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4

HUMAN CAPITAL C, -
2

FORMATION IN INDIA I
'
0 ;;;
-2 0
N N
N

-4
Years
-6

@po us!)
-6 (-7.2)

o<$ ~.:..;,;;'.i;...,r,11~
-''

concepts of Human Resource, Human Capital ·

s= 0 Formation and Human Development
s= sources of Human Capital
0
P
0 Human Capital Formation and Economic Growth
:s=
0 Problems facing Huma~ Capital Formation in India ['

:s=
0 Education as an Essential Element of Human
Resource Development t;,~~ , , ·
:s;i' " ""'* . ,.... '."·

FOCUS
Human capital (skill and expertise of human beings) is as significant as physical capital (plant
and machinery) in the context of economic growth rather more. Because, besides contributing
to GDP growth, human capital also contributes to human development (achievement of human
beings on the basis of their skill and expertise). The chapter explains the concepts of human
resource, human capital formation and human development. It brings out the significance of
human capital formation for economic growth. Also, it highlights how education is an important
element of human resource development. Problems facing human capital formation in India are
brought to the fore.

1. CONCEPTS OF HUMAN RESOURCE,

HUMAN CAPITAL FORMATION AND
HUMAN DEVELOPMENT
Human Resource
Buman r
cont 'b esource refers to abilities (skill and expertise) of human beings to
E n Ute to th e process of value-addition in the economy.
l:atn.ple:
has th Farm.er h as th e ability to grow food and an agricu1tur al sc1ent1st
. .
has the abili ty to give
.
us HYV (high vielding variety seeds). Likewise, a doctor
e abili J ~
tn.ed,j • ty to cure patients while a pharmacist h as the ability to prepare
Cines as prescribed by the doctor.
 •.. -,

tlUIJlall caP Human Capital Formation In lnclla'

ita! is a means to an end: it is a means in the process
Indian Economic Development "1"'··o,n
P . th• ,oonomy. H,m,n dev,Jop,_t, oo th, othe, hand,
coll 1ll ' fh b · · · If•
~110 dditl 'killane d xpertise o uman emgs 1n ltse 1s an achievement '
ell
of" d·"'.,Jt'
ecn
·ts
1 contn
( ·th s
"bution in th, '"""' of "'1.. Th.,, ., ·•dd••°'·
jslll1 ·ve of kill and expertise) leads a more meaningful and more
te ,.,, the one .
irresF d .,.,an Yvl who is not. An educated man enjoys varied and
.sfying .n life (w
.J""
saO .choices life ti,,n
1 • hich tend to enh,nc, Ju, We!f..,) than th, oo, who ra

t
wider to an end ' human capital is linked With value-addition.
., . ., , m - . h=md~elopm,m•u•••d'>ofhwn,ow,1fare,
d ,nd•res,lu~• ' . •• th, p,oc.,, of ""•Ndditioo.
AJJ' as all·veof1tsc
s,idlY, . ontnbut1on
jrrespecO

Skill and Expertise-The Core Dete PHYSICAL CAPITAL AND HUMAN CAPITAL: THE DIFFERENCE
....,
""' sn,c1ents shou. lei 0also
ed. ',.,
In terms
f theunderstand the distincti on between human capital and physical capital which is
foUowing observations:
highUght , . .
Human Capital Formation
' kill and expertise' of a nation at - Physical Capital
Human capital refers to the stock Of s . a point of Human Capital
time. It is the sum total of skill and expertise of engineers, doctors, professors Physical capital refers to the produced
t. Meaning
and workers of all types who are engaged (or have the capacity and expertise means of production. Hum_an capital refers to skill and expertise
acquired by man over time.
to be engaged) in the process of value-addition. · 2. Process of The decision to invest in physical capital
is taken by the owner after considering The decision to invest in human capital is
Human capital formation is simply the process of adding to the stock of human Fonnation
not taken after calculating the returns on
the expected rate of returns from the
capital. While human capital is a stock concept, human capital formation isa mvestment. lt is taken due to influences
investment Thus, it is an economic and
flow concept. Thus, human capital formation occurs when more doctors are of peers, educators and society. Thus, it is
technical process.
largely a social process.
produced and when more & more engineers are added to their existing stock
3. Tangibility ' Physical capital is tangible, and can be sold
in the economy. Human capital is intangible, it cannot be sold
''! ii. in the market like any commodity. m the market like a commodity. Only the
Example: If'human capital stock' ofanation consists ofl0,000 skilled workers services are sold.
at the beginning of 2022, and if at the beginning of2023 it increases to 12,000 4. Separability from Physical capital is separable from owner, Human capital is inseparable from its owner;
skilled workers (implying an increase of human capital stock by 2,000 workers Owner meaning presence of owner is not essential therefore, it is essential that the owner be
in a year), there is human capital formation to the extent of 2,000 skilled in the place of production. present at the place where the services are
being sold.
workers in a year . ,~.,
5.Mobility Mobility of physical capital across borders
.J ) • • •J \ "' X_-,... I . ~ - - - _ 711 Movement of human capital is restricted by
is restricted mainly due to trade barriers; nationality and culture; it is not perfectly

