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Subject: Economics

  • Taxation in India: Classification, Types, Direct tax, Indirect tax

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    Taxation in India

    The India Constitution is quasi-federal in nature, and the country has three tier government structure.

    To avoid any disputes between the centre and state the Constitution envisage following provisions regarding taxation:

    • Division of powers to levy taxes between centre and state is clearly defined.
    • There are certain taxes which are levied by the centre, but their proceeds are distributed between both centre and the state. Example- Union Excise Duty.
    • There are certain taxes which are levied by the centre, but their proceeds are transferred to the states. Example-Estate duty on property other than agriculture income.
    • There are certain taxes which are levied by the central government, but the responsibility to collect them is vested with the states. Example- Stamp Duty other than included in the Union List.
    • There are certain taxes which are levied by the states, and their proceeds are also kept by states. Example: Erstwhile VAT

    Classification of Taxes in India

    What is a Tax?

    Taxes are generally an involuntary fee levied on individuals and corporations by the government in order to finance government activities. Taxes are essentially of quid pro quo in nature. It means a favour or advantage granted in return for something.

    Key Differences between Direct Tax and Indirect Tax

    Basis Direct Tax Indirect Tax
    Meaning The tax that is levied by the government directly on the individuals or corporations are called Direct Taxes. The tax that is levied by the government on one entity (Manufacturer of goods), but is passed on to the final consumer by the manufacturer.
    Incidence The incidence and impact of the direct tax fall on the same person. The incidence and impact of the tax fall on different persons.
    Examples Income Tax, Corporation Tax and Wealth Tax. VAT, Service tax, GST, Excise duty, entertainment tax and Customs Duty.
    Nature They are progressive in nature. They are regressive in nature.
    Objective Both Social and Economical. Social objective of direct tax is the distribution of income. A person earning more should contribute more in the provision of public service by paying more tax. This provision is also known as progressive taxation. Only Economical. When an indirect tax is levied on a product, both rich and poor must pay at the same rate. A person earning 10 lakh a month pays the same tax on the Wheat purchase as the person earning 3000 Re a month. This principle is called regressive taxation.
    Impact Not at all Inflationary. Is inflationary.

    Understanding Regressive Nature of Indirect Taxes.

    Government Levies a tax of 5 percent on a pack of 5KG Rice worth Re1000.

    Tax Burden on the Pack: 5/100*1000= 50 Re

    • Rich Individual Case (Monthly Earning 1 Lakh)

    He buys the rice pack and pays a tax of 50 Re.

    The proportion of his income that went on paying tax on Rice is 0.05 Percent (50/100000) of his total earning.

    • Poor Individual Case (Monthly income 1000 Re)

    He buys Rice pack and pays a tax of Re 50.

    The proportion of his income that went on paying tax on rice is 5 percent (50/1000) of his total earning.

    As you can clearly see, a poor individual is paying a higher proportion of his income as indirect tax as compared to the richer individual.

    Key Differences between Ad valorem and Specific Tax

    Ad Valorem Tax Specific Tax
    Ad valorem tax is based on the assessed value of the product. In Fact, ‘Ad Valorem’ is a Latin word meaning ‘According to Value’. Specific tax is a fixed amount tax based on the quantity of unit sold.
    Most Ad valorem taxes are levied based on the value of the item purchased. Specific tax is levied based on the volume of the item purchased.
    The tax is usually expressed in percentage. Example GST in India has 5 tax rate slabs- 0, 5. 12, 18 and 28 percent. The tax is usually expressed in specific sums. Example: Excise Duty on Petrol.
    Example: GST, Property tax, sales tax. Example: Excise duty on petrol and liquor products.
    They are progressive in nature. They are regressive in nature.

    Types of Taxes in India

    In India, Taxes are levied on income and wealth. Taxes are broadly classified into two main categories: Direct Tax and Indirect tax. Direct taxes are levied directly on individuals and entities, with income tax and corporate tax being prime examples. These taxes are based on the taxpayer’s ability to pay. Indirect taxes, on the other hand, are imposed on goods and services, such as Goods and Services Tax (GST) and excise duty. Each type of tax plays a crucial role in government revenue and economic regulation, contributing to national development.

    Direct Taxes in India

    Direct taxes in India are levied directly on individuals and corporations based on their income or profit. Key types include Income Tax, imposed on individual earnings; Corporate Tax, charged on company profits; and Wealth Tax (though currently abolished), which taxed an individual’s wealth. These taxes ensure equitable distribution of wealth and provide significant revenue for the government.

