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Expanding educational opportunities in a nation is something that ______ the development process.
Expanding educational opportunities in a nation is something that ______ the development process.
accelerates
Just as a country can turn physical resources like land into physical capital like factories, similarly, it can also turn ______ resources into human capital.
Just as a country can turn physical resources like land into physical capital like factories, similarly, it can also turn ______ resources into human capital.
human
Apart from investments in education, investments in health, on-the-job training, migration and ______ are the other sources of human capital formation.
Apart from investments in education, investments in health, on-the-job training, migration and ______ are the other sources of human capital formation.
information
A sick labourer without access to medical facilities is compelled to abstain from work and there is loss of ______.
A sick labourer without access to medical facilities is compelled to abstain from work and there is loss of ______.
People want to know the level of salaries associated with various types of jobs, whether the ______ institutions provide the right type of employable skills and at what cost.
People want to know the level of salaries associated with various types of jobs, whether the ______ institutions provide the right type of employable skills and at what cost.
Physical capital is ______ and can be easily sold in the market like any other commodity.
Physical capital is ______ and can be easily sold in the market like any other commodity.
[Blank] capital is intangible; it is endogenously built in the body and mind of its owner.
[Blank] capital is intangible; it is endogenously built in the body and mind of its owner.
Physical capital is completely mobile between countries except for some artificial trade restrictions, but ______ capital is not perfectly mobile between countries as movement is restricted by nationality and culture.
Physical capital is completely mobile between countries except for some artificial trade restrictions, but ______ capital is not perfectly mobile between countries as movement is restricted by nationality and culture.
Human capital benefits not only the owner but also the society in general, which is known as ______ benefit.
Human capital benefits not only the owner but also the society in general, which is known as ______ benefit.
Trained and educated on sound lines, a large population can itself become an ______ in accelerating economic growth and in ensuring social change in desired directions.
Trained and educated on sound lines, a large population can itself become an ______ in accelerating economic growth and in ensuring social change in desired directions.
With climate change, increasing pollution, and depleting natural resources, there will be a sizeable shift in how we meet the world's energy, water, food, and sanitation needs, again resulting in the need for new skilled labour, particularly in biology, chemistry, physics, agriculture, ______ science, and social science.
With climate change, increasing pollution, and depleting natural resources, there will be a sizeable shift in how we meet the world's energy, water, food, and sanitation needs, again resulting in the need for new skilled labour, particularly in biology, chemistry, physics, agriculture, ______ science, and social science.
The Indian software industry has been showing an impressive record over the past two decades, so entrepreneurs are now advancing views about how India can transform itself into a ______-based economy.
The Indian software industry has been showing an impressive record over the past two decades, so entrepreneurs are now advancing views about how India can transform itself into a ______-based economy.
Human capital considers education and health as a means to increase labour ______.
Human capital considers education and health as a means to increase labour ______.
Human development is based on the idea that education and health are integral to human ______ 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 development is based on the idea that education and health are integral to human ______ 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.
In a developing country like India, a large section of the population lives below the ______ line, and therefore cannot afford to access basic education and health care facilities.
In a developing country like India, a large section of the population lives below the ______ line, and therefore cannot afford to access basic education and health care facilities.
Both, the union and state governments, have been stepping up expenditures in the ______ sector over the years in order to fulfil the objective of attaining cent per cent literacy and considerably increase the average educational attainment of Indians.
Both, the union and state governments, have been stepping up expenditures in the ______ sector over the years in order to fulfil the objective of attaining cent per cent literacy and considerably increase the average educational attainment of Indians.
The percentage of education expenditure of total government expenditure indicates the ______ of education in the scheme of things before the government.
The percentage of education expenditure of total government expenditure indicates the ______ of education in the scheme of things before the government.
The percentage of education expenditure of GDP expresses how much of the people's ______ is being committed to the development of education in the country.
The percentage of education expenditure of GDP expresses how much of the people's ______ is being committed to the development of education in the country.
Elementary education takes a ______ share of total education expenditure and the share of the higher/tertiary education is the least.
