International Referred Research Journal, January, 2012, ISSN- 0975-3486, RNI : RAJBIL 2009/30097, VOL- III * ISSUE 28

Research PaperCommerce

Population Growth In India And

Its Impact On Indian Economy
January, 2012

* Dr. Sushama Deshmukh

* Associate Professor ,HOD of Commerce Dept. Mahila Mahavidyalay, Amravati

Introduction
recording a growth rate of 5.5 per cent per annum
India became only the second country in the during 1981-2001, there was further acceleration in
world after China to cross the one billion mark. The GDP growth to 7.7 per cent per annum during2001-11.
population of the country rose by 21.34 % in 1991 - The economy has weathered the impact of the global
2001,"Population in itself is NOT the problem. Lack slowdown of 2008 much better than most and is well
of basic education and poor economic conditions are on its way to resuming its journey to 8-9 per cent per
the main factor for growth of population. The fast rate annum GDP growth
of growth of population has affected the quality of life Economy of India
of the people. The time has come when future citizens
The Economy of India is the ninth largest in
while in educational institutions should understand the world by nominal GDP and the fourth largest by
various issues related to the population problem. "The purchasing power parity (PPP) The country is one of
birth rate in India (31 per thousand people) is greater the G-20 major economies and a member of BRICS,
than that of China (20 per thousand people). If this and ASEAN. The country's per capita GDP (PPP) was
trend continues, India will beat up China by 2025.A.D. $3,408 (IMF, 129th in the world) in 2010, making it
India has been slow to urbanize. As of 2010, a low-Income country. India recorded the highest
30 per cent of India's population is conservatively clas- growth rates in the mid-2000s, and is one of the fastestsified as ?urban'. This is much lower than in other growing economies in the world. The growth was led
major developing countries, e.g. 45 per cent in China, primarily due to a huge increase in the size of the
54 per cent in Indonesia, 78 per cent in Mexico, and middle class consumer population, a large workforce
87 per cent in Brazil. All these countries have much comprising skilled and non-skilled workers, good
higher per capita incomes but differences in the defi- education standards and considerable foreign investnition of ?urban' also contribute to India's low level of ments. India is the seventeenth largest exporter and
urbanization, If villages with more than 10,000 per- eleventh largest importer in the world. Economic
sons in India were to be classified as ?urban', this growth rates are projected at around 7.5%-8% for the
would imply a level of urbanization in India in 2010 financial year 2011-2012.
of over 35 per cent, but it would still be much lower Challenges before Indian economy:
than in other countries. Structural transformation is 1. Population explosion: According to 2001 census of
typically associated with urbanization during the pro- India, population of India in 2001 was 1,028,610,328,
cess of economic growth, and India is no exception growing at a rate of 2.11% approx. Such a vast popuHowever, the relatively high growth phase of the In- lation puts lots of stress on economic infrastructure of
dian economy since the beginning of the 1980s has the nation. Thus India has to control its growing popubeen associated with less urbanization than would be lation.
normally ?expected'.
2. Poverty: As per records of National Planning ComThe urban share of the gross domestic prod- mission, 36% of the Indian population was living Below
uct (GDP) for the Indian economy is not available on Poverty Line in 1993-94. Though this figure has dea regular and consistent basis, and the underlying data creased in recent times but some major steps are needed
base for estimating this share is very weak. Estimates to be taken to eliminate poverty from India.
by the Central Statistical Organization (CSO), avail- 3. Unemployment: The increasing population is pressable for a few years, indicate that this share increased ing hard on economic resources as well as job opporfrom 37.7 per cent in 1970-71 to 52 per cent in 1999- tunities. Indian government has started various schemes
2000. The Mid-Term Appraisal of the Eleventh Five such as Jawahar Rozgar Yojna, and Self Employment
Year Plan puts the urban share of GDP at 62-63 per Scheme for Educated Unemployed Youth (SEEUY).
cent in 2009-10. The document further projects this But these are proving to be a drop in an ocean.
share to increase to 75 per cent in 2030.India is one of 4. Rural urban divide: It is said that India lies in vilthe fastest growing economies in the world today. After lages, even today when there is lots of talk going about
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International Referred Research Journal, January, 2012, ISSN- 0975-3486, RNI : RAJBIL 2009/30097, VOL- III * ISSUE 28

