IMPLICATIONS OF HIGH GROWTH RATE

We have seen that after independence, the population of India grew at a rate of more than 2 percent a year. This had serious implications for the Indian society. The issue to what extent high population growth rate hampered development is controversial and can never be settled. Development is influenced by ethical and ideological factors, resources, and state policies. Those who claim that population growth is bad for development may argue as follows: if the national income (total value of goods and services produced in a country) grows at 2.5 percent a year and the population also grows at the same rate, in terms of income per capita the country will remain where it is. In crude terms, just to maintain the same level of standard, education, jobs, housing and health facilities the country must grow at 2.5 percent level. Assuming a capital-output ratio of 4, it means that a country must invest 10 percent of national income to achieve this. It is not easy for a poor and backward country to save 10 percent for investment but this has to be done, and without any promise in the near future. Even a good growth of say 5 percent a year, requiring 20 percent investment, would result in a very slow improvement in the economic standards. This is one of the reasons why in the post-independence period, India experienced a Hindu growth rate (i.e., a nearly stable and low growth rate).