J
otherwise, it is completely mobile. mobile.
I ( Human Capital Formation is the process of acquiring and increasing the number
6. Depreciation Depreciation occurs with ageing, but can
' tof persons who have the skill, education and experience which are essential for the Depreciation cannot be avoided,
continuous use of physical capital leads to be avoided with continuous investment in
Ill.,economic and political development of a country." .
education, training and health. Investment in
ti •- -G.M.Me1er depreciation; innovation may also lead to
obsolescence of physical capital. regular training to keep up with innovations
G.M. Meier helps human capital avoid depreciation.
7. Benefits Created Human capital creates private as well as
The benefits of physical capital flow from
social benefits (or external benefits). Human
Human Development the buyer to producer; thus, only private
capital not only creates economic benefits for
. . · (skill benefits are created.
. al' and 'human development' are re1ate d to ab11ines the ,
Both 'human cap1t the owner, but also leads to socio-economic
. ) . . . n between benefit of society at lar_g_e.
and expertise of human beings. Yet, there is a clear d1stmct1o

[]JS ]I
l3TI
i
 •ob-tra1·ning can take different forms: Human Capit al Format ion in India
nic oevetoprnent on-the-J
2. souRCES Of HUMAN CAPITAL rkers m ay be trained in the firms itself under the supervi·s·ion of
w,okilled
(i) worker.
as
sources of bu01an capital (also called determinants of human my.ca .S0 ,rt
the ways of adding co the stock of human capital in the econo pita!) ref. .. Workers m ay be sent for some
. off-campus training.
. s~~r
imP'"'"' w•~ ,r,ddiog '° ""
,,,k of bum• • capiW ,re , "'• of ' (!1) ·rms pre1er
c to retain the. tramed
. Workers with a view to eni·oving
,.
(1) Eiq,end1ture on Education: E · Thebenefits
fi
education is the most effect"ive wa
xpenditure o o fhigner productivity.
a productive workforce in the c Y of ra1s1n ·. n the diture on such training programmes, therefore,
. is yet another
1
therefore, a very important <letountry. t 1_g . ortant dete nninant (and a source) of human capital formation.
£xpen
human capital formation . ermina nt ofs,
!Ill~ Progra
, mmes for Adults: Other than formal education at the
(4)
Most families decide to mcurhu
. Study secon d a ry and university levels, the Government and NGOs
on education, even wh ge expend·
- I en they h itu prima?', st ' rogrammes for adults to make them proficient in their
1se udy P · d · · · f
k-- _,- ""'· R~ro•·. R,rums ''° '° ,,' organ ·
ork areas. This enhances their pro uct1V1ty, servmg as a source o

.
:i •
' ""'~" , _ - • e. on su h itur
· s ProductJVe Worl<force in the country are substantially larg c expend· 'Se
w
human cap1"tal fonnat10n.

Ii:
. (S) Migration: Migration contributes to human
ucanon enables an individual to
life. His total earnings during his
expenditure on ed ucanon.
.
ak
s e a good living throu IS lilitizj
pan would far exceed ghout
h· . h·is
capital formation as it facilitates utilisation \,
of (otherwise) inactive skills of the people,
or it facilitates fuller/better utilisation of the

