Chapter-V Human Capital Formation
HUMAN CAPITAL
Human capital refers to
the stock of skill, ability, expertise, education and knowledge in a nation at
a given point of time.
Chapter
-05
HUMAN
CAPITAL FORMATION
Physical capital refers to all
those inputs which are required for further production, like plant and
machinery, factory, buildings, raw materials, etc.
Human capital refers to the
stock of skill, ability, expertise, education and knowledge involved in the
people.
Meaning of Human
Capital formation: Human
capital formation means the development of abilities and skills among the
population of the country.
Sources of Human
Capital Formation:
1) Expenditure
on education: (It is one of the most important sources of human capital
formation) proper utility of man power depends on the system of education,
training and industrial experience of the people. Spending on education by
individuals is similar to spending on capital goods by companies with the
objective of increasing future profits once a period of time. This increase the
income of the people and their standard of living.
Investment in
education is not only highly productive but also it is yields increasing return
and accelerates economic growth of all the resources education receives most
importance because it gives maximum contribution to the development of the
country.
2) Expenditure on Health: Health
is an important input for a development of a nation.
Expenditure on health is needed
in the following areas.
a. A preventive medicine known as
vaccination curative medicines, i.e., medical intervention during the time of
illness is very important.
b. Provision of clean drinking
water and good sanitation is very important for improvement of health. Health
expenditure directly increases the physical capacity of human being and it
raises the supply of healthy labor force.
3) On the job training: productivity
of physical capital improvement in human capital. Due to this reason many firms
provide on the job training to their workers. Such training has the advantage
that it can be provided fast and without much cost. It increases the skill and
efficiency of the workers and leads to an increase in production by
productivity. Expenditure regarding on the job training is the source of human
capital formation because it increase labor productivity than its cost.
4) Expenditure on migration.
Unemployment people from rural migrate to urban areas technically qualified
people migrate to other countries for higher salaries. Though it results in
cost of migration and higher cost of living due to migration in migrated place
it enhances earning that their cost of migration. Hence it is a source of human
capital formation.
5) Expenditure
on Information:-
Expenditure is incurred to acquire information relating to labour market and
other market. It involves amount spent on seeking information about educational
institutions, education standard their educational needs and cost of education.
This information is necessary to make decisions regarding investment in human
capital as well as for efficient utilization of the acquired human capital
stock.
Importance of
Human capital formation
1. Human Capital
formation is very important for the growth of an economy.
(i) Effective
use of physical capital: Its growth and productivity depends on human capital
formation.
(ii) Human
capital formation raises the productivity and production as knowledgeable and
skilled worker makes the better (use of the resources). Increase in productivity
and quality production depends on technical skill of the people which can be
acquired only by education or training and maintaining health of the people.
2. Inventions,
innovations and technological improvement are all due to the extra knowledge
acquired during education which provides lot of innovations and inventions.
3. The knowledgeable,
skilled and physically fit people help in the human capital formation.
4. Increases
life expectancy: Formation of human capital raises life expectancy of the people.
Health facilities and availability of nutritive food enable people to live a
healthy and long life. This in turn, adds to the quality of life.
5. Improves
Quality of life: The quality of population depends upon the level of education health
of a person and skill formation acquired by the people. Human capital formation
not only makes people productive and creative but also transforms the lives of
the people.
6. Control of
population growth: It has been observed that educated persons have smaller families
as compared to illiterate families, so, spread of education is necessary to
control the population growth rate.
Reasons for poor
Human Capital formations are:
1) Insufficient
Resources:- The resources allocated to the formation of human capital have been
much less than the resources required for meeting the educational & health
needs of the country. Due to this reason, the facilities for the formation of
human capital have remained grossly inadequate.
2) Serious
Inefficiencies: There are a lot of wastages of society’s resources as
capabilities of educated people are either not made use of (in case of
unemployment or are underutilized in case of unemployment). Massive literacy,
non-education of many children, poor health facilities are other
inefficiencies, which have not been attended to adequately & properly.
3) High Growth of population:
The continuous rise in population has adversely affected the quality of human
capital.
4) Lack of proper manpower
planning: There is an imbalance between the demands for the supply of human
resources of various categories, especially in case of highly skilled personnel.
The absence of such balancing has resulted in the wastage of resources.
