Human capital formation in India project for class 12

Human capital formation in India project for class 12

1. HUMAN CAPITAL
FORMATION

3. WHAT IS HUMAN
CAPITAL?
•Just as a country can turn physical resources like land into physical capital
like factories, similarly it can also turn human resources like students
into engineers and doctors.
•Societies need sufficient human capital in the first place-In the form of
competent people who have themselves been educated and trained as
professors and other professionals. This means that we need investment
in human capital out of human resources.

5. POINTS OF DIFFERENCE PHYSICAL CAPITAL HUMAN CAPITAL
✔Physical Construction
It has physical construction. It can be
seen, touched and easily sold.
It is intangible and it is not sold.
Only its services are sold.
✔Separation
It is separable from its owners.It cannot be separated from its
owners.
✔Building
It can be built by imports also. It is built by conscious policy
formulation of state and its expenditure.
✔Nature of Benefits
It creates private benefit.
It creates both private and social
benefits.
✔Mobility
Completely mobile subject to
artificial trade restriction placed at
some places.
It is not perfectly mobile. It is
restricted by nationality and culture.

6. HUMAN CAPITAL HUMAN DEVELOPMENT
Human capital consider education and health as a
means to increase labor productivity.

Human development considers that education and
health are integral to human well-being because
only when people have the ability to read and
write and the ability to lead a long and healthy
life, they will be able to make other choices
which they value.

Human capital treats human beings as a means to
an end; the end being the increase in
productivity. Any investment in education and
health is unproductive if it does not enhance
output of goods and services.

Human welfare should be increased through
investments in education and health even if such
investments do not result in higher labor
productivity. Therefore, basic education and basic
health are important in themselves, irrespective
of their contribution to labor productivity.

8. •Spending on education by
individuals is similar to spending
on capital goods by companies
with the objective of increasing
future profits over a period of time.

•Likewise, individuals invest in
education with the objective of
increasing their future income.
1) EDUCATION

9. 2) HEALTH
•Health is important for the development
of an individual.

•Medicines, provision for clean
drinking water and good sanitation
are various forms of health
expenditures.

•Health expenditure directly increases
the supply of healthy labour force
and is, thus, a source of human capital
formation.

10. 3) ON THE JOB TRAINING
•Firms spend on giving on-the job-training to their workers. This may take different forms:
1.The workers may be trained in the firm itself under the supervision of a skilled worker.
2.The workers may be sent for off-campus training.
•In both these cases firms incur some expenses. Thus they insist that the workers should work for a
specific period of time, after their on-the-job training, during which it can recover the benefits of the
enhanced productivity owing to the training.
•Expenditure regarding on-the-job training is a source of human capital formation as the return of such
expenditure in the form of enhanced labour productivity is more than the cost of it.

11. 4) MIGRATION
•People migrate in search of jobs that fetch them higher
salaries than what they may get in their native places.

•Unemployment is the reason for the rural-urban
migration in India. Technically qualified persons, like
engineers and doctors, migrate to other countries because
of higher salaries that they may get in such countries.

•Migration in both these cases involves cost of transport,
higher cost of living in the migrated places and psychic
costs of living in a strange socio-cultural setup.

•The enhanced earnings in the new place outweigh the
costs of migration; hence, expenditure on migration is
also a source of human capital formation.

12. 5) INFORMATION
•People spend to acquire information relating to the
labour market and other markets like education and
health.

•This information is necessary to make decisions
regarding investments in human capital as well as for
efficient utilisation of the acquired human capital stock.

•Expenditure incurred for acquiring information
relating to the labour market and other markets is also a
source of human capital formation.

13. HEALTH AS A HUMAN RESOURCE

14. •The government of India has evolved a national health policy, which lays down stress on the
preventive, promotive and rehabilitative aspects of life.

•Healthy population helps indirectly in the economic development of the country.

•All machines, equipment's and tools require men to operate on them. Health is an essential
requirement for making an efficient, active and competent working force. There is always a sound
mind in a sound body.

•We should try our best to improve the health standards of the citizens eradicate diseases such as
malaria, smallpox, polio, tetanus etc.

•Illness is a part of human life so there should be sufficient number of hospitals and dispensaries to
cure ailing patients.

•Health helps indirectly the economic development by supplying active, energetic and healthy
working force, which activates the entire production process.

15. Standard of Health Before Independence
•The Average standard of health in India was very poor on the eve of adoption of planned
development:

•Death rate per year = 27.4 per thousand

•Infant Mortality per year = 183 per thousand

•Life expectancy = 32.45 years(Males) 31.66(Females)

•There was one doctor for every 6300 persons, one nurse for every 4300 persons, one trained
mid-wife for every 60,000 persons.

16. EDUCATION AS HUMAN RESOURCE
Human Resource refers to the population of a country and the efficiency, productivity, skill and
farsightedness of its inhabitants. Education is an important factor for the development of human resources:
1.Education improves upon the level of understanding.
2.It increases the capacity and mental efficiency of people to produce more.
3.Technical education develops the efficiency among the laborers to use highly advanced techniques of
production.
4.Education modernizes the attitudes and behaviors of the people which is important for rapid growth
of the economy.