Elementary education takes a ______ share of total education expenditure and the share of the higher/tertiary education is the least.
Government of India has also started levying a 2 per cent ‘education ______' on all Union taxes.
Government of India has also started levying a 2 per cent ‘education ______' on all Union taxes.
Generally, educational achievements in a country are indicated in terms of adult literacy level, primary education ______ rate and youth literacy rate.
Generally, educational achievements in a country are indicated in terms of adult literacy level, primary education ______ rate and youth literacy rate.
Though literacy rates for both adults as well as youth have increased, still the ______ number of illiterates in India is as much as India's population was at the time of independence.
Though literacy rates for both adults as well as youth have increased, still the ______ number of illiterates in India is as much as India's population was at the time of independence.
The differences in literacy rates between males and females are narrowing signifying a positive development in ______ equity.
The differences in literacy rates between males and females are narrowing signifying a positive development in ______ equity.
As per NSSO data, in the year 2011-12, the rate of ______ among youth males who studied graduation and above in rural areas was 19 per cent.
As per NSSO data, in the year 2011-12, the rate of ______ among youth males who studied graduation and above in rural areas was 19 per cent.
The amount of money spent on preventive medicine (vaccination), ______ medicine (medical intervention during illness), social medicine (spread of health literacy) and provision of clean drinking water and good sanitation are the various forms of health expenditures.
The amount of money spent on preventive medicine (vaccination), ______ medicine (medical intervention during illness), social medicine (spread of health literacy) and provision of clean drinking water and good sanitation are the various forms of health expenditures.
Firms spend on giving ______ to their workers, which is a source of human capital formation.
Firms spend on giving ______ to their workers, which is a source of human capital formation.
People ______ in search of jobs that fetch them higher salaries than what they may get in their native places, which involves cost of transport and higher cost of living.
People ______ in search of jobs that fetch them higher salaries than what they may get in their native places, which involves cost of transport and higher cost of living.
Expenditure incurred for acquiring ______ relating to the labour market and other markets is also a source of human capital formation.
Expenditure incurred for acquiring ______ relating to the labour market and other markets is also a source of human capital formation.
Decision regarding investment in physical capital is taken on the basis of one's ______ in this regard.
Decision regarding investment in physical capital is taken on the basis of one's ______ in this regard.
[Blank] capital formation is partly a social process and partly a conscious decision of the possessor of the human capital.
[Blank] capital formation is partly a social process and partly a conscious decision of the possessor of the human capital.
Continuous use of machine leads to ______ and change of technology makes a machine obsolete.
Continuous use of machine leads to ______ and change of technology makes a machine obsolete.
A ______ person can effectively take part in a democratic process and contribute to the socio-economic progress of a nation.
A ______ person can effectively take part in a democratic process and contribute to the socio-economic progress of a nation.
Empirical evidence to prove that increase in human capital causes economic growth is rather ______, which may be because of measurement problems.
Empirical evidence to prove that increase in human capital causes economic growth is rather ______, which may be because of measurement problems.
With various dramatic scientific and technological advances, such as the rise of big data, machine learning, and artificial ______, many unskilled jobs worldwide may be taken over by machines.
With various dramatic scientific and technological advances, such as the rise of big data, machine learning, and artificial ______, many unskilled jobs worldwide may be taken over by machines.
With various dramatic scientific and technological advances there need to be workforce, particularly involving mathematics, computer science, and data science, in conjunction with ______ abilities across the sciences and social sciences, and humanities.
With various dramatic scientific and technological advances there need to be workforce, particularly involving mathematics, computer science, and data science, in conjunction with ______ abilities across the sciences and social sciences, and humanities.
The Indian software industry has been showing an impressive record over the past two decades, and are starting advancing views about how India can transform itself into a knowledge-based economy by using ______ technology (IT).
The Indian software industry has been showing an impressive record over the past two decades, and are starting advancing views about how India can transform itself into a knowledge-based economy by using ______ technology (IT).
Expenditures on education and health make substantial long-term impact and they cannot be easily reversed; hence, ______ intervention is essential.
