ANSWER:

Persons are means as well as ends of economic development. They are an asset if in adequate strength and prove to be a liability if excess in strength.

Population has crossed the optimum LIMIT in India and has become a liability.

So problem of population explosion in India has proved to be a big hindrance in the success of economic planning and development.

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Following are the main effects of population explosion:

1. Problem of Investment Requirement:

Indian population is growing at a rate of 1.8 percent per annum. In order to achieve a given rate of increase in per capita income, larger investment is needed. This adversely AFFECTS the growth rate of the economy. In India, annual growth rate of population is 1.8 percent and CAPITAL output ratio is 4:1. It means that in order to stabilize the existing economic growth rate (4 X 1.8) = 7.2 percent of national income must be invested.

2. Problem of Capital Formation:

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Composition of population in India hampers the increase in capital formation. High birth rate and low expectancy of life means large number of dependents in the total population. In India 35 percent of population is composed of persons less than 14 years of age. Most of these people depend on others for subsistence. They are unproductive consumers. The burden of dependents reduces the capacity of the people to save. So the rate of capital formation falls.

3. Effect on per Capita Income:

Large size of population in India and its rapid rate of growth results into low per capita availability of capital. From 1950-51 to 1980-81. India’s national income GREW at an average annual rate of 3.6 percent per annum. But per capita income had risen around one percent. It is due the fact that population growth has increased by 2.5 percent.