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Notes Gs3 Indian economy

Indian Economy: Population

Demographic transition

Demographic transition is a phenomenon and theory which refers to the historical shift from high birth rates and high death rates in societies with minimal technology, education (especially of women) and economic development, to low birth rates and low death rates in societies with advanced technology, education and economic development. It is a long-term trend in birth and death rates that results in a significant shift in a population’s age distribution. The theory is based on an interpretation of demographic history developed by Warren Thompson. The transition involves four stages, or possibly five. In stage one, pre-industrial society, death rates and birth rates are high and roughly in balance. In stage two, that of a developing country, the death rates drop quickly due to improvements in food supply and sanitation, which increase life expectancy and reduce disease. In stage three, birth rates fall due to access to contraception, increases in wages, urbanization, a reduction in subsistence agriculture and an increase in the status and education of women. In stage four, the birth rate continues to be low and the low death rate stabilises the population.

The Ministry of Statistics and Programme Implementation (MoSPI) has released the ‘Youth in India 2022’ Report, which shows that the population share of the youth is starting to decline whereas the share of the elderly is expected to increase during 2021-2036. The proportion of the elderly population to the total population has increased from 6.8% in 1991 to 9.2% in 2016 and is projected to reach 14.9% in 2036. On the contrary, youth in the age group of 15-29 years comprise 27.2% of the population for the year 2021 which is expected to decrease to 22.7 by 2036.

The demographic transition in India poses both challenges and opportunities for the country’s development. On the one hand, it creates a window of opportunity for economic growth and social progress, as the large working-age population can contribute to higher productivity and income if they are well-educated, healthy and employed. This is known as the demographic dividend. On the other hand, it also requires investments in human capital, health care, social security and environmental sustainability, as the population ages and becomes more dependent on fewer workers. This is known as the demographic burden.

Causes of the Rapid Population Growth

Population increases due to three factors: (1) Decline in Mortality Rate (2) High Birth Rate (3) Immigration

Causes of Decline in Mortality Rate

  1. Elimination of Famines: According to J. Dreze, in Famine Prevention in India, elimination of famines is the biggest reason for bringing down the mortality rate.
  2. Control of epidemics and decline in the incidence of Malaria and TB.
  3. Other factors such as improved sanitation and hygiene, the spread of education and expanded medical facilities, immunization programs, etc.

Causes of High Birth Rate

Economics Factors:

  1. The predominance of agriculture: more people in the family means more income, thus increasing the birth rate.
  2. Slow urbanisation process and predominance of villages: birth rate is usually low in urban and high in rural, due to slow urbanisation the birth rate remains high overall.
  3. Poverty: According to Mahmood Mamdani, in The Myth of Population Control, “People are not poor because they have large families. Quite the contrary, they have large families because they are poor.”

Social Factors:

  1. Near universality of marriages: Marriage is a religious and cultural necessity in India. A higher rate of marriage will result in higher birth rates.
  2. Lower age at the time of marriage: N. C. Das based on an empirical study has claimed that women marrying above the age of 25 only result in some reduction in fertility occurs.
  3. Religious and Social Superstitions: On account of religious and social superstitions, people tend to have more children despite economic conditions.
  4. Joint Family System: This system encourages people to have more children as the expenses are shared by all earning members.
  5. Lack of education: Education alone can change the attitudes of people towards family, marriage and the birth of a child. only education can overcome the superstitions and results in lowering the birth rate.

Population and Economic Development

The population as an Obstacle

  1. Population growth and declining land-man ratio: Due to population growth the pressure on land has increased. Also, more agricultural lands turned into non-agricultural to support the growing population and farm productivity can’t be increased.
  2. Population growth and capital formation: Due to population growth capital formation will go down as more resources are spent on unproductive purposes, which hinders economic growth.
  3. Other adverse effects:
    1. High unemployment and underemployment due to slow growth of the secondary and tertiary sectors, will result in more people going to the primary sector and labour productivity will go down, which in turn hinders economic growth.
    2. The low income per capita and low standard of living are due to population growth and the economy being unable to grow as more resources are spent on supporting the population.
    3. Due to population growth the share of agricultural land has reduced and due to low labour productivity the agricultural sector will fail to provide food to the growing economy and the countries had to import food grains which will result in the BoP crisis.
    4. To increase food production more incentives have to be provided to the farmers and to make the food grains easily available the prices also have to be incentivised which will become a double burden on the economy.
    5. Due to high population growth, the investments in the secondary and tertiary sectors go down which in turn results in preventing the occupational distribution of the population.