Expenditures on education and health make substantial long-term impact and they cannot be easily reversed; hence, ______ intervention is essential.
India's ______ mentions the functions to be carried out by each level of government.
India's ______ mentions the functions to be carried out by each level of government.
Flashcards
What is human capital?
What is human capital?
Human expertise, skills, and knowledge that contribute to economic productivity.
Sources of human capital
Sources of human capital
Education, health, on-the-job training, migration, and information.
Forms of health expenditure
Forms of health expenditure
Preventive medicine, curative medicine, social medicine, clean water, sanitation.
On-the-job training
On-the-job training
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Migration
Migration
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Information relating to the labour market
Information relating to the labour market
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External benefit of human capital
External benefit of human capital
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Human development
Human development
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Education expenditure of total government expenditure
Education expenditure of total government expenditure
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Education Cess
Education Cess
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Indicators of educational achievements
Indicators of educational achievements
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Gender equity in education
Gender equity in education
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Study Notes
- Unit III is titled "Current Challenges Facing the Indian Economy"
- Chapter 4 is titled "Human Capital Formation in India"
- Study of the chapter, allows an understanding of human resources, human capital formation, and human development concepts
- Understand links between investment in human capital, economic growth, and human development
- Understand the need for government spending on education and health
- Understand the state of India's educational attainment
Introduction
- Human capacity to store and transmit knowledge via conversation, songs, and lectures made a difference over time
- Training and skill are needed to do things efficiently
- Labor skill of an educated person is more than that of an uneducated person and makes a greater contribution to economic growth
- Education provides social standing, pride, and the ability to make better life choices
- Education helps understand societal changes and stimulates innovations
- Educated labor force can easily adapt to new technologies
- The need for expanding educational opportunities in a nation accelerates development
Human Capital
- Physical resources (land) can be turned into physical capital (factories)
- Human resources (nurses, farmers, teachers, students) can be turned into human capital (engineers, doctors)
- Societies need sufficient human capital in the form of educated and trained people
- Investment in human capital is needed to produce more human capital out of human resources
Sources of Human Capital
- Investment in education is a main source of human capital
- Other sources include investment in health, on-the-job training, migration, and information
- Investing in education increases future income
- Health is important to the development of a nation as much as it is important to the development of an individual
- A sick laborer without access to medical facilities cannot work and productivity is lost
- Expenditure on health is an important source of human capital formation
- Forms of health expenditures are preventive medicine (vaccination), curative medicine (medical intervention during illness), and social medicine (spread of health literacy)
- Expenditure on providing clean drinking water and good sanitation are also health expenditures
- Health expenditure increases the supply of a healthy labor force, and is a source of human capital formation
- Firms spend on giving on-the-job training to their workers which takes different forms
- Workers are trained in the firm itself under the supervision of a skilled worker
- Workers may be sent for off-campus training
- Increased labor productivity from training is more than the training cost
- People migrate to jobs that pay more money than they may get in their native places
- Unemployment causes rural-urban migration in India
- Technically qualified people migrate to other countries because of higher salaries
- Migration involves the cost of transport, higher cost of living and psychic costs of living in a strange socio-cultural setup
- Earnings in the new place outweigh the costs of migration
- Expenditure on migration is a source of human capital formation
- People spend money acquiring information about labor market and other markets like education and health
- People want to know the level of salaries associated with various types of jobs, what educational institutions provide, and at what cost
- Information is necessary to make decisions regarding investments in human capital
- Information helps with efficient utilization of the acquired human capital stock
- Expenditure incurred for acquiring information relating to the labor market and other markets is a source of human capital formation
Physical and Human Capital - Box 4.1