    Income Tax

    • Income tax is levied on the income of individuals, Hindu undivided families, unregistered firms and other association of people.
    • In India, the nature of income tax is progressive.
    • For taxation purpose income from all sources is added and taxed as per the income tax slabs of the individual.
    • The budget of 2017-18 proposed the following slab structure:
    Income Slab (less than 60 years) Tax Rate
    Up to 2,50,000 No Tax
    Up to 2,50,000 to 5,00,000 5%
    Up to 5,00,000 to 10,00,000 20%
    Excess of 10,00,000 30%
       

    Surcharge of 10% of income tax where the total income exceeds Rs 50 lakh up to Rs 1 Crore.

    Surcharge of 15% of income tax, where the total income exceeds Rs 1 Crore.

    Corporation Tax

    • Corporation tax levied on the income of corporate firms and corporations.
    • For taxation purpose, a company is treated as a separate entity and thus must pay a separate tax different from personal income tax of its owner.
    • Companies both public and private which are registered in India under the companies act 1956 are liable to pay corporate tax.
    • The Budget 2017-18 proposed following tax structure for domestic corporate firms:
    • For the Assessment Year 2017-18 and 2018-19, a domestic company is taxable at 30%.
    • For Assessment Year 2017-18, the tax rate would be 29% where turnover or gross receipt of the company does not exceed Rs. 5 crores in the previous year 2014-15.
    • However, for Assessment year 2018-19, the tax rate would be 25% where turnover or gross receipt of the company does not exceed Rs. 50 crores in the previous year 2015-16.

    Wealth Tax or Capital Tax

    Estate Duty: First introduced in 1953. It was levied on the total property passing on the death of a person. The whole property of the deceased person constituted his wealth and is liable for the tax. The tax now stands abolish w.e.f 1985.

    Wealth Tax: First introduced in 1957. It was levied on the excess of net wealth (over 30,00,00,0 @ 1 percent) of individuals, joint Hindu families and companies. Wealth tax has been a minor source of revenue. The tax now stands abolish wef 2015.

    Gift Tax: First introduced in 1958. The gift tax was levied on all donations except the one given by the charitable institution’s government companies and private companies. The tax now stands abolished wef 1998.

    Capital Gain Tax: Ay profit or gain that arises from the sale of the capital asset is a capital gain. The profit from the sale of capital is taxed. Capital Asset includes land, building, house, jewellery, patents, copyrights etc.

    • Short-term capital asset – An asset which is held for not more than 36 months or less is a short-term capital asset.
    • Long-term capital asset – An asset that is held for more than 36 months is a long-term capital asset.
      From FY 2017-18 onwards – The criteria of 36 months has been reduced to 24 months in the case of immovable property being land, building, and house property.
    • For instance, if you sell house property after holding it for a period of 24 months, any income arising will be treated as long-term capital gain provided that property is sold after 31st March 2017.

    But this change is not applicable to movable property such as jewellery, debt oriented mutual funds etc. They will be classified as a long-term capital asset if held for more than 36 months as earlier.

    • Tax on long-term capital gain: the Long-term capital gain is taxable at 20% + surcharge and education cess.
    • Tax on the short-term capital gain when securities transaction tax is not applicable: If securities transaction tax is not applicable, the short-term capital gain is added to your income tax return, and the taxpayer is taxed according to his income tax slab.
    • Tax on the short-term capital gain if securities transaction tax is applicable: If securities transaction tax is applicable, the short-term capital gain is taxable at the rate of 15% +surcharge and education cess.

    Indirect Taxes in India

    Indirect taxes in India are levied on goods and services rather than on income or profits. Key examples include the Goods and Services Tax (GST), excise duty, and customs duty, which impact consumer prices and government revenue.

    Custom Duty

    • It is a duty levied on exports and imports of goods.
    • Import duty is not only a source of revenue from the government but also have also been employed to regulate trade.
    • Import duties in India is levied on ad valorem basis.
    • Example: if an Indian plan to buy a Mercedes from abroad. He must pay the customs duty levied on it.
    • The purpose of the customs duty is to ensure that all the goods entering the country are taxed and paid for.
    • Just as customs duty ensures that goods for other countries are taxed, octroi is meant to ensure that goods crossing state borders within India are taxed appropriately.
    • It is levied by the state government and functions in much the same way as customs duty does.

    Excise Duty

    • An excise duty is in the true sense is a commodity tax because it is levied on production of goods in India and not on the sale of the product.
    • Excise duty is explicitly levied by the central government except for alcoholic liquor and narcotics.
    • It is different from customs duty because it is applicable only to things produced in India and is also known as the Central Value Added Tax or CENVAT.