The population as not an Obstacle

Poverty is driving population growth as more members in a family will result in more income. But this is due to the slow growth of the secondary and tertiary sectors and not due to population growth.

Underpopulation is a serious obstacle towards economic growth in several countries in Africa and Latin America which leads to the non-utilisation of cultivatable land, low demand for industrial goods resulting in low industrial production, etc.

Remedies for Population Explosion

(1) Economic Measures (2) Social Measures (3) The Family Planning Programme

Economic Measures

  1. Expansion of the industrial sector: due to difficulty in getting employed and to increase the quality of life, the industrial workers will restrict their family size
  2. Creation of employment opportunities in Urban areas: The housing problem and the cost of upbringing of children in urban areas deter big families. So rural to urban migration can be made feasible by creating more employment opportunities in Urban areas.
  3. Equitable distribution of income and removal of poverty: Once the poor people start getting basic amenities of life, they will have no economic compulsion to have more children and their attitude towards the size of their families will change.

Social Measures

  1. Education: According to Jean Dreze and Amartya Sen, “The link between female literacy and fertility is particularly clear.” Educated people tend to limit their family size and education can also delay the marriage age, which can reduce the fertility rate and limit family size.
  2. Improving women’s status: The discrimination between men and women in society leads to the growth of family size.
  3. Raising the minimum age of marriage.

The Family Planning Programme

  1. Public Information Programme: Couples are advised about the benefits of family planning programmes.
  2. Incentives and disincentives: Incentives can help to get more acceptance for family planning.
  3. Family Planning Centres: Clinical and medical help and distribution of contraceptives.
  4. Research: Research can give a more scientific and accurate way to achieve family planning.

Population Policy

Population policy is necessary to check population growth. Entire reliance on family planning made the objectives obsolete and underachieved. The core issues for population growth have to be addressed to achieve the objective of controlling the population. “Clinical approach” has worked in Western countries and in India it was counter-productive. Poverty is a driving force of population growth, so poverty has to be reduced and the standard of living of people has to be increased to check population growth. The attitude of the people towards reproductive health and family planning is crucial in achieving the objectives. Adoption of incentives and disincentives schemes can help in reducing the population.

Sex Composition of Population

Sex ratio is a term that is used to describe the number of males per 100 females in a population. 

Child sex ratio (CSR) indicates the number of girls per 100 boys in the 0-6 age group. The main reason for falling CSR is sex-selective abortion. As Leela Visaria puts it, “Many of the discriminatory practices involved are subtle and lie deep within intimate family behaviour.”

Beti Bachao Beti Padhao (BBBP) is a campaign launched by the Government of India in 2015 to address the issue of the declining child sex ratio (CSR) and to empower girls and women. It is a joint initiative of three ministries: the Ministry of Women and Child Development, the Ministry of Health and Family Welfare and the Ministry of Education. The main objectives of BBBP are:

  • To prevent gender-biased sex-selective elimination of girls
  • To ensure the survival and protection of girls
  • To ensure the education and participation of girls

The scheme initially focused on 100 districts with low CSR across the country and later expanded to 61 additional districts in 2016. It involves multi-sectoral action, awareness generation, community mobilization, enforcement of laws and schemes, and monitoring and evaluation of outcomes.

BBBP also promotes various activities and initiatives to celebrate the girl child and to challenge the stereotypes and discrimination against girls. Some of these include:

  • Selfie with Daughter: A social media campaign started by a village sarpanch in Haryana to encourage parents to take selfies with their daughters and share them online with the hashtag #SelfieWithDaughter. The campaign was endorsed by Prime Minister Narendra Modi and became a global trend.
  • Beti Janmotsav: A celebration of the birth of a girl child in the family and community by planting five saplings, distributing sweets, organizing cultural programmes, etc. The aim is to create a positive environment for the girl child and to acknowledge her as an asset.
  • Beti Samman Samaroh: A felicitation ceremony for the girl students who have excelled in academics, sports, arts, etc. The aim is to recognize and reward their achievements and to inspire other girls to pursue their dreams.
  • Beti Bachat Yojana: A savings scheme for the girl child launched by some state governments under BBBP. The scheme provides financial incentives to parents who enrol their daughters in school, complete their immunization, delay their marriage till 18 years, etc. The aim is to secure the future of the girl child and to reduce her dependency.
  • A tax-free savings account is created in the name of the girl, which will get mature when she attains the age of 21.