I
. (" terms of earnings of the educated_pe~son during his life tim ) · skills.
Monetary benefits o f educanon m . ., ,,. e i -
far exceed the cost of education. ·:a, ' Migration involves cost:
The difference between benefit and cost is an approximate ma~ket v3.\ue 9,f,h~anvcap_j.tal formation. I
(i) cost of transportation from one place
(2) Expenditure on Health: "A sound mind in a sound body" is an old
saying. Expenditure on health makes a man more efficient and, therefore,
to the other, and
,,.,....
(ii) cost of living in different social '
more productive. His contribution in the value-addition process tendsio
environment. Migration helps Fuller UtiLisation of Skill
rise. He adds more to GDP of the nation than a sick person.
Expenditure on health in the form of preventive medicines (vaccination), Yet people migrate in search of better job opportunities. Because: Gains
curative medicines (medical interventions at the time of illness), soci~ of migration (in terms of higher salaries) are greater than the cost of
migration.
medicines (spread of health literacy) and provisions of hygiene and
sanitation, is an important determinant of human capital form ation. Implying that migration leads to human capital formation, through
Health expenditure directly increases the supply of healthy _labour fom fuller /better utilisation of skills.
and is, thus, a source of human capital formation. 6
( ) Expenditure on In formation: Information relating to job markets
f./ (3) On-the-Job Training: On-the-job-training and educational institutions offering specialised skills is an important

,,p
:..• ~ -
helps workers to hone/sharpen their
specialised skills. It enables them to raisethe
level of their efficiency/productivity.
determinant of skill formation. It enables people to actualise their
productive potential. Accordingly, expenditure on information is
another determinant of human capital formation.
. d ke 'on-the Briefly h . . d · d
Fmns are always inclined to un erta ' uman capital formation is promoted by investment on e ucauon an
health b ·d , . ·
· · , programmes. Becau se, returns
·JO b -trammg . ' esi es on-the-job training' programmes. Investment on migration
and inform · · d· b kets
(on account of enhanced producnvi a so contribation relating to availability of specialised skills an JO mar
I
exceed the cost of such programmes. utes to human capital formation.

--
On-rnP-100 , 1 e1 Q ra 1ct:1

D.6]
 - ,-"v' ru1 mat1on in India
ital. Education, for example, is measured .
an cap . . in terms of
~ h ,·n butfl her-pupil ratio and enrolment rates but -t . d"ffi.
W"' teac , . . . . ' 1 is , cult
t .... A,-10N gfO ting year, a1·cy of education. Similarly, 1t 1s possible to measure h h
.)evetopmen ITAL F0R1v1 ,hoo • qu 1 . . d"ffi ul eat
I.
N CAP . • rrH sv- s the terms but it is 1 c t to assess the impr
asses O netary ' ovement 1n
3.
HUMA .... IC GR0VV • 10 s in m •ces It is because of the poor quality of hu .
ecoNO•v• rvi'e alth sefVl ; . . man capital
AND OR ANCAPITALFORMATIQt., se _,...,, of be d that in developmg countries human capital is growin t
eoFHUM 4u"''''0on, w e fin te of economic . gro wth . ga a
''i fofllla thail the ra
NIFICANC _
d ·nco a key
deterroioant of economic grow,.c
.. '-'l.
SIG te faster . that th ere 1-s a cause and effect relationship between human ca p1.t a
. al has develope I . bservations: 5 1
Hurnan capit th folioWlng f,lotable it1 ic gro wth·., human capital formation .stimulates the process o f
0
.
This is proved through . e and Material Environm_ent of Gr owth: d econo!Il wth and economic growth impacts human capital formation.
. Eroouonal change in emotional and mat . all 00 - gro • " · · al · ( ·
(I) Change , 0 . on generates a eriai ..,.,, m1c.
.,.- .
lies 1ncr ease in per capita
. re . mcome .or . mcrease . in per capita
BRAIN ,."'1iJit. HuJ1lan capital forroao Growth ,mp d and services). Higher mcome fac1htates higher investment
TEASER environJ1lent of growth- b comes conducive· to growth as Peo 1 il1·cyofgoo s . h . al c .
· 0 roent e . . Pe availab . and skills. Implymg uman caplt ,ormation. Thus, human
£,notional enV'lro . ted attitude and aspirations.
R~itd the news headlfne • . e rowth-onen 00 educanon . rompts the process of growth, and growth prompts the
given belOW and answer the
rend to acqmr g b omes helpful to growth as the so . ·ral foflilat1on P .

