Page 21 - DECO303_INDIAN_ECONOMY_ENGLISH

Indian Economy

Notes
Example: Some infrastructures which are profitable with minimum density are roads,
dams, ports and irrigation systems.
(b) Demographic Transition and Savings: Urban Development Committees (UDCs) possess
populations with a great proportion of young dependents. When the child dependency
ratio is large, the population comprises a comparatively large number of dependants
consequently consumption will be high as compared to earnings and saving activity will
be low. At the time of the demographic transition, the number of workers increases
relative to consumers, income increases relative to consumption and savings hike.

(c) Capital Formation in Agriculture: In agriculture, the investor, saver and producer of
capital are frequently the same unit — the family farm. In the off season, the family tidies
new land, irrigates, constructs fences and barns, and builds roads, dykes and wells. With
greater population growth, the farmer and his family will place more hours on this kind
of capital formation raising the agricultural capital stock.
(d) Labour Force Participation: Greater dependency ratios go along with increasing rates of
population growth. This may influence labour force participation with relation to hours
worked, entry as well as retirement age, and women’s employment beyond house.
(e) Trade Specialisation: In the Heckscher-Ohlin model of trade, where a country majors in
and exports goods that embody comparatively large quantities of its plenty factors, a high
growth rate in one factor (labour) would facilitate the country to specialise in goods
utilising that factor intensively. Presuming the nation is already exporting labour-intensive
goods, it would merely specialise more and trade more. The developing labour supply
facilitates the country to take part more in trade, and the profits it receives assist to offset
diminishing returns.

Example: The average cost of employing labour in Europe, including social and welfare
costs, is $ 20 an hour, $ 19 in the United States and $ 18 in Japan — and a rough average of $ 1.65
in most of Asia.

2.2.2 Human Resources are Regarded as Vital for Economic
Development

You must understand that human resources are important from the viewpoint of economic
development. In the initial position, people are utilised as an instrument of production and are
accessible as factors of production to work jointly with other factors. Secondly, they are the
consumers and the goal of economic development is to expand their economic well-being.
In other words, you can say, people are the ways to acquire economic development and also the
end in them. The nature as well as size of population, hence, is an important factor deciding
economic development of a country.
Adverse Effect of Population on Economic Development

Labour, without doubt has a positive contribution in the process of production as well as
development of an economy. However, a quickly rising population serves as a hindrance on
smooth economic progress.

(a) Due to quick growth of population, the per capital income in India has stayed either
stagnant or depicted a very marginal increase in spite of a considerable rise in national
income during the plan periods.

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