BBBP is a flagship programme of the Government of India that reflects its commitment to ensuring the rights and dignity of girls and women. It also aligns with the Sustainable Development Goals (SDGs) that aim to achieve gender equality and empower all women and girls by 2030. SDG 3: Good health and well-being, SDG 4: Quality education, SDG 5: Gender equality, SDG 10: Reduced inequalities, SDG 16: Peace, Justice and strong institutions. However, it also faces several challenges in its implementation, such as:

  • Inefficient allocation and release of funds: According to a report by the Comptroller and Auditor General (CAG), there has been a cumulative shortfall of Rs 77 crores between 2014-15 and 2017-18 in the allocation and release of funds for BBBP. The report also found that only 19% of the total funds were spent on direct benefits to the beneficiaries, while the rest were spent on administrative expenses and media campaigns.
  • Insufficient monitoring and oversight: According to another report by the CAG, there has been a lack of effective monitoring and evaluation mechanisms for BBBP at various levels. The report found that many states did not constitute state or district-level task forces as required by the scheme guidelines. The report also found that many states did not submit timely and accurate progress reports or conduct regular inspections or audits of the scheme activities.
  • Unbalanced expenditure patterns: According to a study by Save the Children, there has been an unbalanced expenditure pattern under BBBP, with 47% of the expenditure being on communication-related activities, such as media campaigns, rallies, street plays, etc., while only 5% of the expenditure being on education-related activities, such as scholarships, incentives, enrolment drives, etc. The study suggested that more funds should be allocated for education and health interventions that directly benefit the girl child.
  • Poor coordination and convergence: According to a study by Drishti IAS, there has been poor coordination and convergence among the three ministries involved in BBBP, as well as among various stakeholders at the state and district levels. The study found that there was a lack of clarity and consistency in the roles and responsibilities of different agencies and departments. The study also found that there was a lack of synergy and integration among various schemes and programmes related to girls and women.
  • Deep-rooted social norms and attitudes: According to a study by IBEF, one of the biggest challenges faced by BBBP is the deep-rooted social norms and attitudes that discriminate against girls and women in many parts of India. The study found that factors such as son preference, dowry system, patriarchal mindset, gender-based violence, etc., affect the value and status of girls and women in society. The study also found that these factors influence the decisions and behaviours of parents, families and communities regarding the birth, survival, education and empowerment of girls.

These are some of the major challenges faced by BBBP in its implementation. To overcome these challenges, the government must ensure stricter enforcement of the policy guidelines, improve the monitoring and evaluation mechanisms, increase the allocation and utilization of funds for direct benefits to the beneficiaries, enhance the coordination and convergence among various ministries and stakeholders, and address the social norms and attitudes that hinder the progress of girls and women.

Population and dividend

According to Dr K. S. James, “The demographic dividend is defined as a rise in the rate of economic growth due to a rising share of working-age people in a population. This phenomenon occurs with a falling birth rate and the consequent shift in the age structure of the population towards the adult working ages.”

Dependency is defined as the percentage of the dependent population divided by the working-age population.

Impact on economic growth

  1. A lower dependency ratio will result in higher economic growth. More capital will be available for investments which are inevitable for economic growth.
  2. A decline in fertility will improve economic activity as more women will enter the workforce.
  3. Increased investment in health care will boost both productivity and economic growth.
  4. Governments can also invest more in productive sectors instead of education and health.
  5. A study by Bloom and Williamson(1998) on 78 Asian and non-Asian countries suggests that nearly one-third of the economic miracle of east asian countries can be attributed to the demographic dividend.

According to C P Chandrasekhar, “India is in the midst of a process where it faces the window of opportunity created by demographic dividend.”

According to Prof. K. Navaneetham, the share of the youth segment is decreasing while the mature labour force will be increasing due to the fertility decline and age structural transition in the region. So unemployment will be decreased as no need to create new jobs here.

According to C P Chandrasekhar, “the demographic dividend argument ignores the fact that available workers are not automatically absorbed to deliver growth.”

