Poverty in India is the biggest socio-economic problem being witnessed by India today. The World Bank has acknowledged India as the country with the highest number of multi-dimensionally poor people in the world. Poverty is generally thought of to be a problem emanating from economic sources like lack of money but it is actually a result of a host of factors which include both economic and non-economic reasons. One of the prominent non-economic(political) reasons for Poverty in India today is the System of Reservations. This system was expected to reduce poverty and give poor people their Right to Life in true sense. But instead of reducing poverty, reservations have promoted and fuelled it. Reservations in jobs, educational institutions have created, expanded and strengthened poverty in many ways in the Indian society.

First of all, reservations in India, are not based on economic considerations but on caste considerations. Due to this, a major chunk of poor people remains outside the ambit of reservations. This includes the efficient and deserving people in the Unreserved or the General Category. Hence, the system of reservations instead of reducing poverty increases it because the needy are left reeling and their rightful share goes to the already prosperous.
Secondly, it is noticed in the case of India that even among the lower castes, which enjoy the benefits of reservations, these benefits are appropriated mainly by the politically stronger sections who are already rich. According to reports, reservations have benefitted only 6% of the backward classes. Rest of the people from the backward castes including poor sections are still to experience any gain from reservations.

Thirdly, the system of reservations makes the beneficiaries lax, inefficient and reduces their skill and productivity. This makes them unsuitable for hiring, not only in the private sector but also in the govt. sector. This leads to increase in unemployment which eventually leads to their poverty and destitution. This shows that reservations are more dangerous and disadvantageous for the beneficiaries than the unreserved categories and it has emerged as the main cause of the perpetuation of poverty among this section in contemporary times.

Also, the system of reservations demotivates and dis-incentivises private investments in an economy, as reservations create lack of skill in the labour force (due to the reason given in last paragraph) which repels and increases costs for firms. These firms either substitute machines for labour or shift to foreign locations. Due to this, unemployment is created in the country which again causes Poverty. The recent move of the Bihar Govt. to introduce reservations in the private sector will further intensify poverty in the already very poor state by forcing private firms to shift elsewhere.

The system of reservations has made the rich, richer and the poor, poorer in India. It has increased economic inequality and pushed several people who were barely above the poverty line, below it. In this way it has increased the no. of people below poverty line. Reservations based on castes promote and perpetuate poverty in India. Looking at the Indian case, it can be said that reservations cannot solve the problem of poverty, in fact it increases poverty. To eliminate poverty in the country, the system of reservations in all forms should be avoided. Even the economically-weaker sections should be given economic support to help them come out of their misery instead of giving them the crutches of reservations. Reservation is a type of ‘Favouritism’ which is inherently flawed and unjust. Why should we carry a burdensome system like the reservation system which instead of eliminating poverty from the country, is intensifying it?