CBSE Class 12 Economics - Human Capital Formation in India

  • Human Capital Formation In India

The stock of skill and expertise of a nation at a point of time is referred to as the Human Capital or the sum total of all the workers engaged in the process of production is called Human Capital. 

DETERMINATION SOURCES OF HUMAN CAPITAL FORMATION

  1. Expenditure on Education - Returns of expenditure here are very large as it ensures that an individual will strive to achieve a good living in his life.
  2. Expenditure on Health - It makes an individual efficient and productive and therefore he adds to the GDP of a nation.
  3. On - the - Job Training - To help workers sharpen their skills and become specialized, it increases efficiency and productivity.
  4. Migration - facilitates the use of inactive skills of people. Gains of migration are greater than the cost of migration.
  5. Expenditure on Information - Utilisation of people’s productive potential. 

ROLE OF HUMAN CAPITAL FORMATION

  1. Change in Emotional and Material Environment of Growth:
  • Development of growth-oriented attitude
  • Contribution to society’s skilled worker's increases.

2. Higher Productivity of Physical Capital:

  • Output per unit of capital increases which helps to fasten the pace of growth.

3. Innovative Skills:

  •  Greater possibilities of innovations in the area of production.

4. Higher Rate of Participation:

  • Inducing greater employment through enhancing productive capacities of labour force.

PROBLEMS FACING HUMAN CAPITAL FORMATION IN INDIA

  1. Rising Population - The quality of life of the human capital is badly affected due to the increasing population as per head availability of existing facilities is reduced.
  2. Brain - Drain - The migration of people born, educated and trained in domestic country to developed countries is called Brain Drain it slows down the process of human capital formation.
  3. Deficient Manpower Planning - Graduate unemployment shows the wastage of manpower and skills.
  4. Insufficient On - the - Job Training in Primary Sector - Agriculture in India remains neglected in professional skills as conventional wisdom is dominant.
  5. Low Academic Standards - The academic standards are not up to the mark and therefore the competitiveness in the international market is hindered.

EDUCATION - ELEMENT OF HUMAN RESOURCE DEVELOPMENT

Education - is a process where an individual learns, gets training and improves and develops his skills through knowledge.

IMPORTANCE/ OBJECTIVES OF EDUCATION AND NEED FOR GOVERNMENT INTERVENTION IN EDUCATION AND HEALTH

  • It produces responsible citizens, develops human personality.
  • Expands the mental horizons of people and promotes cultural standards of people.
  • Greater participation enables economic development.

Government participation is necessary as both education and health require heavy investment and fixed expenditure. For people of the country cannot afford high prices for both and therefore government participation becomes a  necessity.

GROWTH OF EDUCATION SECTOR IN INDIA

  1. Expansion of General Education: The number of educational institutions facilitating elementary education increased five times and so did the enrolment of students increased tenfold.
  2. Elementary Education: Number of primary and middle schools increased. The major cause of educational backwardness is ugh socio-economical poverty.
  3. Secondary and Senior Education:  Navodya Vidyalaya established to give modern education to talented students belonging to rural areas and also provides boarding facilities. Kendra Vidyalayas by Central Government has been established to benefit the children of transferable employees.
  4. Higher Education: University Grants Commission regulates and guides higher education in India.  Several Universities and Colleges have been set up in the country.
  5. Vocalization of Secondary education: Vocational courses had been introduced in areas of agriculture, trade and commerce, medicines and health , engineering and technology. These courses prepare students for practical work in life.
  6. Rural Education & Adult and Female Education:
  • Children of scheduled castes and scheduled tribes are provided free education in all states.
  •  National Rural Higher Education Council ensures the expansion of education in rural areas.
  • Providing meaningful education to youth of age group 15 - 25 year and technical education to women.
  • Women Education Council to promote education among women.               

 7. Technical, Medical and Agricultural Education:

  •  New research centres set - up in the country like Indian Institute of Technology, Agricultural universities set - up to ensure awareness and growth in agriculture sector.

8. Total Literacy Campaign:

  • National Literacy Mission was launched to ensure that there is  total literacy in the country it was remodelled to Saakshar Bharat that focused mainly upon female education covering all those in the age group 15 and above.

WHY IS EDUCATION A CHALLENGING PROPOSITION IN INDIA

  1. Large Number of Illiterates: Around 36 crore people in India are illiterate making India a country with the largest number of illiterates.
  2. Inadequate Vocalisation: Degree - oriented education is the main reason for unemployment. Education largely is deficient of qualifications related to a certain profession imparting technical or practical knowledge.
  3. Gender - Bias: Female enrolment ratio is low when compared to male enrolment ratio. Drop - out ratio of females too is high.
  4. Low Rural Access Level: The rural population has less access to education compared to urban.
  5. Privatization: Expensive private education creates and increased the gulf between access level for rich and poor. Weaker sections remained excluded from the educational opportunities.
  6. Low Government Expenditure on Education: The actual expenditure on education by the  government remained as low as 4 - 5 percent.