Economics

Chapter 2- People as Resource

Q. What is meant by human capital? When does population become human capital?
1. Human capital is the stock of skill and productive knowledge embodied in people of a
country.
2. Population becomes human capital when there is investment made in the form of
education, training and medical care.
3. When the existing 'human resource' is developed by becoming more educated and
healthy.
4. 'Human capital formation' that adds to the productive power of the country like 'physical
capital formation'.
Q. What do you understand by 'people as a resource'?
1. 'People as Resource' is country’s working people in terms of their existing productive
skills and abilities.
2. The population which is productive contributes to the Gross National Product.
3. Like other resources population is also a resource — a 'human resource'. This is the
positive side of a large population; we look only at the negative side, considering only the
problems of providing the population with food, education and health facilities.
4. When the existing 'human resource' is further developed by becoming more educated and
healthy, it is 'human capital formation' that adds to the productive power of the country
just like 'physical capital formation'.
Q. What is Gross National Product or National Income?
Gross national product (GNP) is a measure of a nation's total economic activity. GNP is the
value of all finished goods and services produced in a country in one year by its citizens.
HOW IT WORKS (EXAMPLE):
1. GNP includes income earned by citizens and companies abroad, but does not include
income earned by foreigners within the country.
2. The figures used to assess GNP include the manufacturing of goods (cars, furniture and
agricultural products) and services (education, healthcare, and business services).
3. GNP does not include the services used to produce manufactured goods because their
value is included in the price of the finished product.
The formula for GNP is:
Consumption + Government Expenditures + Investments + Exports + Foreign Production by
Companies – Domestic Production by Foreign Companies = Gross National Product

Q. Give two examples of how the human capital has brought phenomenal changes in the
Indian economy.
a) Green revolution: It started in the late 1960s. It brought about increase in the crop
production. It was primarily brought out by the application of the human mind and
knowledge in cultivation.

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 b) Information Technology: It is relatively a new phenomenon. It has been brought out by
the application of human skills and knowledge. It has totally changed the way the information is
generated and distributed.
Q. Give two examples to prove that investment in human capital yields a rich return.
1. Investment in human capital through education, training, medical care yields a return just
like investment in physical capital.
2. This can be seen directly in the form of higher incomes earned because of higher
productivity of the more educated or the better trained persons, as well as the higher
productivity of healthier people.
Q. How is human resource different from other resources like land and physical capital?
OR
Q. Prove by giving example that population is an asset for the economy rather than a liability.
1. Human capital is superior to other resources like land and physical capital: human resource can
make use of land and capital.
2. Land and capital cannot become useful on its own.
3. A large population need not be a liability (burden). It can be turned into a productive
asset by investment in human capital.
4. For example, by spending resources on education and health for all, training of industrial
and agricultural workers in the use of modern technology, useful scientific researches,
etc.

Q. What is the role of education in human capital formation?

1. Education adds to the quality of labour. This enhances total productivity. Total
productivity adds to the growth of the economy.
2. Investment in human resource via education and medical care can give high rates of
return
in the future. This investment on people is the same as investment in land and capital.
3. A large population need not be a liability. It can be turned into a productive asset by
investment in education and health for all, training of industrial and agricultural workers in the
use of modern technology, useful scientific researches, etc.
4. Education helps individual to make better use of the economic opportunities available to
him.
5. Education and skill are the major determinants of the earning of any individual in the
market.

Q. What is the role of health in human capital formation?

i) Health adds to the quality of labour. This enhances total productivity. Total productivity adds
to
the growth of the economy.
ii) Investment in medical care can give high rates of return in the future. This investment on
people is the same as investment in land and capital.
iii) A large population need not be a liability. It can be turned into a productive asset by
investment in health for all, training of industrial and agricultural workers in the use of modern
technology, useful scientific researches, etc.

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Q. How does education create a virtuous cycle and a vicious cycle of development?
Virtuous cycle:
1. A child with investments made on education and health can yield (supply with) a high
return in the future by higher earnings and better contribution to the society.
2. Educated parents are found to invest more heavily on the education of their
child because they have realized the importance of education for themselves.
3. They are aware of proper nutrition and hygiene. They look after their children’s needs for
education and good health.
Vicious cycle:
1. A vicious cycle may be created by disadvantaged parents who themselves are uneducated
and lacking in hygiene and keep their children in a similar disadvantaged state.
2. Illiterate and unhealthy population is a liability for the economy.

Q. How did Japan become a rich country in spite of shortage of natural resources?
OR
Give example of a developed country which is poor in natural resources but rich in human
capital?
1. Countries like Japan have invested in human resource. They did not have much natural
resources.
2. They import the natural resources needed in their country. They have invested on
people in the field of education and health.
3. These people have made efficient use of other resource like land and capital.
4. Efficiency of people and the technology have made these countries rich/developed.

