NOTES- XII Chapter 5- Human Capital
Human capital refers to the stock of skill, ability, expertise, education and knowledge in a nation at a point of time.
Human Capital formation- Human Capital formation implies the development of abilities and skills among the population of the country.It is the process of adding to the stock of human capital over a period of time.
Physical capital refers to assets which themselves have been manufactured and are used for production of other goods and services.
Sources of human capital formation.
(i) Expenditure on education.
(ii) Expenditure on health.
(iii) On the job training.
(iv) Migration.
(v) Expenditure on information.
Role of human capital formation in economic growth.
(i) Raises production
(ii) Change in emotional and physical environment of growth.
(iii) Improves quality of life.
(iv) Raises life expectancy.
(v) Innovative skills.
(vi) Raises social justice and equality.
Problems facing human capital formation.
(i) Rising population
(ii) High regional and gender inequality.
(iii) Brain drain
(iv) Insufficient man power planning.
(v) Insufficient on the job training in agriculture
(vi) High poverty levels
(vii) Low academic standards.
Problems relating to development of education in India
(i) Large number of illiterates.
(ii) Inadequate vocationalisation.
(iii) Gender bias.
(iv) Low rural access level.
(v) Low government expenditure on education.
Interrelationship between human capital formation and economic growth
Human capital formation raises the process of Economic Growth and economic growth raises the process of human capital formation.
(i) Rise in human capital raise economic growth
Rise in Human Capital
↓
Modern attitude and outlook, better quality of life, Higher life expectancy
↓
More Efficiency
↓
More Production
↓
More economic growth
(ii) Rise in economic growth raises human capital formation
Rise in Economic Growth
↓
Rise in per capita income
↓
More investment in education and health
↓
Rise in human capital
Human capital formation in India
(i) The seventh five year plan stressed upon the importance of human capital.
(ii) In India, ministry of education at the Centre and state level, NCERT (National Council of Educational Research and Training), UGC (University Grant commission), AICTE (All India Council of Technical Education) regulate the education sector.
(iii) In India, Ministry of Health at the Union and the State level and ICMR (Indian Council of Medical Research) regulate the health sector.
In addition to it, since independence, the number of institutions imparting technical and professional education has increased significantly in India in which polytechnical institutions, engineering colleges, medical collages, research centres like IIT, agriculture research institute, India statistical institute, IIM etc. are playing prominent roles.