According to the Eleventh five-year plan, “The criticality of skill development in our overall strategy is that if we get our skill development act right, we will be harnessing ‘demographic dividend’; if we do not get there, we would be facing a ‘demographic-nightmare’.”

According to Anil Padmanabhan, “What we have in the making is a social time bomb - few working people to support a disproportionately larger elderly population”.

Way forward as suggested by Sonalde Desai; create employment opportunities for older people, innovate healthcare financing structures, and savings for older people.

Urbanisation

Urbanisation is a part of the development process. In backward stagnant societies, the process of urbanisation is rather slow because cities fail to offer employment opportunities to people living in the countryside. Those who migrate to cities in such societies are pushed out of the villages due to economic and social pressures; they are rarely pulled by the so-called attractions of urban life.

Urbanisation in India is on the rise. But most of the urbanisation happened due to technicality in the census. These towns do not have an urban governance structure or requisite urban infrastructure of sanitation, roads, etc. Also, the large cities will get more investments due to their stronger economic base and the small towns will fail to get credit, so the situation will get worse in the so-called “census towns”.

The approach paper to the twelfth plan has mentioned that “As more urban conglomerations form and grow without adequate infrastructure, the problems will only become worse.”

AMRUT

AMRUT stands for Atal Mission for Rejuvenation and Urban Transformation. It is a scheme launched by the Government of India under the Ministry of Housing and Urban Affairs in 2015. It is the successor of JNURM and aims to provide basic civic amenities to 500 cities with a population of more than one lakh.

The objectives of AMRUT are to ensure that every household has access to a tap with an assured supply of water and a sewerage connection, to increase the amenity value of cities by developing greenery and well-maintained open spaces, and to reduce pollution by switching to public transport or constructing facilities for non-motorized transport.

The scheme follows a project-based approach and provides central assistance to the states and union territories based on their population and urban infrastructure needs. The states and union territories have to prepare State Annual Action Plans (SAAPs) and submit them to the central government for approval. The scheme also mandates a set of reforms at the state and city levels, such as e-governance, audit of water supply systems, credit rating of urban local bodies, etc.

Urban Migration

The migration of the rural population to urban areas in India is the process of people moving from rural areas to urban areas in search of better opportunities, living conditions, and services. According to the 2011 Census, about 139 million people migrated from rural to urban areas, constituting about 11% of the total urban population.

Some of the causes of rural-urban migration in India are:

  • Poverty and unemployment in rural areas due to low agricultural productivity, landlessness, indebtedness, etc. According to P. Sainath, a large number of rural people have been forced to migrate to urban areas during the last two decades because of the collapse of millions of livelihoods in agriculture and related occupations.
  • High population pressure on land and natural resources in rural areas leads to environmental degradation and resource scarcity.
  • Lack of basic infrastructural facilities like health care, education, sanitation, electricity, etc. in rural areas.
  • Better employment opportunities, higher wages, and diversified livelihoods in urban areas due to industrialization, urbanization, and globalization.
  • Availability of better social services, amenities, and entertainment facilities in urban areas.
  • Social and cultural factors like an aspiration for a modern lifestyle, education, marriage, etc.

Some of the consequences of rural-urban migration in India are:

  • The rapid growth of the urban population and expansion of urban areas lead to overcrowding, congestion, slums, pollution, etc.
  • Increased demand for housing, water supply, sanitation, transport, energy, etc. in urban areas puts pressure on urban infrastructure and services.
  • Loss of agricultural labour force and human capital in rural areas affecting rural development and food security.
  • Social and economic problems like poverty, inequality, crime, violence, exploitation, discrimination, etc. faced by migrants in urban areas.
  • Cultural and psychological challenges like adaptation, assimilation, identity crisis, alienation, etc. experienced by migrants in urban areas.

Smart City Mission

Smart City Mission is a scheme launched by the Government of India in 2015 to develop 100 cities across the country as smart cities. A smart city is a city that provides core infrastructure, a clean and sustainable environment, decent quality of life, and smart solutions to its citizens.

The objectives of Smart City Mission are to:

  • Drive economic growth and improve quality of life through local area development and technology integration.
  • Promote cities that are inclusive, liveable, resilient, and innovative.
  • Create replicable models that can inspire other aspiring cities.
  • Foster a culture of citizen participation and co-creation.

