PHYSICAL CAPITAL:It includes all those inputs which are required for further production, like

plant and machinery, factory buildings raw materials etc.Physical capital is needed to make
use of physical resources.

HUMAN CAPITAL:Capital: It refers to the skills which a person acquires through education,
training and lo experience, adding to his/her value to the production process. It is the stock of
skill, ability, expertise, education & knowledge embodied in the people.

HUMAN CAPITAL CREATES BOTH PRIVATE AND SOCIAL BENEFITS:

Human capital benefits not only the owner but also the society in general. For example an
educated person can effectively take part in a democratic process and contribute to the socio
economic process of a nation.similarly healthy person prevents spreading of contagious
diseases and epidemics by maintaining personal hygiene and sanitation.

DIFFERENCE BETWEEN HUMAN CAPITAL AND PHYSICAL CAPITAL

PHYSICAL CAPITAL HUMAN CAPITAL

It is tangible and can be easily sold in the It is intangible and cannot be sold in the
market market.

The value of physical capital depreciates Although Depreciation occurs but it can be
reduced by making continuous investment in
education and health.

It is completely mobile between countries, Human capital is less mobile between

but it's mobility is restricted due to trade countries as movement is restricted by
barriers. nationality and cultural.

Physical capital can be separated from Human capital cannot be separated from
owner owner.

It is the outcome of conscious decision of Formation of humab capital is partly a

owner and is mainly an economic and conscious decision of the prossessor of the
technical process. human caputal
MEANING OF HUMAN CAPITAL FORMATION:
Human Capital Formation refers to the process of addition made to the stock of skilled and
capable people in the country over a period of time In other words, HCF refers to development
of abilities and skills among the population of the country.

It is the process of acquiring and increasing the number of persons, who have the
skills,education and experience.

SOURCES OF HUMAN CAPITAL FORMATION:

1.EXPENDITURE ON EDUCATION:
Labour skill of an educated person is more than that of an uneducated person which enables
him to generate more income than the uneducated person. Economists have stressed the
need for expanding educational opportunities in a nation as it accelerates the development
process.
2.EXPENDITURE ON HEALTH:It is important to build and maintain productive labour force
and to improve quality of life of people in the society.
3.ON THE JOB TRAINING:It increases the skill and efficiency of the workers and leads to an
increase in production and productivity.
4.EXPENDITURE ON MIGRATION: It is a source of Human capital formation as it enhance
earnings in the migrated place is more than the increase in costs due to migration.
5.EXPENDITURE ON INFORMATION:It is necessary to make decisions regarding investments
in human capital as well as for efficient utilization of the qcquired human capital stock.

IMPORTANCE OR ROLE OF HUMAN CAPITAL FORMATION:

1.EFFECTIVE USE OF PHYSICAL CAPITAL:The growth and productivity of physical capital
depends extensively on the human capital formation.
2.HIGHER PRODUCTIVITY AND PRODUCTION:Human capital formation raises the
productivity and production as knowledgeable and skilled worker makes better use of the
resources.
3.INVENTIONS,INNOVATION AND TECHNOLOGICAL IMPROVEMENT:The human capital
formation stimulate Innovations and creates ability to absorb new technologies.
4.MODERNIZATION OF ATTITUDES:The knowledgeable. Skilled and physically fit people are
powerful instrument of change in the society.
5.INCREASE LIFE EXPECTANCY:Formation of human capital raises life expectancy of the
people. Health facilities and availability of nutritive food enable people to live a healthy and long
life.This is turn adds to the quality of life
6.IMPROVE QUALITY OF LIFE:The quality of population depends upon the level of
education, health of a person and skill formation acquired by the people.Human capital
formation not only makes people productive and creative, but also transforms the lives of the
people.
7.CONTROL OF POPULATION GROWTH:It has been observed that educated persons have
smaller families, so spread of education is necessary to control the population growth rate..

PROBLEMS OF HUMAN CAPITAL FORMATION:

1.INSUFFICIENT RESOURCES:The resources allocated to the formation of human capital
have been much less than the resource required.
2.SERIOUS INEFFICIENCY:There is a lot of wastage of society's resources as capabilities of
educated people are either not made use or are underutilized. Massive illiteracy, non education
of many children, poor health facilities are other inefficiencies, which have not been attended to
adequately and properly.
3.BRAIN DRAIN:People migrate from one place to another in search of better job opportunities
and handsome salaries. It leads to the loss of quality people like doctors, engineers etc.who
have high caliber and are rare in a developing country.
4.HIGH GROWTH OF POPULATION:The continuous rise in population has adversely affected
the quality of human capital.It reduces per head availability of the facilities.
5.SEVERAL IMBALANCES:A greater proportion of resources have been diverted towards
higher education, which is meant for few people as compared to primary and secondary
education.
6.LACK OF PROPER MANPOWER PLANNING:There is an imbalance between the demand
and supply of human resources of various categories, especially in case of highly skilled
personnel.
7.Weak science and technology:In respect of education the performance is particularly
unsatisfactory in the fields of science and development of modern technology.