Q. What are the various activities undertaken in the primary sector, secondary
sector and tertiary sector?

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Primary sector includes agriculture, forestry, animal husbandry, fishing, poultry farming.
Secondary sector: Mining, Quarrying, manufacturing. Textile industry is an example of
secondary sector.
Tertiary sector: The activities in this sector result in the production of goods and services. E.g.
Trade, transport, communication, banking, education, health, tourism, services, insurance etc.
These activities add value to the national income and are also called the economic activities.

Q. What are the two parts of economic activities? Or Distinguish between marketed and
non- marketed activities.
Economic activities have two parts — market activities and non-market activities.
Market activities involve remuneration to anyone who performs i.e., activity performed for pay
or profit. These include production of goods or services including government service.
Non-market activities are the production for self-consumption. These can be consumption and
processing of primary product and own account production of fixed assets.

Q. What is the difference between economic activities and non-economic activities?

Economic activities: All activities that generate income are called economic activities. All
activities in primary, secondary and tertiary activities are economic activities. These are normally
paid. Carpenters work, farmers work, teacher’s job etc.
Non-economic activities are those activities that do not generate any income. Helping the poor
people, charity activities, doing work freely are non-economic activities.

Q. Describe the division of labour between men and women in the family?

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 1. Due to historical and cultural reasons there is a division of labour between men and
women in the family.
2. Women look after domestic chores and. cooks food, cleans utensils, washes clothes,
cleans the house and looks after her children.
3. Men work in the fields, sell the produce in the market or engage in any work outside and
earn money for the family.

Q. How are women exploited in unorganized sector? Or What are the problems faced by
women in employment sector? Or Why are women employed in low paid work?
1. A majority of the women have meager education and low skill formation. Women are
paid low compared to men.
2. Most women work where job security is not there. Various activities relating to legal
protection are meager.
3. Employment in unorganized sector is characterized by irregular and low income.
4. In this sector there is an absence of basic facilities like maternity leave, childcare and
other social security systems.

Q. What determine the quality of population?

1. The quality of population depends upon the literacy rate, health of a person indicated by
life expectancy and skill formation acquired by the people of the country. The quality of
population ultimately decides the growth rate of the country.
2. Illiterate and unhealthy population is a liability for the economy. Literate and healthy
population is an asset.

Q. What are the various measures taken by the government to spread education in India?
1. There is a provision for providing universal access, retention and quality in elementary
education with a special emphasis on girls.
2. There is an establishment of pace setting of schools like Navodaya Vidyalaya in each
district. Vocational streams have been developed to equip large number of high school students
with occupations related to knowledge and skills.
3. ‘Sarva Shiksha Abhiyan’ is a step towards providing elementary education to all
children in the age group of six to fourteen years.
4. Bridge courses and back-to-school camps to increase the enrollment in elementary
education.
5. Mid-day meal scheme to encourage attendance and retention of children and improve
their nutritional status. These policies could add to the literate population of India.

** [PG 21 BOOK Q ANS

(a) Has the literacy rate of the population increased since 1951? (b) In which year India had the
highest literacy rates? (c) Why literacy rate is high among the males of India? (d) Why are
women less educated than men? (e) How would you calculate literacy rate in India? (f) What is
your projection about India’s literacy rate in 2010? Ans.(a) Yes. (b) In 2001. (c) Males in India
are provided better educational opportunities. (d) Because of sex discrimination, females are not
treated at par with males. Females are not provided equal educational opportunities. (e) Literacy
Rate = Total literate people in the age group of 17 years and above/ Total number of people in

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the age group of 17 years and above (f) India’s literacy rate may rise to nearly 75 percent. Kerala
has the highest literacy rate while Bihar & Madhya Pradesh has the lowest.]**

Q. What is the target of tenth five year plan in the field of education?
The tenth plan target was:
1. To increase the enrollment in higher education of the 18 to 23 years.
2. The strategy focuses on increasing access, quality, and adoption of states-specific
curriculum modification.
3. Vocationalisation and networking on the use of information technology.
4. The plan focuses on distant education, formal, non-formal, distant and IT education
institutions.
5. Since last fifty years there has been growth in the number of university and institutions of
higher learning in specialized areas.

Q. What part does health play in the individual’s working life?

1. The health of a person helps him to realize his potential and the ability to fight illness.
2. It increases the longevity of life and increases self-confidence. It also reduces infant
mortality rate.
3. An unhealthy person becomes a liability for an organization. improvement in the health
status of the population has been the priority of the country:
a) Health adds to the quality of labour. This enhances total productivity. Total
productivity adds to the growth of the economy.
b) Investment in medical care can give high rates of return in the future.

Q. What is the aim of India’s national health policy?

4. Our national policy, aimed at improving the accessibility of health care, family welfare
and
nutritional service with special focus on underprivileged segment of population.
5. India has built up a vast health infrastructure and manpower required at primary,
secondary and tertiary care in Government as well as in the private sector.

Q. Define infant mortality rate (IMR)

Infant mortality rate is the death rate of a child under one year of age.
Infant Mortality Rate is decreasing due to following reasons:
a) Increase in life expectancy due to improved medical facilities.
b) Better protection of children from infection, ensuring nutrition along with mother and
child care.

