HUMAN RESOURCES : Business Economics 1st Year

LESSON – 7

HUMAN RESOURCES

Objectives

            After going through this chapter, you should be able to

·         Understand the size and growth of population

·         Know the beneficial effects of growth of population

·         Understand population growth as a retarding factor

·         Know the population policy

Structure

7.1       Size and Growth of Population

            7.1.1   Beneficial Effects

            7.1.2   Population Growth as a Retarding Factor

            7.1.3   Population Policy

Unit Questions

7.1.   Size and Growth of Population

            India today possesses about 2.4 per cent of the total land area of the world but she has to support about 17 per cent of the world population. At the beginning of this century India’s population was 236 million and according to 2001 census, the population of India is 1.027 million. A study of the growth rate of India’s population can be made from Table 1.

            A Study of growth rate of India’s population falls into four phases:

            1891-1921: Stagnant population

            1921-1951: Steady  Growth

            1951-1981: Rapid high growth

            1981-2001: High growth with definite signs of slowing down

            During the first phase of 30 years (1891 to 1921). the population of India grew from 236 million in 1891 to 251 million in 1921 i.e. just by 15 million. The compound annual growth rate was negligible i.e. 0.19 per cent per annum for the period. The growth of population was held in check by the prevalence of a high death rate against a high birth rate. Birth and death rates were more or less equal during this period. India was in the first stage of demographic transition in this period marked by stagnant population.

Table - I

Growth of Population in India (1901 – 2001)

Census Year	Population in Millions	Increase or decrease (in Millions)	Percentage increase or decrease
1891	236
1901	236	0.0	0.0
1911	252	+16	+5.7
1921	251	-1	-0.3
(1891 – 1921)		+15	+0.19
1931	279	+28	+11.0
1941	319	+40	+14.2
1951	361	+42	+13.3
(1921 – 1951)		+110	+1.22
1961	439	+78	+21.5
1971	548	+109	+24.8
1981	683	+135	+24.7
(1951 – 1981)		+322	+2.14
1991	844	+161	+23.5
2001	1,027	+183	+21.3
2004	1,087	+59	+5.8

            During the second phase of 30 years (1921 to 1951). the population of India grew from 251 million in 1921 to 361 million in 1951 i.e., by 110 million. The compound growth rate of population was 1.22 per cent per annum which can be considered as moderate. The main reason for the increase in population growth rate was a decline in death rate from about 49 per thousand to 27 per thousand, but compared with this, there was a very small decrease in birth rate. The fall in death rate was largely due to the control of widespread epidemics like plague. small pox. cholera etc. which took a heavy tool of human lives. India had started its entry into the second phase of demographic transition during this period which marked a steady but low growth rate of population.

            During the third phase of 30 years (1951 to 1981), the population of India grew from 361 million in 1951 to 683 million in 1981. In other words, there was a record growth of population by 322 million in a period of 30 years. This gives a compound annual growth rate of 2. 14 per cent which is nearly double the growth rate of the previous phase. With the advent of planning, the extension of hospitals and medical facilities was under taken on a big scale and these measures of death control resulted in a further and sharp decline of death rate to a level of 15 per thousand, but the birth rate fell from 40 to 37 per thousand during this period. As a consequence. there was a population explosion during this period.

            During 1981 to 2001. India entered the fourth phase of high population growth with definite signs of slowing down. Total population increased from 683 million in 1981 to 1.027 million in 2001 indicating an increase of 50.4 per cent during the 20 year period. The annual average rate of growth of population during 198 1-2001 was of the order 2.05 per cent.

            During 1981-91. the population of India grew from 683 million in 1981 to 844 million in 1991 indicating an increase of 161 million during the period. The rate of growth slightly declined to 2.11 per cent during 1981-91 decade. Subsequently, during the next decade (1991-2001). population grew from 844 million to 1.027 million an increase of 183 million. The annual average rate of growth registered a decline to 1.93 per cent. This is a welcome trend which should be strengthened.

