- Briefly explain the concept of Human capital and the role of human capital in economic development.
- Discuss the challenges of human capital formation in India.
- Analyse the opportunities for human capital formation in India.
Human Capital is a measure of the knowledge, skills, capacity and attributes of the human resource of a country, which influence their productive capacity and earning potential.
Role of human capital in economic development:
- Increases productivity: It promotes innovations and creativity; creates ability to absorb new technologies for optimum utilization of natural resources.
- Higher levels of human capital lead to higher employment rates. This increases income levels and help reduce income inequality.
- Brings positive outlook to society: helps overcome regressive thinking, thereby increasing the rate of participation of the workforce, example: promotion of gender inclusive employment.
Challenges to human capital formation in India:
- Low expenditure on health, education and skill development.
- Rising population reduces per head availability of the existing social and economic infrastructure.
- High level of Poverty and regional inequality denies a large population access to basic amenities.
- Increasing gender gap hampers equal opportunity and reduces labour productivity.
- Brain drain slows down the human capital formation in the domestic economy.
- The process of skill formation is long term, hence slow.
- Insufficient on the job training to absorb emerging new technologies.
Opportunities for human capital formation in India:
- Demographic dividend – 65% of India’s population is below the age of 35 years and the working age population (15-64 years) is over 25%.
- A large English speaking population and a strong IT base may be harnessed for further skill development (For example SWAYAM platform for e-learning).
- Global and technological interconnectedness providing for broad opportunities for skill development and training.
- Provision of Constitutional and socio-legal rights to provide a support base for improvement of health and social status in India.
- NITI Aayog’s Sustainable Action for Transforming Human Capital in Education (SATH-E) Roadmaps 2018-2020 to improve learning outcomes.
- Further, initiatives like National Institutional Ranking Framework (NIRF), grading of ITIs, Takshashila (Trainers and Assessors Portal) etc. will go a long way in enhancing the human capital in India.