How is rapid growth of population, a major problem of the Indian
economy?
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Answers
1. Problem of Investment Requirement:
Indian population is growing at a rate of 1.8 percent per annum. In order to achieve a given rate of increase in per capita income, larger investment is needed. This adversely affects the growth rate of the economy. In India, annual growth rate of population is 1.8 percent and capital output ratio is 4:1. It means that in order to stabilize the existing economic growth rate (4 X 1.8) = 7.2 percent of national income must be invested.
2. Problem of Capital Formation
Composition of population in India hampers the increase in capital formation. High birth rate and low expectancy of life means large number of dependents in the total population. In India 35 percent of population is composed of persons less than 14 years of age. Most of these people depend on others for subsistence. They are unproductive consumers. The burden of dependents reduces the capacity of the people to save. So the rate of capital formation falls.
3. Effect on per Capita Income:
Large size of population in India and its rapid rate of growth results into low per capita availability of capital. From 1950-51 to 1980-81. India’s national income grew at an average annual rate of 3.6 percent per annum. But per capita income had risen around one percent. It is due the fact that population growth has increased by 2.5 percent.
4. Effect on Food Problem:
Rapid rate of growth of population has been the root cause of food problem.
Shortage of food grains hampers economic development in two ways:
(a) People do not get sufficient quantity of food due low availability of food which affects their health and productivity. Low productivity causes low per capita income and thus poverty.
(b) Shortage of food-grains obliges the under-developed countries to import food grains from abroad. So a large part of foreign exchange is spent on it. So development work suffers. So rise in population causes food problem.
5. Problem of Unemployment:
Large size of population results in large army of labour force. But due to shortage of capital resources it becomes difficult to provide gainful employment to the entire working population. Disguised unemployment in rural areas and open unemployment in urban areas are the normal features of an under developed country like India.
6. Low Standard of Living:
Rapid growth of population accounts for low standard of living in India. Even the bare necessities of life are not available adequately. According to Dr. Chander Shekhar population in India increases by about 1.60 crore. It requires 121 lakh tonnes of food grains, 1.9 lakh metres of cloth and 2.6 lakh houses and 52 lakh additional jobs.
Every nook and corner of India is a clear display of increasing population. Whether you are in a metro station, airport, railway station, road, highway, bus stop, hospital, shopping mall, market, temple, or even in a social/ religious gathering, we see all these places are overcrowded at any time of the day. This is a clear indication of overpopulation in the country.