DELHI PUBLIC SCHOOL BULANDSHAHR

CLASS- IX
ECONOMICS NOTES
CHAPTER- 2
PEOPLE AS RESOURCE
Overview
The growing population of the country is a negative aspect for the economy, but this population
can be converted into human capital. When the economy invests in education, training and
medical services, the population of the country converts into human capital and that
population becomes productive. Human capital is the stock of skill and productive knowledge
embodied in them. Population becomes human capital when there is investment made in the
form of education, training and medical care.

People as a Resource mean the working population in terms of their existing productive skills
and abilities. Looking at the population from this productive aspect emphasises its ability to
contribute to the creation of the Gross National Product. The term ‘People as Resources’
provides us with a view that population is an asset for the economy rather than a liability.

Human Resources mean the size of population of a country along with its efficiency,
educational qualities, productivity, organisational abilities and farsightedness.

The existing 'human resource' is further developed by becoming more educated and healthy, it’s
called 'Human Capital Formation' that adds to the productive power of the country just like
'physical capital formation'. Investing through education, training, and the best medical care
would yield the best return.

Human capital is better than other resources of production because they use land and
physical capital and through human resource only we are able to make out with other resources.
 Educated and healthy people can use land and physical capital more efficiently. Investment in
human resources can yield higher returns in future just like investment in physical capital.
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, and the higher productivity of healthier people.
For e.g., Countries, like Japan, have invested in their human resource. They do not have rich
natural resources, but still they are called developed nations.

Why Human Capital is considered superior to other resources?

Human capital is in one way superior to other resources like land and physical capital as human
resource only can make use of land and capital. Moreover, human capital is superior to other
factors needed for the production of goods and services like land and physical capital because
without human capital they are just resources with no utility. The presence of human capital offers
utility to other resources necessary for production.

Society also gains in other indirect ways because the advantages of a more educated or a
healthier population spreads to those also who themselves were not directly educated or given
health care.
Story of Sakal
Sakal is a 12 year old boy living in a village that helps his mother in various chores. He was
forced to join the School. Later, his parents took a loan for his Vocational Computer Course.
He was meritorious and interested in studies from the beginning. With great vigour and
enthusiasm he completed his course. After some time he got a job in a private firm as a software
developer. Sakal’s great performance also got him promoted.

Story of Vilas
Vilas was an eleven-year old boy residing in the same village as Sakal. His father Mahesh was a
fisherman, who passed away when he was only two years old. His mother Geeta sold fish to earn
money to feed the family. Vilas’s mother was the only one earning in the family.
Vilas is a patient of arthritis. His mother could not afford to take him to the doctor. He could not
go to school either as he was also not interested in studies. After his mother fell sick Vilas was
forced to sell fishes and earned only a meager income.
Conclusion
In these stories it was seen Sakal went to school and Vilas did not go. Sakal was physically
strong and healthy. There was no need for him to visit the doctor frequently. Vilas was a patient
of arthritis. He lacked the means to visit the doctor. Sakal acquired a degree in computer
programming. Sakal found a job in a private firm while Vilas continued with the same work as
his mother.
As in the case of Sakal, several years of education added to the quality of labour and enhanced
his total productivity. Total productivity adds to the growth of the economy. In case of Vilas,
there could not be any education or health care in the early part of his life, and he earned a
meagre income.

Investment in human resource (via education and medical care) can give high rates of
return in future. It is the same as the investment in land and capital.

Population as Asset:
• Population is an asset, not a liability. Moreover, it becomes human capital when
investment is made in terms of education, medical care, and training.
• We often see the negative aspects of a large population, such as giving them education,
healthy food, and work opportunities. While if we look at the positive aspect, a large
 population can become human capital which can contribute to the Gross Domestic
Product (GDP) of the country.
• Investments made in human capital will yield higher returns in future, just like
investments in physical capital. For instance, an educated person will earn more and be a
productive asset to the organisation and the country.
• The most enticing aspect of the educated and healthy population is that they will not only
earn higher income for themselves, but indirectly they will also be an asset to those who
are not educated.
• Investment in human capital can be made in terms of education, healthcare, training for
industrial and agricultural workers, use of modern technology, useful scientific research,
and so on.

