HUMAN CAPITAL FORMATION IN INDIA

BY:- Mrs.Anuja Sharma

PGT Economics

Kendriya Vidyalaya Birpur

CONCEPTS:-

• Concept of Human Capital and Human Capital Formation
• Determinants/Sources of Human Capital Formation
• Role of Human Capital Formation

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Human Capital Formation and Economic Growth

• Problems Facing Human Capital Formation in India
• Education as an Essential Element of Human Resource Development

CONCEPT OF HUMAN CAPITAL AND HUMAN CAPITAL FORMATION

Human capital refers to the stock of ‘skill and expertise of a nation at a point of time. It is the sum total of skill and expertise of engineers, doctors, professors and workers of all types who are engaged in the process of production.

HUMAN CAPITAL FORMATION

Human Capital Formation

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It is the process of adding to the stock of human capital over time. If 'human capital stock' of a nation consists of 10,000 skilled workers at the beginning of 2018 , and if at beginning of 2019 it increases to 12,000 skilled workers (implying an increase of human capital stock by 2,000 workers in a year) there is human capital formation to the extent of 2,000 skilled workers in a year.

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�"Human Capital Formation is the process of

aacquiring and increasing the number of persons

who have the skill, education and experience

which are essential for the economic and

political development of a country".�

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- G.M.Meier.

DETERMINANTS/SOURCES OF HUMAN CAPITAL FORMATION

1. EXPENDITURE ON EDUCATION
2. EXPENDITURE ON HEALTH
3. ON THE JOB TRAINING
4. STUDY PROGRAMME FOR ADULTS
5. MIGRATION
6. EXPENDITURE ON INFORMATION

1.EXPENDITURE ON EDUCATION

Expenditure on education is the most effective way of raising a productive workforce in the country.

Education enables an individual to make a good living throughout his life . His total earning during his life span would far exceed his initial expenditure on education.

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EXPENDITURE ON HEALTH

• “A sound mind in a sound body” is an old saying. Expenditure on health makes a man more efficient and , therefore, more productive. He adds more to GDP of the nation than a sick person .

ON -THE- JOB TRAINING

• On-the-job training helps workers to hone/sharpen their specialized skills. It enables them to raise the level of their efficiencies/productivity.

STUDY PROGRAMMES FOR ADULTS

• Other than formal education at the primary, secondary and university levels, the governments and NGOs organise study programmes for adults to make them proficient in their work areas. This enhances their productivity, serving as a source of human capital formations .

Expenditure on Information

• Expenditure on information relating to the labour market and other markest is also a source of human capital formation. It enables people to actualise their productive potential. People spend to get information about the salaries,working hours,working conditions and other facilities associated with various types of jobs.

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MIGRATION

• Migration contributes to human capital formation as it facilitates utilisation of (other wise) inactive skills of the people, or it facilitates fuller/ better utilisation of skills.

Human Capital Formation and Economic Growth

• Human capital formation increases in the stock of human capital.
• Stock of human capital leads efficient utilisation of physical capital.
• It leads increase in productivity.
• Increase in productivity gives growth to GDP along with higher rate of participation of workers.
• Higher rate of participation of workers leads higher level of income.
• Higher level of income of the individuals leads higher expenditure on education and health.
• Thus, healthy and educated individuals are the best indicators of economic growth of the country.

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PROBLEMS FACING HUMAN CAPITAL FORMATION IN INDIA

• Rising Population

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• BRAIN DRAIN-

• DEFICIENT MANPOWER PLANNING-

• LOW ACADEMIC STANDARD�

• POVERTY

EDUCATION AS AN ESSENTIAL ELEMENT OF HUMAN RESOURCE DEVELOPMENT

• It improves knowledge and develops skills.
• It makes responsible citizens.
• It expands mental horizon of the people.
• It helps in economic development.
• It promotes cultural standard of the citizens.
• It develops human personality.

EDUCATION AND LITERACY ARE NOT IDENTICAL TERM��1.Education is a much wider concept than literacy.��2.Literacy just refers to the ability to read and write.��3.Education, on the other hand has three parameters, viz primary education, secondary education and tertiary or higher education.��4.While all educated people are literate, all literate people are not necessarily educated.

Problems Relating to Development of Education in India

• Large Number of Illiterates: Presently, nearly 36 crore people are estimated to be illiterate.

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• Inadequate Vocationalisation: Education continues to be largely degree-oriented throwing millions of educated youths down to the corridors of employment exchanges.

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• Gender Bias: There is still a significant ‘gender-bias’ in offering opportunities of education to male and female children.

Problems Relating to Development of Education in India

• Low Rural Access Level: The ‘access level’ is considerably low for the rural population compared to the unbans.

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• Privatisation: There is a growing trend towards privatisation of education being very expensive.

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• Low Government Expenditure on Education: The government has failed fulfil its commitment of spending nearly 6 percent of GDP on education: actual expenditure has been around 4-5 percent only.

Multiple Choice Question: Choose the Correct Options

The ability to read and write is known as:

a) Education b) Human capital

b)Literacy d) Human development

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Ans:- Literacy

As per census 2011, the literacy rate in rural India is about:

a) 74% b) 85%

c) 69% d) 60%

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Ans:- 69%

Multiple Choice Question: Choose the Correct Options

Female literacy rate in India is:

a)75% b) 85%

c) 70% d) 66%

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Ans:- 66%

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Overall literacy rate(census 2011) in India is:

a)74% b)56%

c) 65% d) 60%

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Ans:- 74%

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Multiple Choice Question: Choose the Correct Options

_____ education cess has been imposed by the government on all union taxes:

a) 3% b) 4%

c) 10% d) 2%

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Ans:- 2%

Indicators of educational achievement:

a)Primary education b)Youth literacy rate

C)Adult literacy rate d) All of these

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Ans:- All of these

Multiple Choice Question: Choose the Correct Options

A person becomes a human resource when he is:

a)Willing to work b) Able to work

c) In the age group 15-60 years d) All of these

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Ans:-All of these

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Indicator of growth of education sector:

a)Life expectancy rate b) Infant mortality rate

c)Literacy rate d) None of these

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Ans:- Literacy rate