DIFFERENCE BETWEEN HUMAN CAPITAL AND HUMAN DEVELOPMENT:

HUMAN CAPITAL HUMAN DEVELOPMENT

Human Capital considers education and In Human Development, education and

health as a means to increase labour
productivity.
health are integral to human well being
because only when people have the ability to
read and write and ability to lead a long and
healthy life,they will be able to make other
choices which they value.

Human Capital is a narrow concept as it It Is a broader concept as it considers human

treats human beings as a means to an end
that means as a means to increase its
productivity.An investment in education and
health is unproductive if it does not enhance
output of goods and services.
beings as ends in themselves.According to
human development, human welfare should
be increased through investments in
education and health even if such
investments don't result in higher labour
productivity.

HUMAN CAPITAL FORMATION IN INDIA: GREAT PROSPECT

NEED FOR GOVERNMENT INTERVENTION
1.THE EXPENDITURES ON EDUCATION AND HEALTH MAKE SUBSTANTIAL LONG TERM
IMPACT AND THEY CANNOT BE EASILY REVERSED
2 INDIVIDUAL CONSUMERS OF THESE SERVICES DO NOT HAVE COMPLETE
INFORMATION ABOUT THE QUALITY OF SERVICES AND THEIR COSTS.
3.PROVIDERS OF EDUCATION AND HEALTH MAY ACQUIRE MONOPOLY POWER AND
MAY GET INVOLVED IN EXPLOITATION.
SO THE ROLE OF GOVERNMENT IS IMPORTANT TO ENSURE THAT THE PRIVATE
PROVIDERS OF THESE SERVICES ADHERE TO THE STANDARDS STIPULATED BY THE
GOVERNMENT AND CHARGE THE CORRECT PRICE.
EDUCATIONAL SECTOR IN INDIA:
GROWTH IN GOVERNMENT EXPENDITURE ON EDUCATION
THE INCREASE IN EDUCATION EXPENDITURE HAS NOT BEEN UNIFORM AND THERE
HAS BEEN IRREGULAR RISE AND FALL.
IMPORTANT POINTS ABOUT GOVERNMENT EXPENDITURE:
1 GOVERNMENT SPENDS MORE ON ELEMENTARY EDUCATION THAT MEANS PRIMARY
EDUCATION
2.EXPENDITURE ON TERTIARY EDUCATION IS IMPORTANT.ON AN AVERAGE
GOVERNMENT SPENDS LESS ON TERTIARY EDUCATION.HOWEVER EXPENDITURE
PER STUDENT IN TERTIARY EDUCATION IS HIGHER THAN THAT OF PRIMARY
EDUCATION BUT IT DOES NOT MEAN THAT FINANCIAL RESOURCES SHOULD BE
TRANSFERRED FROM TERTIARY TO PRIMARY EDUCATION.AS WE EXPAND SCHOOL
EDUCATION WE NEED MORE TEACHERS WHO ARE TRAINED IN THE HIGHER
EDUCATIONAL INSTITUTIONS SO EXPENDITURE ON ALL LEVELS OF EDUCATION
SHOULD BE INCREASED.
3DIFFERENCE IN EDUCATIONAL OPPORTUNITIES ACROSS STATES:IN 2014-15,THE PER
CAPITA EDUCATION EXPENDITURE DIFFERS CONSIDERABLY ACROSS STATES.THIS
LEADS TO DIFFERENCES IN EDUCATIONAL OPPORTUNITIES AND ATTAINMENTS
ACROSS STATES.
4.INADEQUATE EXPENDITURE ON EDUCATION:THE EXPENDITURE ON EDUCATION IS
VERY LESS AS COMPARED TO THE DESIRED LEVEL OF EDITING EXPENDITURE
RECOMMENDED BY THE VARIOUS COMMISSIONS.ACCORDING TO THE
RECOMMENDATION IT MUST BE 6 PERCENT BUT IT WAS 4 PERCENT.
5.PROVISION OF FREE AND COMPULSORY EDUCATION:
IN 2009 THE GOVERNMENT OF INDIA ENACTED THE RIGHT TO EDUCATION ACT TO
MAKE FREE EDUCATION A FUNDAMENTAL RIGHT OF ALL CHILDREN IN THE AGE
GROUP OF 6 TO 14 YEARS
GOVERNMENT OF INDIA HAS STARTED LEVYING A 2PERCENT EDUCATION CESS ON
ALL UNION TAXES.REVENUE FROM EDUCATION CESS HAS BEEN EARMARKED FOR
SPENDING ON ELEMENTARY EDUCATION
IN ADDITION TO THIS AMOUNT THE GOVERNMENT SANCTIONED A LARGE OUTLAY
FOR THE PROMOTION OF HIGHER EDUCATION AND NEW LOAN SCHEMES FOR
STUDENTS TO PURSUE HIGHER EDUCATION.
EDUCATIONAL ACHIEVEMENTS IN INDIA