:i
questk>l1 that foUoWS: . - oment ec . ciety capi capitaLformation.
• ·Deen oayat upadhya)'a • Matenal enV'lr 0 . UIIlber of skilled and tramed work cess of human
Grarneen l(.aUShalya Yojana s higher n ers to
,oot.J.GKVJ, as a part of the now possesse d prograromes of economic growth. pro .,.,=..,..~-,.,--.~- ·~ - --- -,
Skill India can,:>afgn pla)'S
i.JDpJement the plans an . . - ff ct of Human Capital Farm~tion ..:
an inst;rumental r~ In
. . f Physical Capital: Human capital forma" ~~Ee . ~w•~. .

supporting tt-e social and
economic programs of tt-e
(2) Hig er
~ t Uke the Make
in India, Digital lndla, Smart
Cities and Start-Up 1ndla,
Stand-UP lndla ca~ igns.•
Scxxce: ddugky.gov.ln
investment In programmes Ulce
oou-GKY, t e a d s t o -
AnS- Human aipttal tormatk>n
(as it enhances the skill.
expertise and talent of the
people).
l
. b Product1v1ty o . '-'On C ital Formation [mcrease -)n ·tlie stock of human capital] Better/Efficient utilisation
d . ·cy of physical capital (refemng to output per unit f Hurnan ap · d. • · · ( · f Ib /
of phys1c. al capital Increase m prof uctiVlty . . output per
1 umt o a our capital) Increase in ,
- es pro ucOV'l o . /
,ncreas .ali d enui neers and skilled workers can cenainly hand] wth along
capital). Spec1 se .,- d . . e GD P gro with higher rate ,o'·· ,partic1pat1on emp oyment Higher level of income of the .
. than the others. It enhances pro uctivity and accelerat d!VI dU als and households
machines better es IO .. Higher eicpenditure
• P.1,- . ,,, •' ·. ) on education and Increase in the stock of \
hurnan capital (impl~ g human capital ,orm~ ~ _. _
the pace of growth- ,
·ta1 r rmation gives binh to innovative skill which leads t
Human cap1 10 o
• .
innovations, inventions and technical improvements, the undercurrent 4. PROBLEMS FACING HUMAN
of rowth and development. Larger the number of skilled and trained bc- CAPITAL FORMATION IN INDIA
. (
pe~onnel, greater the possibilities of inno~ations, inventions and
technical improvements in the area of production and related activities. t e major problems facing human capital formation in India are as under:
These are the life-line of growth, we all know. (1) Rising Populati9n: , Rapidly rising population adversely affects the
quality ofh~ f nri~~pital. This is because it reduces per head availability
. .
:. • l
-:'F
l.;J

(3) Higher Rate of Participation and Equalit y: By enhancing productive

capacities of the labour force, human capital formation induces greater of the existing facilities relating to housing, sanitation, drainage, water- Read the news headUne
given below and answer the
system, hospitals;' education, power supply, etc. question that follows:
employment.
Reduced availaoility pf these facilities leads to a fall in the quality of life. •All of us would h.1ve that
This increases the rate of panicipation (percentage of labour force )-, ' uncle or aunt who'd be living
participating in the process of production or simply the percentage of In tum, this leads -!o a fall in the capacity to acquire specialised skills and In the U.S.• U.K. or Canada.
knowledge. This yearning to taste and
live life in a Western country,
employment of the existing labour force) . is not from the bygone era.
(Z) Brain Drain: M; gration of persons
Higher the rate of panicipation, greater is the degree of economic and 1'.~. •,«--.. 'l Over the years, millions of

·. 'l r,<, t { t _t-~ ·-

t- .. . - ,- -
(born, educated and trained in India) young talented Indians from
various disclpLines have left
social equality in the society.
to developed countries is a serious our soil in search of better
The Seventh Five Year Plan of India clearly recognised the importance of threat to th f ·- ,, ....,' opportunities.·

human capital in the process of economic growth. It underlined the significance

of large population in India as a source of human resource and as an asset w
form arion in
Those wh0 d ' d
e process 0 human capital
· the c0 unqy. j •