17. Educational Sector In India
Primary Education

The Indian government lays emphasis to primary education up to the age of fourteen years.

80% of all recognized schools at the Elementary Stage are government run or supported, making it the
largest provider of education in the Country.

Figures released by the Indian government in 2011 show that there were 5,816,673 elementary school teachers
in India.

Education has also been made free for children for 6 to 14 years of age or up to class VIII under the Right of
Children to Free and Compulsory Education Act 2009.

The current scheme for universalization of Education for All is the Sarva Shiksha Abhiyan which is one of
the largest education initiatives in the world.

18. Secondary Education

Secondary education covers children 14–18 which covers 88.5 million children according to the
Census, 2001.

India's secondary school system is its emphasis on profession based vocational training to help
students attain skills for finding a vocation of his/her choosing.

A special Integrated Education for Disabled Children (IEDC) programme was started in 1974
with a focus on primary education. The government started the Kendriya Vidyalaya project in 1965
to provide uniform education in institutions following the same syllabus at the same pace
regardless of the location to which the employee's family has been transferred.

19. Higher Education

India's higher education system is the third largest in the world, after China and the United States.

The main governing body at the tertiary level is the University Grants Commission (India),
which enforces its standards, advises the government, and helps coordinate between the centre and
the state.

Some institutions of India, such as the Indian Institutes of Technology (IITs), have been globally
acclaimed for their standard of undergraduate education in engineering.

Six Indian Institutes of Technology and the Birla Institute of Technology and Science– Pilani
were listed among the top 20 science and technology schools in Asia by Asiaweek. The Indian
School of Business situated in Hyderabad was ranked number 12 in global MBA rankings by the
Financial Times of London in 2010 while the All India Institute of Medical Sciences has been
recognized as a global leader in medical research and treatment.

21. Human Capital and Economic Growth
•We know that the labour skill of an educated person is more than that of an uneducated person and that
the former generates more income than the latter.
•Economic growth means the increase in real national income of a country; naturally, the contribution of the
educated person to economic growth is more than that of an illiterate person.
•Education provides knowledge to understand changes in society and scientific advancements, thus, facilitate
inventions and innovations.

22. •The enhanced productivity of human beings or human capital contributes substantially not only
towards increasing labour productivity but also stimulates innovations and creates ability to
absorb new technologies.

•The human capital growth in developing countries has been faster but the growth of per capita
real income has not been that fast.

•There are reasons to believe that the causality between human capital and economic growth
flows in either directions.

•The Seventh Five Year Plan of India says “Human resources development has necessarily to be
assigned a key role in any development strategy, particularly in a country with a large population.

•Trained and educated on sound lines, a large population can itself become an asset in accelerating
economic growth and in ensuring social change in desired directions.”

24. What is Human Capital Formation?
•Human Capital is undoubtedly superb biological computer . It enables thinking
process. Man has head start over other species. Men are rational in their decision
making. It requires that the people must be literate, educated and skilled.

•In order to become more efficient and productive people should be trained, skilled
and professionally qualified.

•It is rightly said that the average overall lifetime earning of a graduate is more
than a matriculate.

25. Role of Human Capital Formation

26. •Increases production - Knowledgeable, skilled, qualified persons can contribute their maximum
to the economy. They can increase production through optimum utilization of resources .

•Increases productivity – It promotes innovations , creativity and new technology so that
maximum possible time and cost.

•Improve quality of life – Human capital formation focuses on quality of population, better the
quality of population more will be the economic growth and development.

•Creates positive attributes – People with positive attributes are more open to creativity and
innovations and are rational in their decision making .

•Life expectancy – Human capital formation increases the life expectancy of people.

27. Problems of Human Capital in India
•Rising Population-Large size of population adversely effects the quality of human capital
formation. Larger the population, more capital is required for the purpose of investment in
education and health.

•High level of Poverty-Major section of Indian population living under poverty line finds it
difficult to arrange basic necessities of life. Hence, they cannot afford quality education and
health facilities.

•Braindrain-The migration of highly skilled work force to other countries for better jobs is
known as braindrain. Due to braindrain country loses it’s qualified and skilled workforce
affecting the process of economic growth.

28. HUMAN DEVELOPMENT INDEX
The Human Development Index (HDI) is a composite statistic of life expectancy, education, and
income indices to rank countries into four tiers of human development. It was created by economist
Mahbub ul Haq, followed by economist Amartya Sen in 1990,and published by the United
Nations Development Programme.

29. Three Basic Human Capabilities of HDI
•Longevity-longevity here means life expectancy at birth. It means the number of years a newly
born baby is expected to live. Life expectancy in India is 63 years.

•Educational attainment-It refers to the educational attained by the people of the country on an
average basis. The constituents of educational attainment are the following two variables:
1. Adult Literacy Rate-The rate of people aged 15 or above who can understand, read and write
a short and simple statement in their everyday life is known as ALR.
2. Gross Enrolment Ratio-GLR is defined as the number of students enrolled at different levels
of education.

•Real GDP per capita-It is taken as a measure of the standard of living of the people of a
country.

30. HDI Formula
 

31. World Map by Quartiles of Human Development
Index
Very
High
High
Medium
Low
Data unavailable

32. THANK YOU!