Economics Class

Population, poverty and unemployment


What is the Theory of Demographic Transition?


The Theory of Demographic Transition is based on the hypothesis that every economy passes through three different stages of demographic transition. These stages can be discussed as follows:

           I.            First Stage

In this stage both death rate and birth rate tend to be high. Birth rate is high because there is no urge to control family size. Death rate is high due to lack of sanitation, medical awareness, medical facilities, etc.

         II.            Second Stage

In this stage the death rate begins to fall down due to spread of medical awareness, improvement in medical facilities, rise in standard of living, etc. The birth rate continues to be high. The widening gap between th

       III.            Third Stage

In this stage the birth rate falls due to adoption of family planning measures. The death rate continues to fall and thus the population begins to shrink.



What is unemployment? What are its various forms?


Unemployment refers to a situation when a person who is able and willing to work, does not get an opportunity to work at the prevailing market wage rates. Such a person is involuntarily unemployed.

Various forms of unemployment are:

·         Frictional Unemployment

It is temporary unemployment which exists during the period of transfer of labour from one occupation to another or due to lack of mobility of labour, as a result of which he fails to get a job immediately after leaving his previous job.

·         Seasonal Unemployment

It is generally associated with the agricultural sector. In agriculture, there are seasons which demand less of labour, like the time period between sowing and harvesting. In such seasons there is a rise in seasonal unemployment. It mainly occurs in areas where farmers use single crop system.

·         Structural Unemployment

It occurs when there is a mismatch between available labour force and capital available. It is also a result of low rate of capital formation. Due to this mismatch the labour cannot be gainfully employed.

·         Disguised Unemployment

It occurs when more than required number of people are engaged in a job, i.e. the marginal productivity (change in total productivity) of labour is zero. This may occur due to high pressure on land, primitive methods of farming, poverty, etc.

·         Cyclical Unemployment

It is unemployment caused by slackness in business activities. This is temporary in nature.

·         Technological Unemployment

When introduction of new technology causes displacement of workers, technological unemployment occurs. Also, due to technological upgradation, work is mainly done by machines and less of labour force is required leading to unemployment.


What are the causes of poverty in India?


The major causes of poverty in India can be classified as follows:

v  Economic Causes

·         Fast rise in population:

A large part of country’s wealth is spent on maintenance of a large and rapidly increasing population, thus leaving less of that available for undertaking developmental activities. It is also becoming difficult to provide employment opportunities at pace with population growth.

·         Low productivity:

This refers low productivity in both industrial and agricultural sector. Agricultural productivity is low due to fragmentation of land, primitive methods of farming, high pressure on land, etc. Industrial productivity is low due to lack of capital formation, lack of dynamic entrepreneurship etc.

·         Improper use of natural resources:

India has plenty of natural resources which are not being utilized optimally due to lack of technical know-how, lack of capital, etc.

·         Slow growth of employment opportunities:

The rate at which population is growing is far more than that at which the employment opportunities are generating. This leads to unemployment and poverty.

v  Social Causes

The influence of social customs on the people of our country is largely responsible for poverty. Due to illiteracy and traditions, farmers fail to adopt techniques to improve the deteriorating condition of their land, increase agricultural productivity, etc.





What steps can be taken to remove poverty from India?


Following measures can be suggested to solve the problem of poverty in India:

v  Increase in production: level of production should be increased in both industrial and agricultural sector.

Ø  Industrial sector: following steps can be taken to increase industrial productivity.

§  Modern techniques of production should be used.

§  Integration of large and small scale industries.

§  Providing better infrastructural facilities

§  Inducing investments for providing necessary capital.

Ø  Agricultural sector: following steps can be taken to increase agricultural productivity.

§  Better marketing of agricultural produce, manures, seeds, etc.

§  Fixation of minimum economic land holding to change the perspective of farming from subsistence to marketing.

§  Adopting farm structure to meet the demand for increased use of land.

§  Reforming land tenure system.

§  Assisting the farmer and rural community to adjust to changing farm structure and new techniques in farming.

v   Equitable distribution of wealth and resources

            This can be achieved by:

§  Progressive taxation:

This implies that the rate of tax increases with increase in income. This helps prevent concentration of wealth.

§  Balanced industrial development:

This would help remove uneven opportunities of work, which is a major cause of poverty.

v  Capital Formation: it is surplus production over consumption or adding to the stock real fixed assets. Less rate of capital formation restricts economic growth. Capital growth can be increased by:

§  Mobilizing savings.

§  Providing profitable channels for investment.

§  Optimum utilization of resources and avoiding wastage.

v  Population control: increase in population at a rapid pace boosts poverty. Following measures can be taken to control population:

§  Popularizing family planning measures.

§  Creating job opportunities for the current population at a faster rate.

§  Adopting labour intensive techniques of production to absorb surplus labour.

vCreating a suitable atmosphere: unless all sectors of the society are conscious about the evils of poverty, it cannot be eradicated. Suitable policies need to be implemented and people need to be educated.

vSpecial programmes:  government should implement welfare programmes to benefit the poor. These programmes to aim at:

§  Creating employment opportunities for the poor.

§  Making essential goods available at subsidized rates.

§  Nominal rates of essential facilities for the poor, e.g. educational facilities, medical facilities, etc.



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