    Service Tax

    • Service tax is levied on the services provided in India.
    • Service tax was first introduced in 1994-95 on three services telephone services, general insurance and share broking.
    • Since then, every year the service net has been widened by including more and more services. We now have an exclusion criterion based on ‘negative list’, where some services are excluded out of tax net.
    • The current rate of service tax in India was 15% before being replaced by Goods and Service tax.

    Value Added Tax

    • The India’s indirect tax structure is weak and produces cascading effects.
    • The structure was by, and large uncertain and complex and its administration was difficult.
    • As a result, various committees on taxation recommended ‘Value Added Tax’. The Indirect Taxation enquiry committee argued for VAT.
    • The VAT has a self-monitoring mechanism which makes tax administration easier.
    • The VAT is properly structured removes distortions.
    • Accordingly, VAT has been introduced in India by all states and UTs (except UTs of Andaman Nicobar and Lakshadweep).
    • The State VAT being implemented till 1 July 2017, had replaced erstwhile Sales Tax of States.
    • The tax is levied on various goods sold in the state, and the amount of the tax is decided by the state itself.

    Goods and Services Tax(GST)

    GST is a comprehensive indirect tax introduced in India on July 1, 2017. It aims to simplify the taxation process by unifying multiple indirect taxes into a single tax structure. GST is applied to the supply of goods and services, with rates varying based on the category of the product or service. The main features of GST include a dual tax structure (Central GST and State GST), seamless input tax credit, and a focus on transparency and efficiency in tax administration. GST has streamlined the tax system, promoting ease of doing business and boosting economic growth in India.

    Indirect Taxes in a nutshell

    Tax Who Levies Revenue goes to Nature Incidence Levied on
    Custom Duty Central Government Centre Govt Progressive Shifts to Final Consumer Export and Import
    Excise Duty/CENVAT Central Government Both Centre and State progressive Shifts to Final Consumer Domestically Manufactured Goods
    Service Tax Central Government Centre Govt Regressive Shifts to Final Consumer All Services
    VAT State Government State Govt Regressive Shifts to Final Consumer Sale of Goods in the States

    Conclusion

    For UPSC aspirants, understanding the intricacies of taxation in India, including its classifications, impacts on the economy, and recent reforms, is essential for comprehensive preparation. This knowledge not only aids in tackling examination questions but also provides insights into India’s fiscal policies and their implications on development.

    FAQs

    Why is understanding direct and indirect taxes important for UPSC?

    Understanding direct and indirect taxes is essential for UPSC aspirants as it provides insights into India’s tax system, economic policies, and fiscal responsibilities. This knowledge is vital for answering questions related to taxation in the UPSC exams.

    Why is understanding taxation in India crucial for UPSC aspirants?

    Understanding taxation in India is crucial for UPSC aspirants because it directly influences the economy and public governance. Knowledge of direct and indirect taxes helps candidates analyze fiscal policies, which are often included in the exam syllabus. This understanding is essential for effective exam preparation and for informed decision-making as future civil servants.

     

    By
    Himanshu Arora
    Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

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  • Should Lateral entry be allowed in civil services

    Note4Students:

    If lateral entry is allowed in civil services, it could be a game changing decision. The government has sought recommendations in this regard. This issue can also be linked to GS Mains paper 2 topic i.e. role of Civil service in Democracy. UPSC has asked question on Similar type of issue in Mains 2014(Domain based Civil service!).Thus CD considers this topic as highly probable topic for mains 2017.

    Context

    Department of Personnel & Training (DoPT) has been asked to prepare a proposition on lateral entries into civil services that deal with economy and infrastructure and prepare a broad outline of modalities for selecting private individuals for appointment in the ranks of deputy secretary, director and joint secretary.

    How will it be implemented, if approved?

    The shortlisting of private sector executives or social workers would be through a matrix of experience and qualification, without taking into account their existing salaries. The final selection would be done by a committee headed by the Cabinet Secretary

     Was the idea discussed ever before?

    1. The idea of lateral induction is not new. It has been recommended by high level committees appointed by different governments and a plethora of think tanks.
    2. The first Administrative Reforms Commission (ARC) had pointed out the need for specialization as far back as in 1965.
    3. The Surinder Nath Committee and the Hota Committee also recommended the same in 2003 and 2004, respectively.
    4. In 2005, the second ARC recommended an institutionalized, transparent process for lateral entry at both the Central and state levels.

    Is there a need for lateral entry into Civil Services?

