Question

What are various causes of slow growth of national income? Express in detail the economic factors affecting slow growth of national income.

Answer 1

The slow growth of national income can be attributed to various causes including economic, social, and political factors. Below is a detailed explanation of the economic factors affecting the slow growth of national income.

1. Lack of capital: One of the major obstacles to economic growth is the shortage of capital. Capital deficiency restricts productive capacity, retards investment, and limits employment opportunities. For example, capital formation rates in India are around 20%, which is lower than in more developed countries, where they exceed 35%. This low capital formation hinders growth and development.
2. Technological backwardness: Low productivity caused by outdated technology affects both the agricultural and industrial sectors. Even though some modern techniques exist in organized sectors, overall, the economy remains technologically backward, hampering productivity growth.
3. Excessive dependence on agriculture: A large portion of people (about 72%) depend on agriculture, which suffers from low productivity due to inadequate irrigation, power, and infrastructure. This excessive dependence limits industrial growth and income diversification.
4. Lack of skilled labour: The scarcity of trained and skilled workers creates a bottleneck for industrial and technological advancement. Many industries struggle to find sufficiently skilled personnel, reducing efficiency and output.
5. Under-utilisation of resources: Many private and public sectors do not use their full production capacity. Natural resources remain under-exploited, resulting in lower output and national income.
6. Lack of employment opportunities: High unemployment or underemployment keeps many people without income sources, thereby lowering the national and per capita income.