Introduction
Education is sought not only as it confers higher earing capacity on people but also for its other highly valued benefits: it gives one a better social standing and pride; it enables one to make better choices in life; it provides knowledge to understand the changes taking place in society; it also changes taking place in society; it also stimulates innovations.
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 nurses, farmers, teachers, students into human capital like 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.
Sources of Human Capital
Investment in education is considered as one of the main sources of human capital. There are several other sources as well. Investments in health, on-the. Job training, migration and information are the other sources of human capital formation. The amount of money spent on preventive medicine (vaccination), curative 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. Health expenditure directly increases the supply of healthy labour force and is, thus, a source of human capital formation. Firms spend on giving on-the-job-training to their workers. This may take different forms: one, the workers may be trained in the firm itself under the supervision of a skilled worker; two, the workers may be sent for off-campus training. In both these cases firms incur some expenses. Firms will, thus, insist that the workers should work form a specific period of time, after their on-the-job training.
People migrate in search of jobs that fetch them higher salaries than what they may get in their 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.
Human Capital and Economic Growth –
- Who contributes more to national income – a worker in a factory or a software professional? 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. If a healthy person could provide uninterrupted labour supply for a longer period of time, then health is also an important factor for economic growth. Thus, both education and health, along with many other factors like on-the-job training. Job market information and migration, increase an individual’s income generating capacity.
- India recognized the importance of human capital in economic growth long ago. The Seventh Five Year Plan says, “Human resources development (read human capital) 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.
Human Capital And Human Development
The two terms sound similar but there is a clear distribution between them. Human capital considers education and health as a means to increase labour productivity. Human development is based on the idea that education and health are integral to human well-being because only when people have the ability to read 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. In such a view, every individual has a right to get basic education and basic health care, that is, every individual has a right to be literate and lead a healthy life.
State of Human Capital Formation India
- India is a federal country with a union government, state governments and local governments (Municipal Corporations, Municipalities and Village Panchayats). The constitution of India mentions the functions to be carried out by each level of government. Accordingly, expenditures on both education and health are to be carried out simultaneously by all the three tiers of the government.
- In a developing country like India, with a large section of the population living below the poverty line, many people cannot afford to access basic education and health care facilities. Moreover, a substantial section on India’s population cannot afford to reach super specialty health care and higher education. Furthermore, when basic education and health care is considered as a right of the citizens, then it is essential that the government should provide education and health services free of cost for the deserving citizens and those from the socially oppressed classes. Both, the union and state governments, have been stepping up expenditures in the education sector over the years in order to fulfill the objective of attaining cent per cent literacy and considerably increase the average educational attainment of Indians.
Education Sector In India
- Growth in Government Expenditure on Education – The percentage of ‘education expenditure of total government expenditure’ indicates the importance of education in the scheme of things before the government. The percentage of ‘education expenditure of GDP’ expresses how much of people’s income is being committed to the development of education in the country.
- Elementary education takes a major share of total education expenditure and the share of the higher/tertiary education (institutions of higher learning like colleges, polytechnics and universities) is the least. Though, on an average, the government spends less on tertiary education, ‘expenditure per student’ in tertiary education is higher than that of elementary. This does not mean that financial resources should be transferred from tertiary education to elementary education. As we expand school education.
- Government of India has also started levying a 2 per cent ‘education cess’ on all Union taxes. The revenues from education cess has been earmarked for spending on elementary education. In addition to this, the government sanctions a large outlay for the promotion of higher education and new loan schemes for students to pursue higher education.
Educational Achievements in India – Generally, educational achievements in a country are indicated in terms of adult literacy level, primary education completion rate and youth literacy rate.
Future Prospects
- Education for all – Still a Distant Dream – When the constitution of India was passed by the constituent Assembly, it was noted in the Directive Principles of the constitution that the government should provide free and compulsory education for all children up to the age of 14 years within 10 years from the commencement of the constitution. Had we achieved this, we would have cent per literacy by now.
- Gender Equity Better than Before – The differences in literacy rates between males and females are narrowing signifying a positive development in gender equity; still the need to promote education for women in India is imminent for various reasons such as improving economic independence and social status of women and also because women education makes a favorable impact on fertility rate and health care of women and children.
- Higher Education a Few Takers – The India education pyramid is steep, indicating lesser and lesser number of people reaching the higher education level. Moreover, the level of unemployment among educated youth is the highest.
Conclusion –
The economic and social benefits of human capital formation and human development are well known. The union and state governments in India have been earmarking substantial financial outlays for development of education and health sectors. The spread of education and health services across different sectors of society should be ensured so as to simultaneously attain economic growth and equity. India has a rich stock of scientific and technical manpower in the world. The need of the hour is to better it qualitatively and provide such conditions so that they are utilized in India.