- Both physical and human capital formation are outcomes of conscious investment decisions
- Entrepreneurs use knowledge to calculate rates of return and rationally decide which investments should be made
- Human capital formation takes place when one cannot decide whether it maximizes their earnings
- Decisions regarding human capital investments are made by children, parents and society, even at college level
- Human capital formation is partly a social process and a conscious decision made by the possessor of the human capital
- Owners of physical capital, like a bus, are not needed be present where the bus is used
- Bus Drivers, need to be present when it is being used for transportation
- Physical capital is tangible and can be easily sold in the market
- Human capital is intangible and built in the body and mind of its owner
- Only the services of the human capital are sold
- Necessity of the owner of human capital to be present in the place of production
- Physical capital can be separated from the owner, unlike human capital
- Human capital is not perfectly mobile between countries with movement restricted by nationality and culture
- Physical capital formation can be built even through imports whereas human capital formation is done through policy formulations
- Both forms of capital depreciate with time but in different ways
- Continuous use of a machine leads to depreciation, but machines are made obsolete by a change in technology
- Depreciation occurs with ageing for human capital, but can be reduced through continuous investment in health and education
- Investment facilitates human capital deal with technology, which does not happen with physical capital
- Human capital benefits the owner and society
- This is called external benefit
- Educated persons take part in a democratic process and help the socio-economic progress of a nation
- Healthy person stops the spread of contagious disease
- Human capital creates private and social benefits
- Physical capital creates only private benefit, which is benefits that flow to those who pay the price for the product and services
Human Capital and Economic Growth
- Physical capital is the base for conceptualising human capital
- There are some similarities between both forms of capital
- The labor skill of an educated person is more than that of an uneducated person, and generates more income
- Economic growth means the increase in real national income of a country
- Contribution of the educated person to economic growth is more than that of an illiterate person
- A healthy person could provide uninterrupted labor supply for a longer period of time
- Health, education, training, job market information and migration increase an individual’s income generating capacity
- Increased productivity of human capital contributes substantially to increased labor productivity
- Stimulates innovations and creates ability to absorb new technologies
- Education provides knowledge to understand changes in society and advancements in science
- High income causes building of high level of human capital and vice versa
- India recognised the importance of human capital in economic growth long ago
- Human resources development is to be assigned a key role in any development strategy, particularly in a country with a large population
- Trained and educated population can be an asset in accelerating economic growth and in ensuring social change
- It is difficult to establish a relation of cause and effect from the growth of human capital to economic growth
Select Indicators of Development in Education and Health Sectors - Table 4.1
- Real Per Capita Income (in Rs)
- 1951 - 7,651
- 1981 - 12,174
- 1991 - 15,748
- 2001 - 23,095
- 2016-17 - 77,659
- Crude Death Rate (Per 1,000 Population)
- 1951 - 25.1
- 1981 - 12.5
- 1991 - 9.8
- 2001 - 8.1
- 2016-17 - 6.3
- Infant Mortality Rate
- 1951 - 146
- 1981 - 110
- 1991 - 80
- 2001 - 63
- 2016-17 - 33
- Life Expectancy at Birth (in Years) - Male
- 1951 - 37.2
- 1981 - 54.1
- 1991 - 59.7
- 2001 - 63.9
- 2016-17 - 67
- Life Expectancy at Birth (in Years) - Female
- 1951 - 36.2
- 1981 - 54.7
- 1991 - 60.9
- 2001 - 66.9
- 2016-17 - 70
- Literacy Rate (%)
- 1951 - 16.67
- 1981 - 43.57
- 1991 - 52.21
- 2001 - 65.20
- 2016-17 - 76
- Sectors have grown simultaneously
- Growth in each sector probably reinforces the growth of every other sector
- National Education Policy 2020 mentions that the world is undergoing rapid changes in the knowledge landscape
- Skilled workforce, particularly involving mathematics, computer science and data science will be in increasingly greater demand
- Climate change, and depleting natural resources will cause a shift on how we make use of the world’s energy, water, food, and sanitation
- There is a need for new skilled labor, especially in biology, chemistry, physics, agriculture, climate science, and social science
- The growing emergence of epidemics and pandemics will call for global research in infectious disease management and development of vaccines
India as a Knowledge Economy - Box 4.2
- The Indian software industry has been showing remarkable records over the past two decades
- Entrepreneurs, bureaucrats, and politicians are advancing on how to transform India into a knowledge-based economy with IT
- IT depends greatly on economic development
Human Capital and Human Development
- Considers education and health as a means to increase labor productivity
- Human development is based on the idea that education and health are integral to human well-being