.
--- ====. .(.. ''- ~
Source: indlatimes.com
Migration of people to
developed countries Is
described as the problem of
accelerating the process of economic and social change in the country. ec1 e to migrate are •'·".°~::, ··~ tM•
Persons of h ' h
sci· . •g calibre such as Ans. Brain drain (as it slows
It must • however, be underlined that it is very difficult to assess th e illlpad entists dm· . f'· · down the process of tuman
. ' a I.Il1strators, executives · l capital formation in the
of human capital on economic growth because it is challenging to measurt engineers h . . , ' , Brain Drain: Loss of Human Capita domestic economy).
et ' P ysicians, educationists,
C. t.,
= 138]
[139- lil1,
 Indian Economic Development . . .b d the problem of brain drain. This slows d 11
This 1s descn e as •cal formation in the domesttc
process of human cap I
• •
. economy 0\\, th,

( ) Deficient Manpower Planning•

3
·

enough efforts have been made to · . Not

6
·ot1 is the
duc2-t1)1allge.
50ci:il c
,1 wever,
0
compa
under-current of economic and

red to other countries of the

. .
d of education m India has not been
'"
' .
Human Capital Format,on in India

llla1n P d sprea
the demand-supply balance of the ever-ritain ,.,orl , ing.
. , 0 urag .
Jabour force in the country. sing 5o eP ate in the country contmues to be
literacy r
f/eP
As a result, India is facing an exp Josiveprob1 \oW,
verY , to the Census 2011, barely
relating to graduate unemployment ell\
t,ccordllig t of the population is literate as
er cen
/ £~
,/ ,.,,-..r
-\/:~,IV -
-...\ ,r.- , It 1s a sad reflection on the wastage of
. huni
74,o4 P
· st90t0 9
5 per cent literacy in developed
fl - - --
Emerging Challenge power and human skill. <11 agaiP . f the world.
,oulltries o Education: An Essential Element of
Graduate u~loyment An
Human Resource Development
( ) Insufficient On-the-Job Training in Primary Sector: p .
4
sector (agriculture in particular)
. is the backbone
. . of Indian econonnial") .~ and Literacy are not Identical Terms
education
Unforeunately' it has not
. received due attention m the area ofp c
ro,essioIlly, •on is a much wider concept than literacy
1 Educao .. ·
skills. Two notable pomts are that: nzj cy J·ust refers to the ability to read and write·
1 Litera
The traditional wisdom predominates the primary sector . on on the other hand, encompasses three paramete . .
• Educa0 , rs, lilt primary d .
that 'On-the-job training programmes' are highly scant, if not 1.istless
' 3.J\d

Accordingly, there is a serious deficiency of human capital fa rmat1on

. ·
,_ educanon• and tertiary or higher education· '
...;,,i;hi{ID educated people are literate, all literate people are not
I wou .• , .. ,~
e ucat1on, secondary

necess
aril
yeducated.
primary sector of the economy. lli

(5) Low Academic Standards: In our enthusiasm to spread . IJJlportance and Objectives of Education
. h b · · higher
educanon,
. we ave een operung many uruversities' unmindf 1 II •og points highlight the importance and objectives of education·.
academic standards. Consequently, we have a large army of half-bale
(i) Education produces responsible citizens,
graduates and post-graduates whose deficient skills only lowers thelevedI
of efficiency/productivity. e
(ii) It develops science and technology.

This also impairs our competitiveness in the international market of (iii) It facilitates use of natural and human resources of all regions of the
country.
human capital.
(iv) It expands mental horizon of the people.
Measurement Problem (v) It helps economic development through greater participation of the
In case of physical capital formation, the change can be measured in terms·of units. But, it is difficult people in the process of growth and development,
in case of human capital formation.
This is because, a large number of factors tliat impact productivity of human beings are non-
(vi) It promotes cultural standard of the citizens.
quantifiable. (vii) It develops human personality.
Further, it is di~ult ~ identify...,:.suitable scale of measuring human capital formation,
Need for Government Intervention in Education
5. EDUCATION AS AN ESSENTIAL ELEMENT (and Health)
OF HUMAN RESOURCE DEVELOPMENT Need for government intervention in education and health arises primarily on
account of the following facts:
Education is an essential element of human resource development.
(i) These sectors need huge mvestment
. WI·th a very high fixed
Ed ucauon · 1·1es th e process o f teac h"mg, trammg
· imp · (especiallyin
· · an d 1earn mg, expenditure.
schools or colleges). It improves knowledge and develops skills.