    1. The assurance of a secure career in civil services has discouraged initiative by reducing competition in the higher echelons of government. The entry at lateral level would keep the competition alive.
    2. The quasi-monopolistic hold of the career civil services on senior management position breeds complacency, inhibits innovative thinking and prevents the inflow of new ideas from outside government. Lateral entry would help to bring in new ideas from those in private sector.
    3. The Baswan Committee has pointed out the huge deficit of officers. Many other reports have shown deficiencies at higher levels in governments. It is important to bring in new people. Here lateral entry would be of help.
    4. IAS officers get recruited at a very young age when it is difficult to test potential administrative and judgement capabilities. Mid-career lateral entrants with proven capabilities will help bridge this deficiency.
    5. The career progression in the IAS is almost automatic. Notwithstanding sporadic efforts to introduce meritocracy, very few get weeded out for poor performance. Lateral entry is necessary to push the IAS out of their comfort zone and challenge them.

    Counter-arguments over Lateral Entry into Civil Services

    1. The All India Services provide a unique link between the cutting edge at the field level and top policy making positions as has also been mentioned by the First Administrative Reforms Commission (ARC) and by the Sarkaria Commission. Bringing people from private sector is not welcomed.
    2. The bridge between policy making and implementation, while crucial to all systems, has been of strategic significance in the Indian context, given the regional diversity of the country. Its important to maintain the uniqueness of Indian civil services.
    3. The exposure and sensitivity to the country’s complex socio-political milieu and to the needs of the common man, which widespread field experience provides to these Services, may not be available in the private sector since the private sector does not have the same width and depth of exposure to this type of field experience.
    4. Lateral entry only at top level policy making positions may have little impact on field level implementation, given the multiple links in the chain of command from the Union Government to a rural village.
    5. There might be an issue of conflict of interest when it comes to entrants from the private sector.
    6. The larger experience from such lateral entry has not been happy. Lateral entrants have struggled to fit into “the system” and understand the processes and dynamics of government decision-making. They have complained of hostility from the IAS network which, they believe, sets them up for failure.
    7. “The system” of those already in service sees lateral entrants as adversaries who have made their way in, not through an open competitive examination like they have, but because of privilege and connections.
    8. Once an in-house bureaucratic process is set in motion, it will become a precedent for all time and may be well be cited and manipulated by future governments at the Centre and the states to bring in people regardless of their worth.

    Conclusion

    1. Though an institutionalized lateral entry into civil service will help the government have the best of both youth and experience and take the system closer to the goal of “minimum government, maximum governance”, but a good system encourages and nurtures talent from within instead of seeking to induct leadership from outside.
    2. The remedy to deficiencies in Indian civil services lies not through lateral induction but through more rigorous performance appraisal and improved personnel management.
    3. Entrusting the job of selection to a body supervised by a speacialised agency like the Union Public Service Commission would be the only alternative to ensure that merit is the sole criteria and no scope exists for preferential induction on grounds of region, community or ideological allegiance.

    Sources:

    http://www.livemint.com/Opinion/w9IUEN2qOv4OZxT8ofx4SK/The-need-for-lateral-entry-in-civil-services.html

    http://www.hindustantimes.com/analysis/should-the-government-allow-lateral-entry-into-the-civil-services/story-Q75UKek5TPGwCrMreb9G0I.html

    http://indianexpress.com/article/opinion/columns/the-case-for-lateral-entry-indian-administrative-service-ias-upsc-government-4788115/

    http://indianexpress.com/article/india/dopt-asked-to-prepare-proposal-on-lateral-entry-into-civil-services-department-of-personnel-training-4749693/

    Questions

    Q.1) The government’s recent proposal of bringing in lateral entry in civil services comes with its own advantages and criticisms. Discuss.

    Q.2) Considering the recommendations made by various committees that there exists a large deficit of civil servants at higher levels, do you suggest the idea of bringing in new recruits at middle and higher level. Critically analyse in view of recent debate going on about lateral entry in civil services.

  • Merger of Banks: Need & Challenges

    Note4Students:

    The talk of bank mergers is thicker in the air now, than never before. Government has started with merger of SBI and its subsidiaries. This merger has initiated a debate with some economist calling it a landmark decision while others believe that it will make the financial system more risky.

    Context:

    Recently The boards of State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), the unlisted State Bank of Hyderabad (SBH), State Bank of Patiala (SBP) and Bharatiya Mahila Bank approved the scheme of merger with State Bank of India.