PARTICULA 1990 2000 2011 2017-18 ANALYSES

R

ADULT IN CASE OF
LITERACY MALE
RATE ADULT
LITERACY
MALE 61.9 68.4 79 82 RATE
INCREASED
FEMALE 37.9 45.4 59 66 FROM 61.9
PERCENT
TO
82PERCENT
IN CASE OF
FEMALE
 LITERACY
RATE
INCREASED
OVER THE
YEARS BUT
FAR BELOW
THAN THE
SATISFACTO
RY LEVEL

PRIMARY IN BOTH
COMPLETIO THE CASES
N RATE THE
PRIMARY
MALE 78 85 92 93 COMPLETIO
N RATE HAS
FEMALE 61 69 94 96 INCREASED

YOUTH YOUTH
LITERACY LITERACY
RATE RATE HAS
ALSO
MALE 76.6 79.7 90 93 IMCREASED
IN BOTH
FEMALE 54.2 64.8 83 90 THE CASES
MALE AND
FEMALE

FUTTER PROSPECT IN EDUCATIONAL SECTOR:

EDUCATION FOR ALL IS STILL A DISTANT DREAM:THE LITERACY RATE FOR BOTH
ADULTS AS WELL AS YOUTH HAVE INCREASED.HOWEVER THE ABSOLUTE NO OF
ILLITERATESIS STILL AS MUCH AS INDIA”S POPULATION AT THE TIME OF
INDEPENDENCE
GENDER EQUITY BETTER THAN BEFORE.THE DIFFERENCES IN LITERACY RATES
BETWEEN MALE AND FEMALES ARE NARROWING.IT INDICATES A POSITIVE
DEVELOPMENT IN GENDER EQUITY.
HIGHER EDUCATION:A FEW TAKERS
THE INDIAN EDUCATION PYRAMID IS STEEP INDICATING LESSER AND LESSER NONOF
PEOPLE REACHING THE HIGHER EDUCATION LEVEL.GOVERNMENT NEEDS TO
INCREASE ALLOCATION FOR HIGHER EDUCATION AND ALSO IMPROVE THE STANDARD
OF HIGHER EDUCATION INSTITUTIONS SO THAT STUDENTS CAN ABLE TO GET
EMPLOYABLE SKILLS IN SUCH INSTITUTIONS.

WHY WOMEN EDUCATION NEEDS TO BE PROMOTED:

TO IMPROVE ECONOMIC INDEPENDENCE AND SOCIAL STATUS OF WOMEN
WOMEN EDUCATION MAKES A FAVOURABLE IMPACT ON FERTILITY RATE AND HEALTH
CARE OF WOMEN AND CHILDREN.
ADULT LITERACY RATE:IT REFERS TO THE RATIO OF LITERATE ADULT POPULATION TO
THE TOTAL ADULT POPULATION IN A COUNTRY.

PRIMARY COMPLETION RATE:IT IS THE PERCENTAGE OF STUDENTS COMPLETING THE

LAST YEAR OF PRIMARY SCHOOL

YOUTH LITERACY RATE:IT IS THE PERCENTAGE OF PEOPLE AGED 15 TO 24 WHO CAN

WITH UNDERSTANDING READ AND WRITE A SHORT SIMPLE STATEMENT ON THEIR
EVERYDAY LIFE

REGULATORY AUTHORITY OF HEALTH AND EDUCATION

IN EDUCATION MINISTERS OF EDUCATION AT THE UNION AND STATE LEVEL AND
DEPARTMENTS OF EDUCATION AND VARIOUS ORGANISATIONS LIKE
NCERT,UGC,AICTE REGULATE THE EDUCATION SECTOR

IN HEALTH THE MINISTRIES OF HEALTH AT THE UNION AND STATE LEVEL AND ICMR
REGULATE THE HEALTH SECTOR.

HUMAN CAPITAL CREATES BOTH PRIVATE AND SOCIAL BENEFITS

IT BENEFITS NOT ONLY THE OWNER BUT ALSO THE SOCIETY IN GENERAL.FOR
EXAMPLE AN EDUCATED PERSON CAN EFFECTIVELY TAKE PART IN A DEMOCRATIC
PROCESS AND CONTRIBUTE TO THE SOCIO ECONOMIC PROGRESS OF A
NATION.SIMILARLY A HEALTHY PERSON PREVENTS SPREADING OF CONTAGIOUS
DISEASE AND EPIDEMICS BY MAINTAINING PERSONAL HYGIENE AND
SANITATION.FROM THIS POINTVOF VIEW WE CAM SAY THAT IT CREATES BOTH
PRIVATE AND SOCIAL BENEFITS

BETI BACHAO BETI PADHAO

THIS CAMPAIGN WAS LAUNCHED IN 2015 BY THE INDIAN GOVERNMENT TO GENERATE
AWARENESS AND IMPROVE THE EFFICIENCY OF WELFARE SERVICES INTENDED FOR
GIRLS IN INDIA.THE OBJECTIVES OF THIS INITIATIVE ARE
PREVENTION OF GENDER BIASED SEX SELECTIVE ELIMINATION
ENSURING SURVIVAL AND PROTECTION OF THE GIRL CHILD
ENSURING EDUCATION AND PARTICIPATION OF THE GIRL CHILD