Virtuous and Vicious cycle of Human Capital Investment

A Virtuous cycle of human capital investment is the cycle which will give positive results. In
terms of human capital, a virtuous cycle of human development refers to the cycle whereby the
parents take care of the needs of their child and gives him/her a comfortable space to live, study
and play in a healthy environment.
Educated parents are an asset as they know the significance of education, and thus they are
willing to provide the same and even better level of education to their children. Moreover, they
are also conscious of healthy food and nutrition so that their children remain healthy.

On the contrary, a vicious cycle of human capital investment is one which will yield negative
returns. For instance, illiterate and poor parents who do know the value of education are not able
to invest in their schooling and skill training efficiently. Furthermore, as they are
underprivileged, they cannot provide nutritious and healthy food to their children. This makes
the children earn less and grow up unhealthy.

Economic Activities by Men and Women

 Human beings perform many activities which can be grouped into economic and non-economic
activities.

Economic Activities: Economic activities refer to those activities of man which are undertaken for a
monetary gain or to satisfy his/her wants. Economic activities are activities that add value to the
national income. These activities contribute to the Gross Domestic Product (GDP) of any country.

The activities of workers, farmers, shopkeepers, manufacturers, doctors, lawyers, taxi drivers,
etc. fall under this category.

Market Activities and Non-Market Activities- Further economic activities are divided into two
types of activities; market activity and non-market activity.

• Market Activities involve paying those who participate, i.e., those who work for
compensation or profit. Market activities are those that are performed with the objective
of earning money in terms of salary or profit. These activities provide remuneration to
any individual who performs. For eg., Geeta, the mother of Vikas. She earns by selling
fish. Thus she is paid for her work as she has entered the labour market. This will be
included in market activity and add value to the country’s national income.

Non-Market Activities simply mean activities that are done for the purpose of self-consumption
without the objective of making a profit or salary. For instance, on farms, small-scale farmers
keep some produce for self-consumption. Non-market activities are production for self-
consumption.
Non-Economic Activities: Non-economic activities are ones that are not undertaken for any
monetary gain. These are also called unpaid activities, e.g.., Puja-paath, housekeeping, helping
the poor or disabled, etc.

Classification of Economic Activities into Sectors of the Indian

Economy
Various economic activities can be classified into three main sectors, that is primary sector,
secondary sector, and tertiary sector.
Primary Sector: This sector involves the creation of products by extracting and gathering
natural resources. Activities such as farming, forestry, hunting, fishing, and mining are part of
this sector. E.g., Farming, forestry, hunting, fishing and mining. It is called Primary as it forms
the base to produce other secondary or tertiary sectors’ subsequent products. As most natural
products are obtained from agriculture, dairy, fishing, and forestry, this sector is also called the
Agriculture and Related Sector.
Secondary Sector: This sector involves activities that transform natural materials into new
products through various manufacturing processes. It follows the primary sector and requires
several production stages. It’s also known as the industrial sector. Since this sector is associated
with various kinds of industries, it is also called as Industrial Sector.
Tertiary Sector: This sector includes activities that support the growth of the primary and
secondary sectors. These activities don’t produce a good directly, but they assist or support the
production process. It’s also referred to as the Service Sector. Examples include teachers,
doctors, laundry workers, barbers, shoe repairers, lawyers, call centres, software companies, and
so forth.

Sectors of Indian Economy

People are engaged in various economic activities. Some of these are activities producing goods.
Some others are producing services. These economic activities can be grouped them using some
important criteria. These groups are also called sectors.
Sector defines a large segment of the economy in which businesses share the same or a
related product or service.
Gender Division of Labour
In India traditionally Due to historical and cultural reasons there is division of labour between
men and women in the family. Women generally look after domestic chores and men used to
work at fields, sell the produce in the market and earn for the family. Women are not paid for
their service delivered in the family.

Women generally look after domestic affairs like cooking food, washing clothes, cleaning
utensils, housekeeping and looking after children and all the earning activities are assigned to the
men. The household work done by women is not recognised in the National Income.

Women are paid for their work when they enter the labour market. Their earning like that of
their male counterpart is determined on the basis of education and skill. Education and skill are
the major determinants of the earning of any individual in the market. A majority of women
have meagre education and low skill formation. Women are paid low compared to men. Most
women work where job security is not there. Various activities relating to legal protection are
meagre. Employment in this sector is characterised by irregular and low income.