    Background

    1. The various committees appointed by the Government of India have advocated consolidation They argue that we need to have three to four large nationalized banks in order to improve the operational efficiency and distribution efficiency. The Narsimhan committee ii has specifically emphasized the need to have Indian Banks which are comparable in size with global leading banks.. The Narsimhan committee proposed a three-tier banking structure in India with around 3-4 large banks to take a stand in global scenario,8-10 banks to provide national coverage and rest to take care of local coverage.
    2. Most of the mergers in the pre-reform period have been forced ones. The post-reform era has witnessed both forced and voluntary mergers. The forced mergers have been caused by the financial ill health of the acquired banks. Banks witnessing erosion in net worth, huge NPAs and decline in capital adequacy ratio have been forced by the regulatory authority to undergo merger. Oriental Bank of Commerce’s acquisition of Global Trust Bank is an example of forced merger. Voluntary mergers have expansion, diversification and growth as the main motives. HDFC’s acquisition of Times Bank and ICICI’s acquisition of Madura Bank are a few examples of voluntary mergers. India has also witnessed cross- border acquisitions in the recent past. SBI’s acquisition of a Mauritian bank is one such example.

    What is bank consolidation?

    1. Bank consolidation occurs when two or more banks become one bank. Bank consolidation can lead to expansion for the newly merged institution. Banks consolidate for multiple reasons, including to mitigate competition, gain capital power both domestically and internationally, to compete with larger banking institutions or to expand the services that the newly merged bank can provide both internally and geographically by decreasing overall operating costs.

    Why do we need Consolidation of Banks?

    1. Economies of scale: Assocham Survey has found that size of Indian banks in terms of their assets stands very small to make optimal use of their capacities to raise funds at internationally competitive rates. Combined assets of top ten banks constitute less than 60 per cent of the GDP unlike the banking system of European economies, where even after the global financial turmoil, assets of only top five banks has grown to four times of GDP.
    2. Indian Banks are too small: Even as India is the second largest growth market for banking services after China in terms of the number of wealthy households, the ASSOCHAM Chief said, only two Indian banks, State Bank of India at the 64th position and ICICI Bank Ltd at 81st, figure among the global top 100 by tier I capital – a core measure of a bank’s financial strength that consists largely of shareholders’ capital.
    3. Similarly, in terms of assets, India’s largest bank, SBI is now the world’s 70th largest bank. On the other hand, ICICI Bank Ltd, the largest private sector lender has attained the 148th position. None of the other Indian banks features among the top 200 banks in the world-in terms of size of assets.
    4. Many experts in Banking field feels that hampered by the fragmented nature of the banking industry, Indian banks are not able to compete globally in terms of fund mobilisation, credit disbursal, investment and rendering of financial services. The balance sheets of top 10 Indian banks suggest the greater scope of consolidation to reap the benefits of large sized globally competitive Indian banks
    5. Merger will increase Capital efficiency: Consolidation will also increase capital efficiency. Merged entity will have more leg room to raise capital.
    6. Would decrease NPA: At a time when NPAs are high, and banks are putting more effort in recovery, the ability to recover by smaller number of banks will be higher though a individual bank’s exposure may go up. This is because there are smaller number of voices 
 in the joint lenders’ forum today there are too many voices and each lender has a differential right with the borrower and they often not agree to a common recovery programme. With consolidation the recovery will be far more focused. Thus consolidation could decrease NPA in India.

    Advantages of merger of SBI with associate banks

    1. SBI will have global presence among top 50 Banks, bringing confidence, investment and greater lending.
    2. SBI can become one of the anchor banks to finance large infrastructure projects like dedicated freight corridor, solar energy, Sagarmala etc.
    3. It will increase networking of SBI all over India, thus better services of SBI compared to its associate branches will be able to reach remote locations.
    4. It will reduce duplication as SBI and its associates target the same clients with similar products.
    5. It will consolidate resources and infrastructure, reducing the cost on operations, human resource and technological solutions, overlapping bank branches, reduce inter-bank transaction cost etc.

    Disadvantages of merger

    1. Presently these banks have huge NPAs thus merger should be planned after sufficient capital is injected.
    2. Banking competition may be affected, as SBI is likely to be five times larger than its nearest competitor.
    3. RBI has declared SBI as Domestic Systemically Important Bank (D-SIBs) and its failure can shock other parts of financial system.
    4. Past example of large banks and their failure with financial crisis in Japan, USA, etc.
    5. Workers resistance from associations like AIBEA calling for strikes
    6. India has poor financial inclusion, thus needs variety of banks and differentiated services.

    Suggestions

    1. The govt should not rush through the process – all stakeholders must be involved in the process
    2. In the event of further divestment, the govt. share shall not fall below 51% in any case
    3. Acquiring bank shall not dominate the smaller ones- good practices of both should be combined; conscious and organized efforts to synthesize the differences must be made.

