Class - XII

Subject -Economics (Indian Economic Development)

Chapter- 5
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

2. Higher Productivity of Physical Capital
3. Innovative Skills:
4. Higher Rate of Participation:

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. Insufficient On - the - Job Training in Primary Sector - Agriculture in India
remains neglected in professional skills as conventional wisdom is
dominant.
4. 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.
 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 remodeled 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. Gender - Bias: Female enrolment ratio is low when compared to male
enrolment ratio. Drop - out ratio of females too is high.
3. Low Rural Access Level: The rural population has less access to education
compared to urban.
4. Privatization: Expensive private education creates and increased the gulf
between access level for rich and poor. Weaker sections remained
excluded from the educational opportunities.