Lots Of People? Good. Tiny Plots? Bad

Source: The post is based on the article “Lots Of People? Good. Tiny Plots? Bad” published in The Times of India on 11^th May 2023.

Syllabus: GS 1 – Population & Associated Issues

Relevance: benefits of rising population

News: According to the United Nations (UN) population estimates, this year, the population of India surpassed or will surpass that of China. The article explains how the Indian economy would benefit from the increase in population.

How will a rise in the younger population benefit the Indian economy?

First, given the technology and volume of capital available, a younger population results in a larger workforce and hence a higher GDP.

Second, a younger population saves more than old and this higher savings translates into higher investment. The higher investment further adds to the GDP.

Third, a younger population brings greater energy and vibrancy to a nation, leading to more innovation and its greater exploitation.

What are the concerns with the rising younger population?

The concern with the rising younger population is that it leads to greater unemployment. However, the unemployment rate depends more on policies, rather than the age composition of the population.

Moreover, the unemployment rate in India has been low in the 3-5% range and the major concern with India is underemployment rather than unemployment.

Although India has witnessed a decline in the ratio of underemployment post 1991 policy reforms, still more policy measures are required to accelerate this decline.

What are other benefits of a larger population?

A larger population benefits the economy in terms of public goods. For example, India’s digital infrastructure.

On the cost side, with no additional cost for adding another user, the platform’s per-user cost decreases as the number of users increases.

On the benefits side, as more users come on board, the value of the platform to the existing users rises since they can now transact with a larger number of users.

The larger number of users also generates a larger volume of data increasing their utility to potential data users.

This same argument also applies to other forms of infrastructure.

For instance, once a road is constructed, adding additional users does not reduce its accessibility to other users until traffic congestion occurs. Existing roads become more useful as the road network grows.

What are the disadvantages of a larger population?

A major disadvantage of a larger population is the fixed quantity of agricultural land. There has been a consistent decline in the size of agricultural land holdings, e.g., 48% of land holdings, by 2015, had fallen below half hectare in size.

Since agriculture involves a larger number of populations, the small agricultural land becomes uneconomical for the growing population. Hence, it is argued that a larger population is a bane for the economy.

What can be the solution to underemployment in agriculture?

The solution to the underemployment in agriculture is not the small population but faster migration of the workforce out of agriculture into industry and services.

The migration out of agriculture has been a at a slow pace. This needs to be addressed by the government to reap the benefits of the larger younger population.