    Conclusion

    Bank consolidation is a tricky issue. While it is said that the long-term benefits of consolidation outweigh the short-term concerns, it must not be made a general policy. It is only to be done with right banks for right purpose with proper safeguards.

    (Q) What do You Understand by Bank consolidation? Do Indian Banking sector need banking consolidation? Highlight Pros and cons.

    (Q) Examine various implications of proposed merger of the State Bank of India with its five associate banks and the Bharatiya Mahila Bank.

     

     

  • Population and Associated Issues

    Introduction

    In demographics, the world population is the total number of humans currently living. The World is facing major challenge of rapid increase in human population since last many decades, (UNFPA, 2011). The world population was estimated to have reached 7.5 billion in April 2017. In various parts of globe, there is unparalleled rapid demographic change and the most noticeable example of this change is the vast expansion of human.

    It is expected that in near future, it will increase rapidly and give birth to numerous issues in the least developed regions. It is recommended that there is a desperate need to take urgent steps to control population otherwise serious problems can arise such as environment damage and restricted availability of food resources.

    Constant growth of population is a major issue and therefore it is significant to understand how policy makers can manage population growth for the benefit of society.

    Increase in population in India:

    Causes of Over Population:

    The two main common causes leading to over population in India are:

    • The birth rate is still higher than the death rate. We have been successful in declining the death rates but the same cannot be said for birth rates.
    • The fertility rate due to the population policies and other measures has been falling but even then it is much higher compared to other countries.

    The above two causes are interrelated to the various social issues in our country which are leading to over population.

    • Early Marriage and Universal Marriage System: Even though the marriageable age of a girl is legally 18 years, the concept of early marriage still prevails. Getting married at a young age prolongs the child bearing age. Also, in India, marriage is a sacred obligation and a universal practice, where almost every woman is married at the reproductive age.
    • Poverty and Illiteracy: Another factor for the rapid growth of population is poverty. Impoverished families have this notion that more the number of members in the family, more will be the numbers to earn income. Some feel that more children are needed to look after them in their old age. Also hunger can be cause of death of their children and hence the need for more children. Strange but true, Indian still lags behind the use of contraceptives and birth control methods. Many of them are not willing to discuss or are totally unaware about them. Illiteracy is thus another cause of over population.
    • Age old cultural norm: Sons are the bread earners of the families in India. This age old thought puts considerable pressure on the parents to produce children till a male child is born.
    • Illegal migration: Last but not the least, we cannot ignore the fact that illegal migration is continuously taking place from Bangladesh and Nepal is leading to increased population density.

    Effects of Over Population:

    Even after 67 years of independence, the scenario of our country is not good, due to over population. Some major impacts of high population are as follows:

    • Unemployment: Generating employment for a huge population in a country like India is very difficult. The number of illiterate persons increases every year. Unemployment rate is thus showing an increasing trend.
    • Manpower utilisation: The number of jobless people is on the rise in India due to economic depression and slow business development and expansion activities.
    • Pressure on infrastructure: Development of infrastructural facilities is unfortunately not keeping pace with the growth of population. The result is lack of transportation, communication, housing, education, healthcare etc. There has been an increase in the number of slums, overcrowded houses, traffic congestion etc.
    • Resource utilisation: Land areas, water resources, forests are over exploited. There is also scarcity of resources.
    • Decreased production and increased costs: Food production and distribution have not been able to catch up with the increasing population and hence the costs of production have increased. Inflation is the major consequence of over population.
    • Inequitable income distribution: In the face of an increasing population, an unequal distribution of income and inequalities within the country widen.

    Steps to Control Population in India

    Increasing the welfare and status of women and girls, spread of education, increasing awareness for the use of contraceptives and family planning methods, sex education, encouraging male sterilisation and spacing births, free distribution of contraceptives and condoms among the poor, encouraging female empowerment, more health care centres for the poor, to name a few, can play a major role in controlling population.

    India’s strengths in the global world in various fields cannot be ignored, whether in science & technology, medicine and health care, business and industry, military, communication, entertainment, literature and many more. Experts are hopeful that by increasing public awareness and enlisting strict population control norms by the Government will definitely lead the way for the country’s economic prosperity and control of population.