The Smart City Mission follows a two-stage competition process to select the cities. The first stage is at the state level where the states nominate their potential smart cities based on certain criteria. The second stage is at the national level where the nominated cities submit their Smart City Proposals (SCPs) based on their vision, goals, strategies, and projects. The SCPs are evaluated by an expert committee and the final list of 100 smart cities is announced.

The Smart City Mission has operated as a Centrally Sponsored Scheme with the financial support of Rs. 48,000 crores from the central government over five years. The states and urban local bodies (ULBs) have to provide an equal amount of matching funds. The mission also encourages convergence with other government schemes, innovative financing mechanisms, public-private partnerships, and citizen contributions.

The Smart City Mission has six fundamental principles on which the concept of smart cities is based:

  • Promoting mixed land use in area-based developments
  • Housing and inclusiveness
  • Creating walkable localities
  • Preserving and developing open spaces
  • Promoting a variety of transport options
  • Making governance citizen-friendly and cost-effective

Smart City Mission addresses environmental sustainability in various ways, such as:

  • Providing the core infrastructure that ensures adequate water supply, sanitation, solid waste management, stormwater drainage, etc. to reduce pollution and health risks.
  • Promoting clean and renewable energy sources, such as solar, wind, biogas, etc. to reduce greenhouse gas emissions and dependence on fossil fuels.
  • Developing green spaces and parks to enhance the amenity value of the city and provide recreational and ecological benefits.
  • Encouraging non-motorized and public transport modes, such as cycling, walking, buses, metro, etc. to reduce traffic congestion and air pollution.
  • Implementing smart solutions that use information and communication technology (ICT) to monitor and manage environmental parameters, such as air quality, water quality, noise levels, etc. and provide real-time feedback and alerts.
  • Engaging citizens and stakeholders in co-creating and implementing environmentally sustainable initiatives and practices.

Some of the challenges faced by Smart City Mission are:

  • Financing: The Smart City Mission requires a huge amount of investment from various sources, such as central and state governments, urban local bodies, the private sector, and citizens. However, there are gaps and constraints in mobilizing adequate funds for the mission, especially in the context of fiscal deficit, debt burden, and revenue generation of the states and ULBs.
  • Coordination: The Smart City Mission involves multiple stakeholders, such as central and state governments, ULBs, the private sector, civil society, and citizens. There is a need for effective coordination and collaboration among them to ensure the smooth implementation and delivery of smart city projects. However, there are issues of overlapping jurisdictions, conflicting interests, lack of trust, and weak institutional mechanisms that hamper coordination.
  • Capacity: The Smart City Mission requires skilled and trained human resources, technical expertise, and managerial capabilities to plan, execute, monitor, and evaluate smart city projects. However, there is a lack of adequate capacity at the state and ULB levels to undertake such complex and innovative tasks. There is also a need for capacity building of the citizens and communities to participate in and benefit from the smart city initiatives.
  • Data privacy: The Smart City Mission relies heavily on data collection, analysis, and sharing to provide smart solutions and services to the citizens. However, there are concerns about the security and privacy of the data collected from various sources, such as sensors, cameras, mobile devices, etc. There is a need for clear policies and regulations to protect the data from unauthorized access, misuse, or breach.
  • Sustainability: The Smart City Mission aims to promote environmental sustainability by reducing pollution, enhancing greenery, promoting renewable energy, etc. However, there are challenges in balancing the economic growth and environmental protection goals of the mission. There is also a need for ensuring social sustainability by addressing the issues of equity, inclusion, participation, and empowerment of marginalized groups in smart city development.

Smart City Mission and AMRUT are two urban development schemes launched by the Government of India in 2015. They have some similarities and differences, such as:

  • Similarities: Both schemes aim to improve the quality of life, infrastructure, and services in urban areas. Both schemes follow a bottom-up approach that involves citizen participation and stakeholder consultation. Both schemes encourage convergence with other government programs and innovative financing mechanisms.
  • Differences: Smart City Mission covers 100 cities selected through a city challenge competition, while AMRUT covers 500 cities nominated by the states. Smart City Mission focuses on area-based development that uses smart solutions and technology applications, while AMRUT focuses on project-based development that provides basic services such as water supply, sewerage, urban transport, etc. Smart City Mission provides equal central and state funding of Rs. 100 crore per city per year for five years, while AMRUT provides variable central funding based on the population and urban infrastructure needs of the cities.