migration to cities, 70% of the Indian population still

lives in villages. There is a very stark difference in
pace of rural and urban growth. Unless there isn't a
balanced development Indian economy cannot grow.
These challenges can be overcome by the sustained
and planned economic reforms.
Rural population and their development
Over seventy per cent of India's population
still lives in rural areas. There are substantial differences between the states in the proportion of rural and
urban population, Such as varying from almost 90 per
cent in Assam and Bihar to 61 per cent in Maharashtra.
Agriculture is the largest and one of the most important sectors of the rural economy and contributes both
to economic growth and employment. Its contribution
to the Gross Domestic Product has declined over the
last five decades but agriculture still remains the source
of livelihood for over 70 per cent of the country's population. A large proportion of the rural work force is
small and consists of marginal farmers and landless
agricultural labourers. There is substantial under
employment among these people; both wages and
productivity are low. These in turn result in poverty; it
is estimated that 320 million people are still living
below the poverty line in rural India.
Though poverty has declined over the last
three decades, the number of rural poor has in fact
increased due to the population growth. Poor tend to
have larger families which puts enormous burden on
their main resources, and prevent them from breaking
out of the shackles of poverty. In States like Tamil
Nadu where replacement level of fertility has been
attained, population growth rates are much lower than
in many other States; but the population density is
high and so there is a pressure on land. In States like
Rajasthan, Uttar Pradesh, Bihar and Madhya Pradesh
population is growing rapidly, resulting in increasing
pressure on land and may be result land fragmentation. Low productivity of small land holders leads to
poverty, low energy intake and under nutrition, and
this, in turn, prevents the development thus creating
a vicious circle. In most of the states non-farm employment in rural areas has not grown very much and
cannot absorb the growing labour force. Those who
are getting educated specially beyond the primary level
may not wish to do manual agricultural work. They
would like better opportunities and more remunerative employment. In this context, it is imperative that
programmes for skill development, vocational training and technical education are taken up on a large
scale in order to generate productive employment in
rural areas. The entire complete range of existing
poverty alleviation and employment generation

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programmes may have to be restructured to meet the

newly emerging types of demand for employment.
Rural poor have inadequate access to basic minimum
services, because of poor connectivity, lack of awareness, inadequate and poorly functional infrastructure.
There are ongoing efforts to improve these, but with
the growing aspirations of the younger, educated population these efforts may prove to be inadequate to meet
the increasing needs both in terms of type and quality
of services. Greater education, awareness and better
standard of living among the growing younger age
group population would create the required consciousness among them that smaller families are desirable;
if all the felt needs for health and family welfare services are fully met, it will be possible to enable them
to attain their reproductive goals, achieve substantial
decline in the family size and improve quality of life.
Structural transformation is typically associated with reduced dependence of the population on
agriculture and increased migration from low-productivity agriculture to high-productivity sectors of industry and services in search of employment. Since
these sectors are based in urban areas, rapid economic
growth is normally associated with urbanization. The
Indian experience of economic growth and structural
transformation in the period 1980-2005 (for which
employment data are also available by sector), however, is associated with only a moderate decline in the
share of agriculture in total employment in the economy.
Table 1.1 Growth Rates of GDP at Constant Prices*
(Per cent per annum)
Year
Agriculture Industry Construction Services
1951-61
3.1
6.1
6.8
4.2
1961-71
2.5
5.4
5.6
4.8
1971-81
1.8
4.4
3.3
4.4
1981-91
3.5
6.7
4.7
6.6
1991-01
2.8
5.7
5.1
7.3
2001-11
3.1
6.9
10.0
9.4
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
Source: CSO.