7.1.1   Beneficial Effects

            Growth of population in developed countries is a boom to their economic development as it is the main source of supplying cheap labour which in turn helps in producing large quantities of goods at low cost. It is usually said, “Manpower is the power of the Nation.” Manpower is ‘Nations’s Wealth’. Population can accelerate economic development of a country in the following ways. In other words, the positive effects of population growth are as follows

            (1) Increase in Production. So long the size of population is small in relation to availability of capital, land and other natural resources, an increase in the number of people will bring about greater increase in production. As population increases, opportunities of division of labour result in large-scale production. The producers enjoy external and internal economies. As a result, cost of production falls, price per unit of the product also falls and the size of the market expands. Wide extent of the market means more demand and thereby more production. In this way, population growth makes a positive contribution to production.

            (2) Source of Labour Supply. Population is the source of labour supply. Economic development depends upon many factors, such as, natural resources, manpower, capital formation, technology etc. Of these, the most important factor is the trained and efficient labour force. It is on the efficiency of the labour force that the optimum use of other factors depends. In this way, labour is the most important and dynamic factor in the process of economic growth. According to Prof Meiers, “Capital, natural resources, foreign aid and international trade usually make more important contributions to economic development but none equals manpower.” Thus, as a source of labour supply, population growth is an essential factor for economic development and upto a particular point every increase in population would mean a larger quantity in output.

            (3) Population Determines Capital Formation. As a matter of fact, disguised unemployment is found in underdeveloped countries because of large population. Disguised unemployment can be deployed in capital formation activities without adversely affecting agricultural production. In this way, if these persons are shifted from their villages to constructive sites and they continue to get their subsistence from their family sources, then the rate of capital formation can be substantially increased. According to Prof. Ragnar Nurkse, the surplus labour force implies at least to some extent a disguised saving potential. These potential savings in the shape of disguised unemployment can be mobilised for capital formation.

            (4) As an Incentive for Development. Population is both a means as well as an end of economic activity. It is a source of production, it is also a source of consumption. As a consumer, rise in population means rise in demand. When demand increases, size of the market automatically expands, which in turn, encourages large-scale production and pattern of production diversifies. It provides more varied employment opportunities to the growing population and an incentive for economic development.

            (5) Improvements in Techniques and Productivity. It is argued that population growth leads to improvements in techniques and productivity. Trained and efficient labour force is regarded as human capital. Improvement in the quality of manpower can be a major contribution to economic growth in a country. The quality of manpower can be improved through a process of increasing knowledge, skills and the capacities of the people. The trained and skilled labour force is a valuable asset which is responsible for improving techniques and productivity. According to Kendrick “a substantial part of. the rise in growth rate of America is the result of the increase in labour productivity there.” In this way, the improvement in techniques and labour productivity can be a key source of economic development.

            (6) Adds to the Number of 1 etc. It is also argued that increased population adds to the number of producers, entrepreneurs, scientists, engineers, educationists, doctors, technologists etc. They can prove a boon to the economic development of a country. According to Simon Kuznets, “Growth of economic output is a function of growth of the stock of tested knowledge.” According to E. Boserup, “The major stimulus to the ‘green revolution’ a classic case of new technology and a radical increase in crop yields, has originated from the large rise in the demand for food on account of the rapidly increasing population.”

7.1.2   Population Growth as a retarding factor

            Growing population adversely affects the economic development of underdeveloped and developing countries because their socio economic conditions are quite different. More than 230 years back in 1778, Malthus had opposed rise in population and suggested measures to prevent it. According to Prof. Villard and Prof H. W. Singer ‘Rise in population is an obstacle to economic development.” In support of his statement, Prof. Singer has given the following equation to represent the relationship between the rate of economic development, the rate of net savings, the productivity of investment and the rate of increase in population:

Where

D = SP - r

            D stands for rate of economic development.

            S stands for rate of net savings.

            P stands for productivity of new investment.

            r stands for rate of increase in population.

            In the above equation, r appears as a negative factor with a minus sign It is a proof of the view that population is an obstacle to economic development.

