the post-90 period. There has been a paradigm shift from closed-economy towards open economy which were based upon the philosophy of liberalization, privatization and globalization.
These were the significant changes towards minimizing the State control and maximizing the predominance of market forces. This in sense was also clear turn in favor of a capitalistic economy where policies are framed on the basis of demand and supply factors of the market. All this has promoted profit motives of the corporate world and the monopolistic tendencies of the few. The State gradually but surely was orienting towards globalization.But it had its social and economic repercussions too. The social and economic disparities were bound to widen than ever before. Capitalistic order demanded highest form of division of labor, and there was no place for unskilled and semi-skilled labor in such a competitive world. Profit motive and vested interests superseded the welfare objectives and interests of the larger sections of the society. Capital-intensive industries took over from labor-intensive industries. In our country where two-third of the population seeks livelihood from the primary sector, all these changes have proved to be fatal. and its contribution in the GDP declined to merely 21percent whereas tertiary sector and secondary sector increased significantly to 52percent and 27 percent respectively.
Poverty is a state of powerlessness and resourcelessness which also reflects inequality and disparity in terms of health, education, shelter and nutrition parameters. Capitalism though globalized the Indian economy have also marginalized the already weaker sections of the society leading to the rural unemployment. It is true that capitalism induced more growth opportunities and employment but it also reduced the scope of unskilled, semi-skilled, uneducated and illiterate people. The result being that the rich became even richer and poor though marginally improved could not keep pace with those high on the ladder.Human Development Index(HDI) puts India at 128th position. Human Poverty Index(HPI) also presents a gloomy picture of our country. Poverty and unemployment are very interrelated phenomenon which basically originate due to ineffective social structure. Employment growth rate is just 2percent per annum. The job opportunities created by the capitalistic policies have failed to meet the demands of the job-seekers. Even the recent economic meltdown have also led to the instant reduction in job opportunities.
Poverty and unemployment also cause social discrimination, low self-esteem and vulnerability among people. Capitalistic order of economy have led to such social discriminations causing personal, family and social disorganization resulting into various forms of deviance behavior and crime. In the backdrop of above discussion it could well be maintained that this is high time to review the socio-economic paradigm and its outcomes in order to find out more effective solutions to problems of poverty and unemployment.