    • Social Measure: Population outburst is considered to be a social problem and it is intensely rooted in the civilization. It is therefore necessary to make efforts to eliminate the social iniquities in the country. Minimum age of Marriage: As fertility depends on the age of marriage therefore the minimum age of marriage should be raised. In India minimum age for marriage is 21 years for men and 18 years for women fixed by law. This law should be strongly implemented and people should also be made aware of this through promotion.
    • Raising the Status of Women: There are prevalent biases to women. They are restricted to house. They are still confined to rearing and bearing of children. So women should be given opportunities to develop socially and economically. Free education should be given to them.
    • Spread education: The spread of education changes the views of people. The educated men take mature decisions and prefer to delay marriage and adopt small family custom. Educated women are health mindful and avoid frequent pregnancies and thus help in lowering birth rate.
    • Adoption: is also effective way to curb population. Some parents do not have any child, despite expensive medical treatment. It is recommended that they should adopt orphan children. It will be helpful to orphan children and children to couples.
    • Social Security: is necessary for people. It is responsibility of government to include more and more people under-social security schemes. So that they do not depend upon others in the event of old age, sickness, unemployment with these facilities they will have no desire for more children.
    • Economic Measures: There has to be numerous economic measures taken as a preventive measure for population explosion. Government must devise policies for more employment opportunities. It is necessary is to raise the employment opportunities in rural as well as urban areas. Generally in rural areas there is disguised joblessness. Another economic measure for population control is the development of Agriculture and Industry. If agriculture and industry are correctly developed, huge number of people will get employment. When their income is increased they would enhance their standard of living and accept small family norms. Good standard of living is a deterrent to large family norm. In order to maintain their enhanced standard of living, people prefer to have a small family.
    • Urbanisation: process can reduce population increase. It is reported that people in urban areas have low birth rate than those living in rural areas. Urbanisation should be encouraged.
    • There is a need to follow strict birth control measures such as China has adopted the strategy to decrease the birth rate. But it is not possible to reduce technological advancements to decrease the death rate in India. In order to reduce the birth rate, several government-funded agencies like the Family Planning Association of India spend excessive funds to promote on family planning as a basic human right and the norm of a two-child family on a voluntary basis.
    • It is done to achieve a balance between the population size and resources, to get ready young people for responsible attitudes in human sexuality, and to provide education and services to all. The family planning methods provided by the family planning program are vasectomy, tubectomy, IUD, conventional contraceptives (that is condoms, diaphragms, jelly/cream tubes, foam tables) and oral pills.
    • Additionally, induced abortion is available, free of charge, in institutions recognized by the government to control population increase. However, the success of the family planning program in India depends on many factors such as literacy, religion and the region where the people live.

    Population policy followed in India since Independence

    After independence, a Population Policy Committee was created in 1952 which suggested for the appointment of a Family Planning Research and Programmes Committee in 1953.

    A Central Family Planning Board was created in 1956 which emphasized sterilization. Up till 1960s a rigid policy was not adopted to arrest the fast growth of population. The policy framed in 1951-52 was ad hoc in nature, flexible, and based on a trial and error approach.

    When the First Five-Year Plan was formulated, it was enumerated in the plan that the programme for family limitation and population control should:

    (a) present an accurate picture of the factors contributing to the rapid increase of population;

    (b) discover suitable techniques of family planning and devise methods by which knowledge of these techniques could be widely disseminated; and

    (c) give advice on family planning as an integral part of the service of government hospitals and public agencies.

    Until the Fifth Plan, family planning programme concerned itself primarily with birth control but in this plan ‘maternal and child health and nutrition services’ were also included as an integral part of family planning programme. Despite all the Five-Year Plans (from First to Tenth) and policies, the population of India is growing at a faster pace and taking the shape of ‘population explosion’.

    The striking growth rate of population compelled the government to adopt a relatively more clear and less flexible policy of population which can stabilize the growth rate. In 1961-71, the population growth rate was 2.25% which was highest in any decade after independence. At present (2001-2011), the population growth rate has declined to 1.50%.

    In April 1976, the First National Population Policy was framed by the Union Ministry of Health and Family Planning which suggested a wide spectrum of programmes including raising the statutory age of marriage, introducing monetary incentives, paying special attention to improving female literacy, etc.

    Though this policy was endorsed by the parliament, it was planned at a time when the Emergency was clamped all over India. Sanjay Gandhi, the then President of Indian Youth Congress, took the programme of sterilization overzealously which made the masses hostile towards the government led by Indira Gandhi as well as the programme. One of the reasons for this was said to be the excesses committed in the programme.

    There was an overall resentment among the people (as a result of which the Congress was voted out of power in elections held in March 1977). This incident defeated the whole purpose of the family planning programme. The enthusiasm of the people about birth control was also to some extent slackened. The later governments became extremely cautious about the implementation of programmes of family planning.

