Impact of Population on Indian Economy

In some underdeveloped economics, the increased population may help in the economic progress of the country by providing cheap and abundant labor. It can also expand market which necessitates effective demand. But this is not true in case of the over-populated and under-developed country like India.

In India population is increasing at an alarming rate. It is a great menace to our economic growth. Advances in medical science and other well-improved public health measures have greatly reduced the death-rate. But the birth rate has continued to remain more or less stationary. The population increases between 100-120 lakhs per year. A high birth-rate accompanied by a low death-rate cannot adjust population to the means of living.

The high rate of growth of population on the top of existing massive population hampers the economic development in India in the following ways:

  • In India food supply is inadequate, and one-third of the populations are underfed. During the first 15 years of planning food production per head declined from 12.8 oz, to 12.4 oz. This trend has not improved much in spite of green revolution.
  • The explosive rate of growth of population has also greatly aggravated the unemployment problem in India. Unemployment and under-employment in rural and urban areas are a serious headache for the economic planners. In India about 45 million people are registered unemployed. These people do not make any addition to the production. But they have to be fed by the community all the time. The natural resources are not harnessed.
  • One of the far-reaching results of the ever increasing population is that it reduces the saving and investment of the country. The average annual per capita income is very low. The purchasing power of the people is extremely poor. The nation income leaves no margin for saving. It may be said that only about 20% of the national income is invested in the economy. Shortage of saving lies at the root of capital deficiency. An alarming rate of population growth makes it very difficult to step up the rate of saving.
  • There is also high proportion of unproductive population. In 1961, 57 percent of the population were unproductive consumers. In 1991 this percentage has gone up to 62.4 percent.
  • The growth of population also affects the standard of living of the people. In India one-third of the people live below the subsistence level.
  • Women in India do not participate in the productive activity for a long time due to frequent maternity.

Hence, the explosive rate of growth of population adversely affects the pace of economic progress in India. The population pressure worsens of unemployment problems, keeps down the per capita real income and the country’s national income, aggravates the supply of food grains and also militates against capital formation.

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