Population may be considered positive hindrance in the way of economic development of a country.
In a ‘capital poor’ and technologically backward country, growth of population reduces output by lowering the per capita availability of capital.
Too much population is not good for economic development.
Population can be a limiting factor to economic development because of the following reasons:
1. Population reduces the Rate of Capital Formation:
In underdeveloped countries, the composition of population is determined to increase capital formation. Due to higher birth rate and low expectation of life in these countries, the percentage of dependents is very high. Nearly 40 to 50 per cent of the population is in the non-productive age group which simply consumes and does not produce anything.
In under developed countries, rapid growth of population diminishes the availability of capital per head which reduces the productivity of its labour force. Their income, as a consequence, is reduced and their capacity to save is diminished which, in turn, adversely affects capital formation.
2. Higher Rate of Population requires more Investment:
In economically backward countries, investment requirements are beyond its investing capacity. A rapidly growing population increases the requirements of demographic investment which at the same time reduces the capacity of the people to save.
This creates a serious imbalance between investment requirements and the availability of investible funds. Therefore, the volume of such investment is determined by the rate of population growth in an economy. Some economists have estimated that for maintaining the present level of per capita income, 2 per cent to 5 per cent of national income must be invested if population grows at 1 per cent per annum.
In these countries, population is increasing at the rate of about 2.5 per cent per annum and 5 per cent to 12.5 per cent of their national income and hence the entire investment is absorbed by demographic investment and nothing is left for economic development. These factors are mainly responsible for stagnation in such economies.
3. It reduces per Capita Availability of Capital:
The large size of population also reduces per capita availability of capital in less developed countries. This is true in respect of underdeveloped countries where capital is scarce and its supply is inelastic. A rapidly growing population leads to a progressive decline in the availability of capital per worker. This further leads to lower productivity and diminishing returns.
4. Adverse Effect on per Capital Income:
Rapid growth of population directly effects per capita income in an economy. Up to ‘income optimizing level’, the growth of population increases per capita income but beyond that it necessarily lowers the same. In a sense, so long as the rate of population growth is lower than the per capita income, rate of economic growth will rise but if population growth exceeds the rate of economic growth, usually found in the case of less developed countries, per capita income must fall.
5. Large Population creates the Problem of Unemployment:
A fast growth in population means a large number of persons coming to the labour market for whom it may not be possible to provide employment. In fact, in underdeveloped countries, the number of job seekers is expanding so fast that despite all efforts towards planned development, it has not been possible to provide employment to all. Unemployment, underemployment and disguised employment are common features in these countries. The rapidly rising population makes it almost impossible for economically backward countries to solve their problem of unemployment.
6. Rapid Population Growth creates Food Problem:
Increased population means more mouths to feed which, in turn, creates pressure upon available stock of food. This is the reason, the under-developed countries with rapid growing population are generally faced with a problem of food shortage. Despite all their efforts for raising agricultural production, they are not able to feed their growing population.
Food scarcity effects economic development in two respects. Firstly, inadequate supply of food leads to undernourishment of the people which lowers their productivity. It further reduces the production capacity of the workers, Secondly, the deficiency of food compels to import food grains which places as unnecessarily strain on their foreign exchange resources.
7. Population and Farming:
In less developed countries the majority of population lives in, 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. As a result these economies suffer largely for want of improved farm techniques and ultimately become the victim of the vicious circle of poverty. Thus retared farming and the process of overall development.
8. Population and Vicious Circle in 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.
Thus savings and rate of capital formation remain low, reduction in per capita income, rise in general price level leading to sharp rise in cost of living. No improvement in agricultural and industrial technology, shortage of essential commodities, low standard of living, mass unemployment etc. As a result the entire economy of an underdeveloped country is surrounded by the vicious circle of poverty.
9. Reduction in Efficiency of Labour Force:
The labour force in an economy is the ratio of working population to total population. If we assume 50 years as the average life expectancy in an underdeveloped country, the labour force is in effect the number of people in the age group of 15-50 years. During the demographic transitional phase, the birth rate is high and the death rate has declined and due to which the larger percentage of total population is in lower age group of 1-15 years, which is small labour force implies that comparatively there are few persons to participate in productive employment.
To overcome the demographic transition stage, it is essential for less developed countries to bring down their fertility rate. Thus, we can conclude that labour force increases with the increase in population.
10. Rapid Population declines Social Infrastructure:
A welfare state line India is pledged to meet social needs of the people adequately and for this, the government has to spend a lot on providing basic facilities like education, housing and medical aid. But rapid increase in population make burden all the more heavy.
11. Adverse Effect on Environment:
Rapid population growth leads to the environmental change. Rapid population growth has swelled the ranks of unemployed men and women at an alarming rate. Due to this, a large number of people are being pushed in ecologically sensitive areas such as hill sides and tropical forests. It leads to the cutting of forests for cultivation leading to several environmental change. Besides all this, the increasing population growth leads to the migration of large number to urban areas with industrialization. This results in polluted air, water, noise and population in big cities and towns.
12. Obstacle to Self Reliance:
The excessive population growth is an obstacle in the way of attaining self or reliance because it obliges us to importance and more food articles in order to meet the needs of increasing millions and on the other hand, it cuts down export surplus heavily. Reduction in exports makes us unable to pay for imports and we have to depend on foreign aid. Thus, the aim of self reliance cannot be achieved without controlling the population.
13. Declining trend of Agricultural Development:
In less developed countries, mostly people live in rural areas and their main occupation is agriculture and if the population increases the land-man ratio disturbed. Per capita availability of land for cultivation declined from 1.1 acre in 1911 to 0.6 acre in 1971 in our country which makes the size of holdings very small. The small size of holdings makes adoption of modern technology means of irrigation and mechanization impossible.
This also leads to the occurrence of disguised unemployment and underemployment in the agricultural sector. It leads to congestion and moreover to reduction in land available for farming as well as for building houses, factories, hospitals, shopping centres, educational institutions, roads and railway tracks etc. Thus, the growth of population retards agricultural development and creates many other problems.
14. Growing Population lowers Standard of Living:
The standard of living is determined by their per capita income. The factors affecting per capita income in relation to population growth equally apply to the standard of living. The increase in population leads to an increased demand for food products, clothes, houses etc., but their supply cannot be increased due to the lack of cooperate factors like raw materials, skilled labour and capital etc.
The cost and prices rise which raise the cost of living of the masses. This brings the standard of living low. Poverty breeds large number of children which increases poverty further and vicious circle of poverty. Thus, the consequence of population growth is to lower the standard of living.