Through education with vocational training, it would make better use of economic opportunities.
Women used to work where there was no job security and employment here is characterized as
irregular and low income. Basic facilities are also missing maternity leave, childcare, and other
social security. Women with good education are paid high with perks.

However, women with high education and skill formation are paid at par with the men.
Among the organised sector, teaching and medicine attract them the most. Some women have
entered administrative and other services including job that need high levels of scientific and
technological competence.

Quality of Population
The quality of population depends upon literacy rate, the health of a person, indicated by
life expectancy and skills formation acquired by the people of the country. The quality of the
population ultimately decides the growth rate of the country. Literate and healthy population are an
asset for the country.

Role of Education: Education is the most important component of human resource

development. A more educated population is a sign of the quality of the population. Education
caters to the needs of the masses and helps to increase the national income and moreover
contributes to the growth of society and culture. It enhances the national income, cultural
richness and increases the efficiency of governance.
The government has made several efforts to provide education to the population-
• Providing universal access, retention, and quality in elementary education with special
emphasis on girls.
 • Developing several vocational programs to equip a large chunk of the high school
population with work and occupations related to their skillsets and knowledge.
• Establishing pace setting of schools like Navodaya Vidyalaya in each district.
• Increasing plan expenditure from INR 151 crore to INR 99,300 crore.
• Increasing the expenditure on education in terms of percentage of GDP from 0.64% in
1951 to 1952 to 3.1% in 2019 and 2020.

Additionally, the budgetary estimate highlighted in the Budget Documents of Union State
Governments and Reserve Bank of India that the expenditure on education has further
reduced to 2.8% of the GDP in the year 2020-2021.

Various Outcomes of these steps taken to spread Education-

• As a result of these efforts, the average literacy rate of the country has increased from
18% in 1951 to 85% in 2018.
• The primary school system has expanded over a period of time to 7,78,842, lakh in 2019–20.

Various Challenges for Government to Address in Education Sector-

• A vast difference is noticed across different sections, states and areas of the population.
Literacy among males is nearly 16.1% higher than females and it is about 14.2% higher
in urban areas as compared to rural areas. As per 2011 census, literacy rates varied from
94% in Kerala to 62% in Bihar.
• The expansion of primary school system is affected by high dropout rates and poor
quality of schooling.

Various Plans to Improve the Education System

Furthermore, the government has introduced various schemes like Sarva Shiksha Abhiyan
and Mid-day Meal Scheme. Under this scheme, all children within the age group of 6 years to
14 years will be provided with elementary education. Mid-day meal scheme launched by the
government was certainly a game changer as this influenced students to come to school
regularly, especially in the rural areas, further improving their nutritional status.

The Gross Enrolment Ratio (GER) in higher education within the age group of 18 to 23 years is
27% in the year 2019–20, which is at par with the world average. The strategy focuses on
increasing access, quality, adoption of state-specific curriculum modification, vocationalisation
and networking on the use of information technology. There is also focus on distance education,
convergence of formal, non-formal, distance and IT education institutions.
Health: Health is another very important component of human resource development. No
organisation would be interested in employing someone with an illness because the illness will
ultimately affect his or her productivity at the workplace. Undoubtedly, health is an
indispensable part of realising one’s well-being. A healthy person is more productive and
efficient while a unhealthy person becomes hostile to an organisation. Improvement in the
health status of the population health status has been the country’s priority. Our national
policy aims at improving the accessibility of healthcare services, family welfare and nutritional
service with a special focus on the underprivileged section of the population. In the last five
decades, India has been able to build a huge and efficient health infrastructure.

.
As a result of these measures, there has been a considerable improvement in the country’s
health standard-

• The life expectancy in India has increased to 69.4 years by the year 2016.
• The infant mortality rate (IMR) has reduced from 147 in the year 1951 to 36 in 2020.
• Crude Birth Rates have reduced to 20.0 in 2018.
• Death Rates dropped to 6.2 in 2018.
• Increase in life expectancy and enhancement in childcare.
• Increase in the longevity of life.