- 140] mi
.....
 ian Economic Development
ANoteof ~ ution J of private service proV1der. Government
Just because the absolute
expenditure is higher in
elementary e,-penditure and
expenditure per student
is higher in tertiary
education, it does not mean
that financial resources
should be transferred from
tertiary to elementary or
from demenrary to tertiary.
As the school education is
expanded in India, there
would be need for teachers
at higher level of education, Expenditure incurred on education can be measured in two ways: as percentage
so expenditure should be
increased at all levels of
education.
In 2009, the Government
oflndia made education a
fundamental right for all
children in the age group of
6-14 years by enacting the
Right of Children to Free
and Compulsory Education
,Act (popularly known as
Right to Education Act).
This Act is based on the
Directive Principles of
Indian Constitution which of the country. The overall trend in the expenditure incurred on educatio,
state that the government
should provide free and
compulsory education for
all children up to the age
the government increased from 7,92 per cent to 15.7 per cent, while educariQ
ofl4 years within 10 years
from the commencement of expenditure as percentage of GDP increased from 0.64 per cent to 4.IJ !'r
Constitution. To cope with
the consequent expenditure,
the government started
levying a 2per cent
education cess on all union
taices. It was specified that
the revenue generated from
the cess would be utilised
--
for incurring expenses on
elementary education.
ill
. . ,aK9.~
It is difficult to expect private investo~s to invest in health and edu 1 Human Capital Formation 1n Indra
(ii) unless they are allowed to recover their huge costs through high Cation al d·ture one ducation while the share of tertiary education (C oll eges
0
. Pr1c. r expen ·ues . ) w as 12.74 per cent. However, eXpenditure
. per student .in
these sefVICeS. '0[ aJld
t Universicanon . . higher as compared
1s . to that 1n elementary educatio n.
(iii) People in a poor country like ours cannot afford high price for ed certia
, ry0 edu e curren t trends on expenditure. and the recommendations , it is
and health. Ucati01 Base he In 1an
dthat
n tht d' government needs to mcrease eXpenditure on all levels
dear .
iv) Individual consumers of. these services
. are unaware abo ut the d canon.
( · · · th d" ·
and costs of these services,
. which leads to
. the exploitat·tve heh%1ih,
. ·1 ofhe u O flnd1a
. show vanatton
. m e eXpen , .
lture incurred on education ·
. mtervention
these service providers adhere to stipulated standards.
is t o ens av,% r
Ure th,t
re states Himachal Pradesh mcurred . highest expenditure . on education
. to~3 4,65 1 per capita) while .the) lowest eXpendtture was incurred
In 2014-lS,
(
(v) When basic education and healthcare is considered as righ ts ofc'. a,~
~ounnng ( ountmg . to t 4' 088 per capita . As a result, great variations are
11 b
y Bihard ·n ed ucation
the government needs to make provision for free of cost educaf 0t Zens, observe tam . al opportunities and attainments across the states.
health services, at least for the backward sections of the society.
. ' n •nd
In the end, it may be stated that these services would rem a1n• be EDUCATIONAL FINANCE: WHO SPENDS ON EDUCATION AND HOW MUCH?
reach of most people unless these are subsidised or directly provided
. Yond
b th, i The State Governments: A state government is spending between 10-30 per cent of its total annual
Yth,
( l budget. State government budgets amount to approximately 74 per cent of the total education budget
government. for India.
Government Ex penditure on Education (ii) The Central Government: ~45,000 crore annually (nearly 3 per cent of its total annual budget).
(... ) Total Percentage Expenditure by the. Governments (states as well as the centre): 80-90 per cent.
rn .
.
(IV) The Parents (by way of fees) for their children: 4-5 per cent.
oftotal expenditure ofthe government and as percentage ofGDP, The Education
(v) The Private Trusts: 7 per cent.
Commission (1964-66) had recommended that to make noticeable gro\111 (vi) Endowments: 3 per cent.
in educational achievements, the Government of India must spend arouno
A broad conclusion thus emerges that in India, despite a significant trend towards privatisation of education,
6 per cent of GDP on education, In 1999, the Government oflndia appointeo the bulk of spending is done by the central and the state governments.
the Tapas Majumdar Committee, which estimated that the governmentwou!a
need to incur an expenditure of 1.37 lakh crore over a period of JO yeM ;
Educational Achievements in India
(1998-99 to 2006-07) to bring all the children in the age-group of 6 to 14 ye.~
under the education cover. There has been an expansion of general education during the period of Five
Year Plans, as indicated by Table 1.
Compared to the recommended level of expenditure, in recent years, the India:
government has been spending a little over 4 per cent of GDP on educatio~ Table 1. Expansion of General Education
which has proven to quite inadequate to achieve the educational aspiratiolli Item
I. Institutions
I 1950-51 I 2015-16
in India is fluctuating, showing a rise in some years and fall in some oth,~ (i) Primary and Middle Schools
2.23 ]akh 12.?0lakh
During 1952-2014, education expenditure as per cent of total expenditureol (ii) Secondary and Senior (Higher) Secondary Schools
7.4 thousand 2.52 lakh
J (iii) Colleges (General)
578 39,071
(iv) Universities (including Deemed Universities) 27 799
cent. In 2016-17, the expenditure on education showed a miniscule increa~ 11
· Number of Students
4
to .3 8 per cent. Ot is important to note that this data pertains only to tl., (i) Primary and Middle
expe nd iture undertaken by the public sector, and not the private sector. Jitl.e (ii) High a d H" h