            That increase in population affects adversely the economic development of a country is evident from the following :

            (1) Reduces Per Capita Income. The rapid growth of population in underdeveloped countries reduces per capita income in three ways (i) by increasing the pressure of population on land because land is limited while the growth of population is unlimited; (ii) by increasing the cost of consumption goods because of the scarcity of the co-operant factors to increase their supplies; and (iii) by reducing the rate of capital accumulation because expenses increase with every increase in family members. The growth of population has more severe effects on per capita income when the percentage of children out of the total population is high. It is an important feature in underdeveloped countries of the world where the rapid growth of population has largely been effective in lowering the per capita income and a large number of children entails a heavy burden on the economy. Children consume more, but produce nothing and thus, they are liabilities on the economy.

            (2) Population Growth Create Mass Unemployment. In under developed countries where the growth of population is very high, there is mass unemployment and disguised unemployment. As a matter of fact, in underdeveloped countries, the army of job seekers is expanding so fast that despite all efforts towards planned development, it has not been possible to provide jobs to all. Further, the high growth rate of population diminishes income, savings and capital formation and thus leads to reduction in job opportunities in the country. Consequently, the problem of unemployment gradually increases in underdeveloped and developing countries. There is backlog of unemployment which gradually grows with a rapidly increasing population. For example, in India the burning problem of the day is the mass unemployment causing hindrances in the economic development of the country.

            (3) Population Reduce Capital Formation. Rapid population growth in underdeveloped countries retards capital formation. As population increases, per capita available income declines. People are required to feed more children with the same income. It means more expenditure on consumption and a further fall in savings and investments. Consequently, the rate of capital formation is bound to reduce considerably in underdeveloped countries.

            (4) Reduces Standard of Living. The rising population in underdeveloped and developing countries reduces standard of living of the people. A rapidly increasing population leads to increased demand for food products, clothes, housing etc. But their supplies cannot be increased in the short run due to the lack of co-operant factors, like raw materials, skilled labour, capital etc. Further, the per capita income is also reduced proportionately. Consequently, the costs and the prices rise sharply which raises the cost of living of the masses. This brings down further the already low standard of living. Poverty breeds large number of children which increases poverty further and the vicious circle of poverty, the flow of more children and low standard of living continues.

            (5) Population and Savings and Investment. Rapid growth of population in underdeveloped countries adversely affects the rate of savings and investment. On the contrary, higher rate of population growth requires more savings and investment in order to achieve a given rate of increase in per capita income and economic growth. As a matter of fact, on account of low per capita

income in underdeveloped countries, the rate of savings and investment is quite low which adversely affects their economic development.

            (6) Population and Farming. In underdeveloped countries, the majority of population lives in the countryside where agriculture is their mainstay. The growth of population is relatively very high in rural areas and it has disturbed the land-man ratio. Further, it has increased the problem of disguised unemployment and reduced per capita farm product in such economies, as the number of landless workers has largely increased followed by low rate of their wages. The low farm productivity has reduced the propensity to save and invest. Consequently, these economies suffer largely for want of improved farm techniques and ultimately become the victim of the ‘vicious circle of poverty’. Thus, the rapid growth of population in underdeveloped countries retards farming and the process of overall development as well.

            (7) Population and Food Problem. Rapid growth of population in underdeveloped countries gives rise to food problem as there are more mouths to feed. As a matter of fact, rise in the rate of growth of population is much higher than the rise in the rate of increase in food production. Per capita availability of foodgrains goes on falling and the gap between demand for food and supply of food goes on increasing. Shortage of food hinders economic development in two ways: (i) On account of low per capita availability of food masses do not get sufficient nutritive diet. It tells upon their health and their productivity falls. (ii) In order to meet the food shortage, they are compelled to import foodgrains from abroad like U.SA., Canada, Australia and other countries. It places unnecessary strain on their meagre foreign exchange resources. As such, all development programmes remain confined to files only and, thus, the economic development of underdeveloped countries is hardly hit.

            (8) Population and Environment. Rapid growth of population leads to environmental change. Scarcity of land due to increasing population pushes large number of people in ecologically sensitive areas such as hill sides and tropical forests. it leads to overgrazing and cutting of forests for cultivation leading to severe environmental damage. Further, rapid growing population leads to migration of large numbers to urban areas with industrialisation. This results in severe air, water, and noise pollution in cities.