Human Capital
& Human Development
S.No
|
Human Capital
|
Human
Development
|
1.
|
Human Capital
consider education & health as a means to increase labour productivity
|
Human
Development is leased on the Idea that education & health are integral to
human well being
|
2.
|
In Human
capital, investment in education and health is considered to be unproductive,
if it does not increase output of goods & services
|
In case of
human development, investments in education and health is taken to be
productive, even if it does not leads to higher output
|
3.
|
Human capital
treats human beings as a means to an end; the end being the increase in
productivity
|
In the human
development perspective, human welfare should be increased through investment
in
education
& health as every individual & health as every individual has a right
to be literate & lead a healthy life
|
Growth of
Education Sector in India
There has been
considered growth in the field of Education. The number of schools increased from
230.7 thousands (1950-51) to 1,215.8 thousands (2005-06). The no. of teachers
in the same period increased from 751 thousand to 6010 thousands & no of
students from 23,800 thousands to 2, 22,700 thousands.
Gross
Environment Ratio
Gross Enrollment
Ratio (GER) is the total enrolment of pupil in grade or cycle or level of education,
regardless of age, expressed as percentage of the corresponding eligible
official age group population in a given school year. GER in elementary education
increased steadily from 82% in 1950-51 to 94.85% in 2005-06.
Literacy Rate
The literacy rate has increased
from 18.33% to in 1951 to 74.04% in 2011
Elementary
Education in India
Elementary
Education in India means eight years of schooling from the age of six i.e., primary
& middle school education together, is called Elementary Education.
Elementary Education, therefore is the foundation on which the development of
every citizens and the nation as a whole hinges. The government has made
elementary education compulsory and free. But, the goal of universal elementary
education in India has been very difficult to achieve till now.
In December
2002, the government of India made free and compulsory education, a fundamental
right of all children in the age group of 6-14 years.
Primary
Education Schemes hu
Government has made number of
schemes to make “Education for all”The following are the few schemes
Sarva Shiksha
Abhiyan (SSA)
It was launched
in 2001 to universalize & improve the quality of Elementary Education in
India through community ownership of Elementary Education. The SSA is being
implemented in partnership with states to address the needs of children in age
group of 6-14 years. The achievements under SSA up to September 30, 2007,
include constructions of 7, 13,179 additional classrooms, 1, 72,381 drinking
water facilities, construction of 2, 18,075 toilets. Supply of free textbooks
of 6.64 crore children & appointment of 8.10 lakh teacher’s besides opening
of 1,86,985 (till 31.3.07) new schools.
National
Programme for Education of Girls at Elementary Education (NPEGEL):
The programme is
aimed at enhancing girl’s education by providing additional support for
development of a model girl child friendly school. In every cluster with more
intense community mobilization and supervision of girls enrolment in schools.
Under NPEGEL, 35,252 models schools have been opened. In addition to supporting
25,537 Early Childhood Care & Education (ECCE) centers. Besides, 24,837
additional classrooms have been constructed and 18.75 lakh teachers have been
given training on gender sensitization.
Kasturba Gandhi
Balika Vidyalaya (KGBV)
The Kasturba Gandhi Balika
Vidyalaya (KGBV) scheme was launched in July 2004 for setting up residential
schools at upper primary level, for girls belonging predominantly to the SC, ST,
OBC & minority community. The scheme ran as separate scheme for two years
but was merged with Sarva Siksha Abhiyan w.e.f April 1, 2007.
Secondary
Education
Secondary
Education, which starts with classes IX and X leads to senior secondary classes
XI and XII aims to in cooperate basic skills & analytical abilities. It
provides a stepping stone to higher professional and technical education.
Higher Education
The Higher
Education System comprises both general and technical education. The higher
education has undergone a manifold expansion since Independence. The no. of universities
in the country has increased from 27 in 1950-51 to 350 in 2005-06
University
Grants Commission (UGC) takes measures for promotion and
coordination of university education and determination and maintenance of standards
in teaching, examination and research in universities and allocation and
disbursement of grants to them.
Technical
Education
Technical
Education plays a vital role in human resources development of the country by creating
skilled manpower, enhancing Industrial productivity and improving the quality
of life. Since independence, there has been a phenomenal expansion of Technical
Education Sector in the country. With 43 diploma level polytechnic at the time
of independence, the no. increased to 1,231 in 2000-01. Similarly, the no. of
degree level engineering institutions rose from 38 in 1947 to 1265 in 2001-02.
All India Council for Technical Education (AICTE) is the apex body in the field
of Technical Education.
Weakness of the
Education Sector
1. High
Illiteracy: According to 2001 census, the literacy rate of 64.8 percent is
still far off the 100 percent mark.
2. Gender
Bias: Education in India is gender biased. The enrolment of girls in both
primary and upper primary classes is much below the boys.
3. Low
Quality Education: The quality of the education is fairly low.
4. Lack of
Vocational and Technical Training: Too much emphasis on general education neglecting
the Vocational and Technical Education.
5. Low Level
of Government Expenditure: Actual level of expenditure is only 3.46% compared
to the desired level of 6%
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