19,15 lakh 17crore
nd n 1g er Secondary Schools 15.0 lakh 3.2 crore
expe iture incurred by the private sector is considered, the total expe 11 <lit~'
on education in Indian economy would be much higher.)
_(iii) Higher Education
I 3.6 lakh 346 lakh
Most of the e d' nr •P [Source: Statistical
Outline of India 2012-13, Economic Survey 2018-19
. xpen iture undertaken on education goes to e1eme · and www.ncert nic.in)
education. In 2016-17 I ofrb (Note: Prima d • d · )
'e ementary education accounted for 49 .68 per ce 01 ry an middle school education together is called elementary e ucanon.
t 143 lj'
 Human C .
Table 1 suggests that substantial progress has been made in th e field ck in the education system of the c apital Formation . .
§_piinant bottlene ountry. Thi 1n India
serious . facts and figures makes education stil] a chal]e . s along With
Considering the importance education. Of
ache foUoWlng nging proposition
of education in human During the plans, the number of educational
. institutions providing e1eine
capital formation, the iO Jndia: -..r rober of Illiterates: India harbours th
Government of India
education has increased roughly by five times and the number of st udentntary
(1) Large 1,u.n the world. Presently, nearly 36 era e 1argest number of
tries to regulate education increased ten-fold. s has . rates J
1 re people ar .
sector through various
organisations. Important In 1951, hardly 18.33 per cent of the total population was literate· In 2011 iJl te ·]literate. The number exceeds even the tota] _e estimated
among these are:
to be J . s in the worId . p0 pulation of most
percentage ofliterates increased to 74.04 per cent. , the countne . . .
(i) NCERT (National
Council of Educational Table 2 shows the details ofliteracy rates (adult and youth) as well ascoin 1 t e Vocat1onahsat1on: Education conti·
adequa nues to be
Research and rate for primary education. P etion (2) In -oriented throwing millions of educated youth d 1argely
Training): It is basically degree h . s own to the
engaged in designing Table 2. Educational Attainment in India ·a rs of employment exc anges. Vocanonalisation of d .
text material up to the
-r------... corn
. °
f: cry. As a result, th e rate of unemployment am e ucat1on is
th
-~
senior secondary level. 5
ull a isartrending up .
(ii) UGC (University
Item .. ' 1990 2000 2011 2017.
you th
ong e educated
Grants Commission): Adult Literacy Rate
It is primarily the (per cent of people aged 15+) 2011-lZ according to NSSO data, the rate of unemployrn
In ' ent among
funding authority for
61.9 68.4 79 d te Youth in rural areas was 19 per cent while that ,·n b
university education. (i) Male 82 gra ua . . . . ur an areas
lt also enforces the 16 Per cent. The s1tuatJ.on 1s more gnm in case of female g d
(ii) Female 37.9 45.4 59 was ra uates.
66
rules and regulations Nearly, 30 per cent of the female graduates are unemployed.
regarding higher Primary Completion Rate
education in the (per cent of relevant age group) (3) Gender Bias: There ~s still a significant 'gender-bias' in offering
country. opportunities of education to male and female children.
(i) Male 78 85 92
(iii) AICTE (All India 93
Council ofTechnical (ii) Female 61 69 94 The enrolment ratio is relatively low for the female candidates and their
Education): It enforces 96
rules and regulations Youth Literacy Rate drop-out ratio is considerably high. Education system in India thus needs
regarding technical/ (per cent of people aged 15+ to 24) a substantial change in the attitudes of the people.
engineering education
in the country. (i) Male 76.6 79.7 90 93 It is important to promote education among women to improve their
(iv) ICMR(Indian (ii) Female 54.2 64.8 82 90
economic independence and social status.
Council for Medica
Research): It enforces [Source: NCERTJ (4) Low Rural Access Level: There is a high degree of disparity in access to
rules and regulations
education. The 'access level' is considerably low for the rural population
relating to education Education Still a Challenging Proposition compared to the urban population.
and research in the
health sector. Focus on education has tremendously increased over time. It is encouraging
(5) Privatisation: There is a growing trend towards privatisation of
to note that nearly 96.5 per cent children are now the school goers. But in the
education. Being very expensive, private education has tended to widen
backdrop of this statistics there is a bitter truth: despite
the gulf between access level for the rich and the poor. There is almost a
.. . . .. the constitutional provision for free and compulsory
education for the children between the age group of 6
drought of educational opportunities for poorer sections of the society.
( ) Low Government Expenditure on Education: The government has
6-14 years, quality of education and infrastructure
continues to be disappointing. Administrative callousness failed to fulfil its commitment of spending nearly 6 per cent of GDP
compounds the problem further. A survey by the "Child on education: actual expenditure has been around 4-5 per cent only.
www.cry.org Th·is P0 ints
· to the gap between what is intended or desire
· d and what 1s
Rights and You" (CRY) finds that children continue 10 actually achieved.
0
~V\Sl.\rin~ \o.stin~ C.h~n~t. be refused admission to schools because of the lack : II Given. th ese ,acts,
h c
there follows an obvious inference that educanon · in. India
transfer documentation, birth registration and proo I
for C.hi\drtn of residence. In some cases, parents of school-going \,
as failed t 0 h k th
reac the masses, and has also failed to brea e vi ·cious mc!e of
I Iteracy •n· ·
-11 .
"lJ" cy
Child Rights and You (CRY) chI"ld ren are compelled to pay fees. Such instances P~• -, iteracy breeding poverty and poverty breading I itera ·