Q. Define life expectancy.

Life expectancy is the average length of a human being, which is the same as the expected age at
death. Life expectancy means the expected time remaining to live.

***Definitions from book pg 23 Birth rate, Death Rate

Q. Explain the term unemployment?

Unemployment is when people who are willing to work at the going wages cannot find jobs.

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Q. What is the difference between disguised unemployment and seasonal unemployment?
Seasonal unemployment:
a) when people are not able to find jobs during some months of the year. People dependant
upon agriculture usually face problem.
b) There are certain busy seasons when sowing, harvesting, weeding, threshing is done.
c) Certain months do not provide much work to the people dependant on agriculture.
Disguised unemployment
a) People appear to be employed. They have agricultural plot where they find work.
b) This happens among family members engaged in agricultural activity.
c) The work requires the service of five people but engages eight people. Three people are
extra. These three people also work in the same plot as five people.
d) The contribution made by the three extra people does not add to the contribution made by
the five people. If three people are removed the productivity of the field will not decline.

Q. Why is educated unemployed, a problem of India?

OR
Q. What is the paradoxical manpower situation in India?
1. In urban areas educated unemployment is very common.
2. Literacy rate in India has increased. Many youth with matriculation, graduation and post-
graduation degrees are not able to find job.
3. Unemployment of graduate and post-graduate has increased faster than matriculates.
4. Surplus of manpower in certain categories co-exist with shortage of manpower in others.
5. There is unemployment among technically qualified person on one hand, while there is a
shortage of technical skills required for economic growth.

Q Is there any difference between unemployment in rural and urban areas?

Yes the nature of the unemployed differs in rural and urban area:
1. In Rural areas there is seasonal and disguised unemployment.
2. Urban areas have mostly educated unemployment.

Q. What are the consequences of unemployment?

OR
Q. How does unemployment adversely affect the economy?
1. Unemployment leads to wastage of manpower resource. People who are an asset for the
economy turn into a liability.
2. There is a feeling of hopelessness among the youth. People do not have enough
money to support their family.
3. Inability of educated people who are willing to work to find gainful employment implies
a great social waste.
4. Unemployment tends to increase economic overload. The dependence of the
unemployed
on the working population increases. The quality of life of an individual as well as of society is
adversely affected.

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 5. When a family has to live on a bare subsistence level decline in health status and
withdrawal from the school system. Hence, unemployment has detrimental impact on the
overall growth of an economy.
6. Increase in unemployment is an indicator of a depressed economy. It also wastes the
resource, which could have been gainfully employed. If people cannot be used as a resource,
they naturally appear as a liability to the economy.

Q. Why is the unemployment rate in India lower than the actual situation?
1. In case of India, the unemployment rate is low. A large number of people having low
income and productivity are counted as employed.
2. They appear to work throughout the year but in terms of their potential and income, it is
not sufficient for them. The work that they are pursuing seems forced upon them. They
may want other work of their choice.

Q. How is the hardship of unemployment in rural sector reduced?

1. Poor people cannot afford to sit idle. They tend to engage in any activity irrespective of
how much they earn. Their earning keeps them on a bare subsistence level.
2. The employment structure in the primary sector is self-employment. The whole family
contributes in the field even if everybody is not needed.
3. So there is disguised unemployment in the agriculture sector. Whole family shares in the
produced. This concept of sharing of work in the field and the produce reduces the
hardship of unemployment in the rural sector.

Q. Can you suggest some measures in the education system to mitigate the problem of the
educated unemployed?
Measures to Reduce Educated Unemployment:
1. The education system in India is not employment oriented. There is too much emphasis
on general education rather than vocational education.
2. More employment exchange offices may be opened in the country. These employment
exchanges do not directly provide employment; they are of great assistance in directing
the educated job seekers to the possible areas of employment.

Q How has the employment scenario changed in India in recent decades?

OR
Discuss about the employment scenario in the three sectors in India
1. Primary Sector: Agriculture is the most labour absorbing sector of the economy. In
recent years, there has been a decline in the dependence of population on agriculture
partly because of disguised unemployment. Some of the surplus is moving from primary
to secondary or tertiary sectors.
2. Secondary Sector: Small scale manufacturing units absorb most of the labour in
secondary sector.

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 3. Tertiary Sector: Various new services have started employing labour in tertiary sector
like biotechnology, information technology and so on.

Q. Suggest any three ways to transform population load into an asset.

The three ways to transform population load into an asset are:
1. To improve literacy rate: Education provides new aspirations and developed values of
life. Education helps in enhancing the national income, cultural richness and increases the
efficiency of governance.
2. Health: The health of a person helps him to realize his potential and the ability to fight
illness. Increase in longevity of life in an indicator of good quality of life marked by self-
confidence. It involves protection of children from infection, ensuring nutrition and along
with mother and child care.
3. Formation of skills: Providing vocational and skilled based education helps the people
to get employment and therefore they contribute to the national income later on.