    The term ‘family planning’ was replaced by ‘family welfare’. While delivering a talk on ‘Indian Population in the 1990s,’ on February 8, 1991, the noted demographer Ashish Bose said that ‘family planning programme has completely failed in the country and entirely a new approach is needed for its success’.

    The progress to arrest population growth has been extremely slow as is evident when we compare it with China. Through vigorous family planning programme since 1970 and a more rigid policy of having only one child per family in 1980, China has avoided the birth of more than 200 million children and brought the fertility rate down to 2.5 from 5.82 among eligible mothers. This is a classic example of the role of government policy in affecting birth rate.

    To check the alarming population growth, an attempt has been made to rejuvenate the National Family Welfare Programme. The Ministry of Health and Family Welfare revised the strategy in the last decade of the 20th century seeking to broaden the area of family planning.

    It was emphasized that the population control programme would continue purely on voluntary basis as an integral part of a comprehensive policy package covering education, health, maternity and childcare, and women’s rights and nutrition, including anti-poverty programme. It was made people’s programme based on welfare approach.

    This revised strategy particularly focused on the provision of family planning strives at the doorsteps of the people. It is with this objective that the age of marriage is proposed to be raised for women from 18 to 20 years as envisaged in National Population Policy document, 2000, discussed later on.

    For raising the status of women, much emphasis on female education is also being given. Efforts are also being made to involve the voluntary organizations to promote family planning. As a part of family welfare and population control, the government has revised the PNDT Act in 2003, which was enacted in 1994. The main aim of the Act is to check female (embryo) infanticide.

    The 1990s, however, witnessed a marked shift in the approach of family planning programme in the country. The early years of the decade had seen intensification of women’s movement, both within and outside the country, in reaction to the overwhelming responsibilities imposed on women in family planning programme for achieving fertility reduction.

    The proponents of the movement were very critical of the approach and regarded the prevalent methods of birth control as an infringement on women’s fundamental rights. It was against this background that an expert group under the chairmanship of Dr. M.S. Swaminathan was appointed in August 1993 to prepare a draft on new population policy.

    The New Population Policy:

    Government of India introduced first National Population Policy in 1976, which focussed on reducing birth rate, lowering infant mortality rate and improving standard of life. The policy was revised in 1977 which focussed on:

    • No coercion for family planning
    • Minimum marriage age 18 years for females and 21 years for males.
    • Emphasis on awareness through education and media
    • Mandatory registration of marriages
    • Use of media for spreading the awareness about family planning among the rural masses.
    • Monetary compensation to those who opt for permanent measures of birth control (sterilisation and tubectomy).

    The National Population Policy 2000 provided a comprehensive framework to provide the reproductive and health needs of the people of India for the next ten years. It has fixed short term, medium term and long term goals as follows:

    • Short term goal: Addressing the unfulfilled needs of contraception and health care infrastructure. Provision of integrated service for basic reproductive and child health care.
    • Medium term goal: Bring down the Total Fertility rate.
    • Long term goal: To achieve a stable population by 2045.

    The government implemented the policy with involvement of local level bodies and voluntary sector with funds from central government.

    Critical Assessment of India’s Population Policy

    India’s national population policies have failed to achieve their objectives as we remain world’s second largest populated country. The population of India in 1951 was 35 crore, but by 2011, it had increased to 121 crore. There have been few shortcomings.

    • Firstly, the NPP have a narrow perspective, give much importance to contraception and sterilisation. The basic prerequisite of controlling population include poverty alleviation, improving the standards of living and the spread of education.
    • Secondly, on national scale the policy was not publicised and failed to generate mass support in favour of population control.
    • Thirdly, we have insufficient infrastructure owing to the lack of trained staff, lack of adequate aptitude among the staff and limited use or misuse of the equipment for population control resulted in failure of the policy.
    • Lastly, the use of coercion during the Emergency (1976-77) caused a serious resentment among the masses. This made the very NPP itself very unpopular.

    Conclusion

    To summarize, population escalation is a major issue around the world which has adverse impact on numerous environmental and human health problems. Population growth continue to increase in the world at a fast pace. As the population enlarges, many experts are concerned about its dangerous results.

    The growth rate of population is a function of migration, birth rate and death rate in a country. The change in population caused by net migration as a proportion of total population of the country is almost insignificant and, therefore, can be easily ignored. That leaves us with birth rate and death rate.

    The difference between the birth rate and the death rate measures the growth rate of population. Over populated regions need more resources. Population explosion causes deforestation for food production, urban overcrowding and the spread of horrible diseases.

    The effectual way to stop population growth is to implement family planning policies but the exact way to achieve that has created a great deal of disagreement. Several feasible solutions have been proposed by the government to curb population.