-
__,
MK]
m:s 11'1
611
 Indian Economic Development
(/ Revision Window beings to contribute to th
. ) of )lt1!llan e Pr~
Power Points
Human Resource:. · · It refers to abilities (skill and eJlpertlse · n at a point of time
of v al ue-add 1t1on 1n the economy. tise, 0 fa nat1° ·
nd
Human Capital: It refers to the stock of'skiH a e,q,er . to the stock of human capital.
. . th cess of adding . .
Human Capital Fonnauon: It refers to e pro . (ii) £:,cpend1ture on health, (iii) On-
d" ducauon, d" . ,. . the.ioh
Sources of Huillan Capital: (i) r.£,q,en
d It1ture on e . ( •) £:,cpen 1ture on m,ormat1on.
(v) Migrauon, \11 -:::!:.-----------~
training, (iv) Study programmes or a u s, . emotional and material envi
. c ·tal ForJJ1ation: (i) Change in . (· ) . rorunent
Signincance of Human api . . al (" .. ) innovative skills, 1v Higher rate ofparti .
g,-owd>, (;;) H;gh~ p,ud"ctivi'Y of phy,,cal ~P" , w op"'
and equality.r. • H Capital Forillation in India: (i) Rising population, (ii) Brain d .
• Problems ,acing uillan . . . . . . rai~
(iii) Deficient manpower planning, (iv) Insufficient on-the-Job trammg m pnmary sector, (v) L-Ow

academic standards.
Importance and Objectives of Education:
(i) Education produces good citizens.
(ii) It develops science and technology.
(iii) It facilitates use of resources in the country.
(iv) It expands mental horizon of the people.
(v) It helps in economic development through greater participation of the people in the process ~

growth and development.

(vi) It promotes cultural standard of the citizens.
(vii) It develops human personality.
Growth of Education Sector in India: It includes: (i) Expenditure incurred on education, (ii) Educationa

achievements of India.
Problems Relating to Development of Education in India: (i) Large number of illiterate\1
(ii) Inadequate vocationalisation, (iii) Gender bias, (iv) Low rural access level, (v) Privatisation, (vi)Lo

government expenditure on education.

146 1