Human Capital Formation in India | Latest updated notes |

 HUMAN CAPITAL FORMATION 

IN INDIA 

It refers to the stock of skills and knowledge gained by a worker through education and experience to perform a labour so as to produce economic value.  

SOURCES OF HUMAN CAPITAL

1) Investment in Education 

The best source for the formation of human capital is education. The goverment must spend on education policy and the guardians must send their child in school atleast for their primary education. As this is also the fundamental right of everyone to pursue primary education according to Article 21  of the Indian Constitution.

2) Investment in Health 

Money should spent on : Preventive medicine, Curative medicine, Social medicine, Clean water & Sanitation. 

3) On the Job Training 

To enchance labour productivity job training can be provided in 2 ways : 

(i)  Trained itself within the firm under the supervision of a skilled worker.

(ii) May sent for off-campus training.

4) Migration 

People used to migrate for higher salaries from one place to other place.

5) Information 

For becoming a better human resource a person must have the knowledge about the level of salaries in various types of jobs so that he/she may develop skills as per the requirement and qualifications desired by companies in the national and international market.

PHYSICAL AND HUMAN CAPITAL  

Physical Capital : 

• Physical capital is a tangible capital which can be touched and sold in the market.
• It is seperable from its owner, It has mobility.
• Depreciation and new technology will make it obsolete.
• It only creates private benefits.

Human Capital :

 

• Human capital is Intangible and can not be sold in the market separately.
• It is in the body and mind of its owner .
• Service of human capital can be sold in the market with the presence of its owner.
• Non-mobility due to the citizenship and culture.
• It includes a depreciation factor due to ageing it can be reduce by health-care and investment in education too.
• Creates private and social benefit.

HUMAN CAPITAL AND ECONOMIC GROWTH 

• Economic growth means increase in the Real National Income of a country.
• Health, an important factor in economic development as healthy one provide uninterrupted labour supply.
• The availability of educated labour force facilitates the adoption of new technology.

NOTE: To prove that increase in human capital causes economic growth is not clear as the human capital growth in the developing countries has been faster but the growth of Per-capita real income has not been that fast.

HUMAN CAPITAL AND HUMAN DEVELOPMENT  

• Human capital considers education and health as a means to increase labour productivity.
• Human development is based on idea that education and health are the integral to human well-being because only when the people have the ability to read and write and a ability to lead a long and healthy life, they will be able to make other choices which they value.

STATE OF HUMAN CAPITAL FORMATION IN INDIA

Human capital formation is the outcome of investments in education, health, on-the job training, migration and information.

Education and health care services create both private and social benefits.

Individual consumers of these services (students and patients) do not have complete awareness about the quality of services and their costs. In this situation the providers of such services may acquire monopoly power and can involve in exploitation of such users.

 The role of goverment is to ensure that the private providers of these services adhere the standards fixed by the goverment and charge the fair price.

To keep an eye in India ; The Ministries of Education at the Union and State level.

Department of Education ; Various organisations like : NCERT, UGC, AICTE comes under the Education sector.   

Department of Health , National Medical Commission and ICMR comes under Health sector.

In developing country like India, with a large population living below the poverty line cannot afford the access to basic education and health care facilities.

FUTURE PROSPECTS  

~ Education for all - Still a distant dream 

   In 1950 our Constitution comes into force and in Directive Principles of State Policy it is mentioned to provide Free Education to children of 1-14 years.

~ Gender equality - Better than before  

                                                                                                    

   Difference in literacy rates between male and female are narrowing which reflects the  positive development in Gender equality. Still the need to promote the education for women in India ; reasons such as economic independence and social status of women , favorable impact on fertility rate and health care of women and children. 

~ Higher Education - a few takers 

                                                                       

   Indian education pyramid is a little bit steep indicating lesser and lesser number of people reaching the higher education level. ''Unemployment among the educated youth is highest'' (Can you answer in the comment section why ? )

As per the  NSSO Data on Unemployment (Read page no. 27) in the year 2022-23.

The unemployment among ;

 

• Youth ⚦ (graduated) in rural   10%
• Youth ⚦ (graduated) in urban  18%
• Youth ♀ (graduate) in rural     15%
• Youth ♀(graduate) in urban     25%

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