NCERT Class 11 Economics Human Capital Formation In India

HUMAN CAPITAL FORMATION IN INDIA

5.1 INTRODUCTION

Think of one factor that has made a great difference in the evolution of mankind. Perhaps it is man’s capacity to store and transmit knowledge which he has been doing through conversation, through songs and through elaborate lectures. But man soon found out that we need a good deal of training and skill to do things efficiently. We know that the labourskill of an educated person is more than that of an uneducated person and hence the former is able to generate more income than the latter and his contribution to economic growth is, consequently, more. Education is sought not only as it confers higher earning capacity on people but also for its other highly valued benefits: it gives one a better social standing and pride; it enables one to make better choices in life; it provides knowledge to understand the changes taking place in society; it also stimulates innovations. Moreover, the availability of educated labour force facilitates adaptation of new technologies. Economists have stressed the need for expanding educational opportunities in a nation as it accelerates the development process.

5.2 WHAT IS HUMAN CAPITAL?

Just as a country can turn physical resources like land into physical capital like factories, similarly, it can also turn human resources like students into human capital like engineers and doctors. Societies need sufficient human capital in the first place—in the form of competent people who have themselves been educated and trained as professors and other professionals. In other words, we need good human capital to produce other human capital (say, doctors, engineers...). This means that we need investment in human capital to produce more human capital out of human resources.

5.3 SOURCES OF HUMAN CAPITAL

Investment in education is considered as one of the main sources of human capital. There are several other sources as well. Investments in health, on- thejob training, migration and information are the other sources of human capital formation.

Why do your parents spend money on education? Spending on education  by individuals is similar to spending on capital goods by companies with the objective of increasing future profits over a period of time. Likewise, individuals invest in education with the objective of increasing their future income. Like education, health is also considered as an important input for the development of a nation as much as it is important for the development of an individual. Who can work better—a sick person or a person with sound health? A sick labourer without access to medical facilities is compelled to abstain from work and there is loss of productivity. Hence, expenditure on health is an important source of human capital formation.

EXERCISES

1. What are the two major sources of human capital in a country?

2. What are the indicators of educational achievement in a country?

3. Why do we observe regional differences in educational attainment in India?

4. Bring out the differences between human capital and human development.

5. How is human development a broader term as compared to human capital?

6. What factors contribute to human capital formation?

7. Mention two government organisations each that regulate the health and education sectors.

8. Education is considered an important input for the development of a nation. How?

9. Discuss the following as a sources of human capital formation

(i) Health infrastructure

(ii) Expenditure on migration.

10. Establish the need for acquiring information relating to health and  education expenditure for the effective utilisation of human resources.

11. How does investment in human capital contribute to growth?

12. ‘There is a downward trend in inequality world-wide with a rise in the average education levels’. Comment.

13. Examine the role of education in the economic development of a nation.

14. Explain how investment in education stimulates economic growth.

15. Bring out the need for on-the-job-training for a person.

16. Trace the relationship between human capital and economic growth.

17. Discuss the need for promoting women’s education in India.

18. Argue in favour of the need for different forms of government intervention in education and health sectors.

19. What are the main problems of human capital formation in India?

20. In your view, is it essential for the government to regulate the fee structure in education and health care institutions? If so, why?

Please refer to attached file for NCERT Class 11 Economics Human Capital Formation In India