Individual theory of poverty and informal sector: a case study of street vendors of NDMC, Delhi

The poverty in general has been looked at from various perspectives and various explanations have been given for underlying causes of poverty which have translated into certain specific theories of poverty. The two main strands in theory explaining the causes of poverty are: individual theory and cultural theory of poverty. This paper is an attempt to test the individual theory of poverty on the street vendors of Delhi, a Tier I city. Age has been taken as a proxy variable for genetic factors while individual factors chosen for the study are education levels of vendors and their duration of stay in the same occupation. Since the magnitude of the vendor population is humongous in Delhi, thus the study has been confined to NDMC Area of the city. Of the 961 licensed vendors in NDMC, 610 vendors have been chosen for the study which are spread over three important markets based on commercial hierarchy of the city: Connaught Place, Sarojini Nagar and Khan Market. The method of path co-efficient has been used to assess the relationships of each variable (age, education, period of stay) with incomes of vendors. The results depict that all the three variables; age, education and period of stay have a positive relationship with income of a vendor. However structural equation results are higher for period of stay than incomes. This implies that age and education have greater influence in choice of staying the same occupation by the vendor than determining his income. While age is an important factor for period of stay of vendors, education becomes an important factor for incomes of vendors. Higher the age of vendors, longer the duration of vendors in the same occupation. Similarly more the education level of vendors, more the earnings of vendors. The variables of individual theory seem to be weaker in the case of Tier I city as Delhi than in Tier II city such as Vijayawada. Thus it might be possible that other socio-economic and political factor might be more dominant in determining earnings of vendors in Tier I cities.