6.3
-7.2
10.0
0.0
5.8
4.0
4.9
1.6
0.4
5.4

2.4
6.8
6.0
8.5
8.1
10.7
7.4
2.6
8.3
8.2

4.0
7.9
12.0
16.1
16.2
11.8
10.1
7.2
7.0
8.0

7.2
7.5
8.5
9.1
10.6
11.2
10.9
9.7
10.1
9.6

GDP
3.9
3.8
3.2
5.4
5.6
7.7
5.8
3.8
8.5
7.5
9.5
9.7
9.0
6.7
8.0
8.6

The decline in the agricultural sector's share in employment in the 1980s was very small, and even in the
decade from 1993-94 to 2004-05 when it was faster,
the share only fell from 64 per cent to 52 per cent. The
industrial sector failed to exercise a pull away from
agriculture as the share of industry in total employment in the economy actually decreased, contrary to

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what would be expected in any normal process of economic growth. Services were the principal sector recording a sharp increase in the share of total employment. Since GDP growth was coming from highly
skilled services such as information technology (IT),
telecom, and banking, or from sophisticated manufacturing industries like engineered goods and pharmaceuticals, it did not draw much labour from rural areas. Overall, the growth of urban population which
had already decelerated from 3.9 per cent per annum
in the 1970s to 3.2 per cent per annum in the 1980s,
further slowed down to 2.8 per cent per annum in the
1990s .
Urbanization and Economic Growth
Only 30 per cent of India's population lives
in urban areas. This is much lower than in China,
Indonesia, South Korea, Mexico, and Brazil. Some of
this may be due to much lower per capita incomes in
India. The Committee's projections suggest that India's
urban population as presently defined will be close to
600 million by 2031, more than double that in 2001.
Already the number of metropolitan cities with population of 1 million and above has increased from 35 in
2001 to 50 in 2011 and is expected to increase further
to 87 by 2031. The expanding size of Indian cities will
happen in many cases through a process of peripheral
expansion, with smaller municipalities
and large villages surrounding the core city becoming
part of the large metropolitan area, placing increasing
strain on the country's urban infrastructure. Future
growth is likely to concentrate in and around 60 to 70
large cities having a population of one million or more.
Decentralization of municipal governance and greater
reliance on institutional financing and capital markets for resource mobilization are likely to increase the
disparity between the larger and smaller urban centers. A satisfying outcome will depend on the formulation of effective public policies to accelerate all-round
development of smaller urban centers and to refashion
the role of the state as an effective facilitator to compensate for the deficiencies of market mechanisms in
the delivery of public goods.
Three decades of rapid economic growth
would normally have propelled migration from rural
areas but growth in India has not had this effect thus
far. This is because industrialization has been capital
intensive and the services boom fuelled by the knowl-

edge economy has also been skill intensive. A few cities of India have acted as centers of knowledge and
innovation. As more cities provide economies of agglomeration and scale for clusters of industries and
other non-agricultural economic activity, the urban
sector will become the principal engine for stimulating national economic growth. Industrialization will
absorb more people as India advances further in its
integration with the world economy. At the present
juncture, India faces the challenge of continuing on its
high growth trajectory while making growth more
broad-based and labour-intensive. The fortunes of the
agricultural sector are crucially linked to the manner
in which growth in the industry and services sectors
unfolds. People living in rural areas typically tap the
opportunities that cities provide for employment, entrepreneurial avenues, learning, and monetary repatriation. As urbanization grows, demand for food items
other than food grains, i.e. vegetables, lentils, milk,
eggs, etc., also grows. This leads to investments in
infrastructure, logistics, processing, packaging, and
organized retailing. These investments and other economic inter-linkages connect and build synergy between rural and urban centers. Of course, government
policy should also focus on enhancing the productive
potential of the rural economy. From the report, that
India's urban future promises to be an inclusive one,
with the benefits extending to rural areas as well. Already, there is evidence to suggest that rising standards
of living in India's urban areas in the post-reform period have had significant distributional effects favoring the country's rural poor.
Summary
Population, which is engaged in any economic
activity (employed persons) and population seeking
work (unemployed) constitute Labour Force. India has
the second largest labour force in the world. Projection
of labour force is pre-requisite ensuring optimal utilization of available human resources. Manpower development is then taken up to provide adequate labour
force, of appropriate skills and quality to different sectors so that there is rapid socioeconomic development
and there is no mismatch between skills required and
skills available. Planning also attempts to provide
enabling environment for employment generation (both
self employment and wage employment) in public,
private and voluntary sectors in urban and rural areas.

R E F E R E N C E
1. Anoop Kumar-Report of the Committee on India Vision 2020 2. Report on Indian Urban Infrastructure and Services March 20113. Economic
Survey of India 20114. Indian Economy Since Independence 19th ed.Editor : Uma Kapila
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