Reduction in infant mortality involves the protection of children from infection, ensuring
the nutrition of both the mother and the child, and childcare, which points to the fact of
improving healthcare systems.

But the health facilities in the country have not developed equally in all the states; there are
many differences in this regard in the states. There are many places in India which do not
have even these basic facilities. There are only 542 medical colleges in the country and 313
dental colleges. Just four states, like Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu
have the maximum number of medical colleges. India has built up a vast health infrastructure but
still much more is needed to be done.

Infant Mortality Rate is the death of the child under one year of age.
Birth Rate is the number of babies born for every 1,000 people during a particular period of time.
Death Rate is the number of people per 1,000 who die during a particular period of time.
Health is a state of complete physical, mental and social well-being and not merely that absence
of disease or infirmity is termed as health.
“Sarva Shiksha Abhiyan is a significant step towards providing elementary education to all
children in the age group of 6–14 years by 2010. It is a time-bound initiative of the Central
government, in partnership with the States, the local government and the community for
achieving the goal of universalisation of elementary education.”
Mid-day Meal Scheme has been implemented to encourage attendance and retention of children
and improve their nutritional status.

Literate- According to the census of 2001, a person aged 7 years and above can re ad and
write with understanding in any language.

Organised Sector is the sector; where women with higher education and skill formation are paid
at par with the men and job security is there, employment in this sector is characterized by
regular and high income and also in this sector; there is presence of basic facilities like maternity
leave, child care and other social security systems.

Unorganised Sector is the sector; where women with lower or no education and low skill
formation are paid at lesser than men and job security is not there, employment in this sector is
characterized by irregular and low income and also in this sector; there is absence of basic
facilities like maternity leave, child care and other social security systems.
Unemployment
Unemployment is said to exist when people who are willing and capable to work at the
prevailing wage rates cannot find jobs. The workforce population includes people from 15 years
to 59 years. Children below 15 years of age and the old people above 60 are not considered while
counting the number of unemployed.

Nature of Unemployment in India:

In India, there is unemployment in urban and rural areas, though the types of
unemployment vary.
Seasonal Unemployment- It happens when people are not able to find jobs during some
months of the year. People dependent upon agriculture usually face such kind of problem.
There are certain busy seasons when sowing harvesting weeding and threshing is done . Farm
labourers also face this kind of problem.

Disguised Unemployment is another kind of unemployment found in rural areas. Such kind of
problem arises due to excessive pressure of population on agriculture. Disguised unemployment
refers to a situation where in the number of workers in a job is more than actually required to do
the job. The extra number of workers is disguisedly unemployed.
Educated Unemployment is a very common sight in urban areas, wherein people who are
graduates and postgraduates are not able to find work. Educated people in urban areas do not get
work according to their qualifications, this is called educated unemployment.

Many graduates and postgraduates, even technically qualified people, are jobless while there is a
dearth of technical skills required for economic growth.
Consequences of Unemployment:
(i) Unemployment leads to wastage of manpower resource.
(ii) Unemployment tends to increase the economic overload that is dependence of the
unemployed on the working population.
(iii) Unemployment may lead to increase in social unrest and tension.
(iv) The quality of life of an individual as well as of society is adversely affected.
(v) Decline in health status
(vi) Rising withdrawal from the school system.
(vii) Increased unemployment is an indicator of depressed economy.

se in

In India, statistically, the unemployment rate is low. A large number of people represented
with low income and productivity are counted as employed. They appear to work throughout the
year but in terms of their potential and income, it is not adequate for them.

In the primary sector, the employment structure is characterised by self-employment.

Agriculture is the most labour-absorbing sector of the economy. But, in recent years, there has
been a decline in the dependence of population on agriculture. Unemployment adversely affects
the economic development of the country. Poverty does not reduce due to unemployment in rural
areas and people migrate towards cities.

Some of the surplus labour in agriculture has moved to either the secondary or the tertiary sector.
In the secondary sector, small-scale manufacturing was the most labour-absorbing. In the case of
the tertiary sector, various new services are now appearing, like Biotechnology, Information
Technology and so on.
Major factors responsible for Unemployment
• Rapid growth of population
• Over dependence on agriculture
• Underdevelopment of cottage and small -scale industries
• Under development of industries
• Slow pace of infrastructure growth due to slow growth of Indian economy