- Human capital sees human beings as a means to an end
- Human development states human beings are ends in themselves
- Human welfare should be increased with investments in education and health, even if it does not result in higher productivity
- Basic education and basic health are important in themselves
- Every individual has a right to basic education and health, and the right to be literate and lead a healthy life
State of Human Capital Formation in India
- Focuses on analyzing human capital formation in India
- Human capital formation is the outcome of investments in education, health, on-the-job training, migration, and information
- Education and health are important sources of human capital formation
- India is a federal country with a union government, state governments and local governments
- Constitution of India mentions the functions to be carried out by each level of government
- Expenditures on both health and education are to be carried out by all three tiers of government simultaneously
- Analyzes only the education sector
- Education and health generate private and social benefits
- Private and public institutions exist in the education and health service markets
- Expenditures on education and health have long-term impacts and can not be easily reversed
- Government intervention is essential
- People do not have complete information about the quality of education and health services and their costs
- Providers of education and health services acquire monopoly power and are involved in exploitation
- The government makes sure private providers adhere to the standards stipulated
- Union and state level ministries of education in India, departments of education and various organizations facilitate institutions in the education sector
- Similar ministries of health in the Union, departments of health and many organizations facilitate institutions in the health sector
- Large section of population lives below the poverty line
- People cannot afford basic education and health care facilities
Education Sector in India
- Education expenditure as a percentage of total government expenditure and as a percentage of GDP
- The percentage of education expenditure indicates the importance of education to the government
- Percentage of education expenditure of GDP expresses how much of people’s income is committed to education
- Education expenditure from 1952-2014 increased from 7.92% to 15.7% and percentage of GDP increased from 0.64% to 4.13%
- Increase in education expenditure has not been uniform and there has been irregular rise and fall
- Private and philanthropic expenditures should be included
- Elementary education takes the major share of total education expenditure
- Share of higher/tertiary education is the least
- Government spends less on tertiary education
- Expenditure per student in tertiary education is higher than elementary
- Higher education can not be transferred to elementary education
- There were differences in educational opportunities across states
- In 2014-15, per capita public expenditure in Himachal Pradash was Rs 34,651 and in Bihar was Rs 4088
- Inadequacy of education expenditure is compared with desired level of commissions recommendations
- Education Commission (1964-66) said 6 per cent of GDP should be spent to grow educational achievement
- Tapas Majumdar Committee appointed by Government of India in 1999 showed expenditure of Rs 1.37 lakh crore over 10 years
- Government is trying to bring all Indian children between 6 and 14 into schooling
- Current level of 4% of GDP is inadequate
- In 2009, there was Right of Children to Free and Compulsory Education Act
- Government started the 2 per cent ‘education cess’ on all Union taxes.
- Government sanctions large outlay for the promotion of education
Future Prospects
- Literacy rates for adults and youth have increased
- Absolute number of illiterates in India is as much as India's population at the time of independence.
- The Constitution of India was passed by the Constituent Assembly in 1950 and said to provide free education for all under 14 years of age
- Had we done that, everyone would now be literate
Gender Equity
- Differences in literacy rates between males and females are narrowing (positive)
- Need to promote education for women to have a positive impact on fertility rate, and health care of women and children
- Cannot be complacent about literacy rates
- Miles to go in achieving adult literacy
Higher Education
- Steep, indicating lesser number of people reaching higher education level
- Level of unemployment among educated youth is the highest
- Unemployment among youth males who studied graduation in rural areas was 19 percent, as of the data from NSSO in 2011-2012,
- Their urban counterparts had less unemployment at 16 per cent
- In contrast, only 3-6 per cent of primary level educated youth in rural and urban areas were unemployed
- Therefore, the government should increase allocation for higher education and improves the standard of education in institution to improve employable skills
Conclusion
- The union and state governments have been spending money towards the development of education and health sectors
- Education and health across different sectors of society allows for simultaneous economic growth and equity
- Rich stock of scientific and technical manpower in the world for India
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