            (9) Population and Social Overhead Facilities. Rapid growth of population necessitates huge investment on providing social overhead facilities like housing, electricity, education, medical, roads, transport and water etc. In this way, lion’s share of the available capital is invested on these social overhead facilities. Resources become scarce for conducting other development programmes, thereby the spread of economic development in underdeveloped countries goes down.

            (10) Population and Vicious Circle of Poverty. Rapid growth of population is largely responsible for the perpetuation of vicious circle of poverty in underdeveloped countries. On account of rapid growth of population people are required to spend a major part of their income on bringing up their children. As a result, savings and rate of capital formation remain low, fall in per capita income, rise in general price level leading to sharp rise in cost of living, no improvement in agricultural and industrial technology leading to a fall both in production and productivity, shortage of essential of essential commodities, low standard of living, mass unemployment etc. In this way, the entire economy of an underdeveloped country is surrounded by the vicious circle of poverty.

7.1.3   POPULATION POLICY

            The significance of the growth in population can be judged from the fact that during the decade 1991-2001, there has been an increase of about 183 million reaching a level of 1,027 million in 2001. The alarming rate at which population is growing calls forth the need for a positive population policy to restrict this rapid growth of population.

            In 1983, on the recommendation a Working Group on Population Policy set up by the Planning Commission, the National Health Policy (1983) set the goal of reducing the Net Reproduction Rate (NRR) to 1 by 2000 A.D.

            To achieve the family planning goals, the following measures were adopted by the Government:

(i)         Motivation programme to spread the knowledge of family planning. All mass media-newspapers, radio, TV. films etc. were widely used to spread consciousness about family limitation.

(ii)        Supply of contraceptives to all sections of rural and urban population.

(iii)       Financial incentives for family planning in the form of cash awards for undergoing sterilisation.

(iv)       Extensive use of sterilisation of both males and females.

            In India, the family planning programme did not concentrate on a single method but adopted what is generally described as “the cafeteria approach” i.e. making use of all the scientifically approved contraceptives. Apart from family planning, the Government relied upon--to some extent-education and economic progress to restrict the growth of our population. Raising the level of education of the people has a general salutary effect on fertility. This is particularly so if the female population is educated.

            Besides this Population Policy has listed the following measures to achieve a stable population by 2046.

            1.         Reduction of infant mortality rate below 30 per 1000 live births.

            2.         Reduction of maternal mortality rate to below 100 per 1,00,000 live births.

            3.         Universal immunisation

4.         To achieve 80 per cent deliveries in regular dispensaries, hospitals and medical institutions with trained staff.

5.         Access to information, containing AIDS, prevention and control of communicable diseases.

6.         Incentive to adopt two-child small family norm.

7.         Facilities for safe abortions to be increased.

8.         Strict enforcement of Child Marriage Restraint Act and Pre-Natal Diagnostic Techniques Act.

9.         Raising the age of marriage of girls not earlier than 18 and preferably raising it to 20 years or more.

10.       A special reward for women who marry after 21 and opt for a terminal method of contraception after the second child.

11.       Health insurance cover for those below the poverty line who undergo sterilisation after having two children.

12.       The appointment of a National Commission on Population to be headed by the Prime Minister to monitor the implementation of population policy. This is being done to impress upon the nation the urgency of paying attention to the problems of control of population. Since India has already crossed the mark of 1.000 million, the effort of the National Population Policy is to limit it to 1.100 million by the year 2010 by intensifying family planning measures.

            The Action Plan drawn for the next 10 crucial years includes the following:

a)         Self-help groups at village panchayat levels comprising mostly of housewives will interact with healthcare workers and gram panchayats.

b)         Elementary education to be made free and compulsory.

c)         Registration of marriage, pregnancy to be made compulsory along with births and deaths.

            The policy provides incentives only to women to accept terminal methods of contraception after the second child, it would have been far better, had the policy also provided similar incentives for “men” for sterilisation after the second child.

UNIT QUESTIONS

1.         Trace the growth of population India.

2.         Give an account of the beneficial effects of population.

3.         Do you consider population growth as a retarding factor to economic development.

4.         Critically evaluate Population Policy of India.

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