CHAPTER – 5

HUMAN CAPITAL FORMATION IN INDIA

I. Choose the correct answer. (Each question carries one mark)

1) Who can work better in the following:
[1] A sick person [2] An Unhealthy labourer
[3] A person with sound health [4] None of the above

2) What per cent GDP as estimated by the Tapas Majumdar Committee should
spend for education.
[1] 4 % [2] 6 %
[3] 8% [4] 5 %

3) Education for all,

[1] Still not a distant dream [2] Still a distant dream
[3] Dream Only [4] None of the above

II. Fill in the Blanks. (Each question carries one mark)

1) Investment on Education is considered as one of the main sources of _Human
capital formation_
2) Government of India has also started levying a 2 percent of _education
cess_on all union taxes.
3) The revenues from education cess has been ear marked for spending on
elementary education_.
4) The contribution of the educated person to economic growth is more than
that of an uneducated_ person.
III. Match the following (Each question carries one mark)
1) More contribution to National Income 1] Global Growth Centres
2) Deutsche Bank 2] India and the Knowledge
economy.
3) World Bank 3] Literacy Rate
4) Educational Achievements 4] A positive Development
5) Better Gender Equity 5] Skilled Labourer
IV. Answer the following question in a word /sentence each. (Each question carries one mark)
1) Expand NCERT.
Ans: National Council of Education Research and Training (NCERT)
2) State the reasons for migration.
● Ans: 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.

3) Expand UGC.
Ans: University Grants Commission.
4) Expand ICMR.
Ans: Indian Council for Medical Research (ICMR)

V. Answer the following question in four sentences each. (Each question

carries two marks)
1) State the need of investment on human capital.
Ans: we need investment in human capital to produce more human capital out
of
human resources. In other words, we need good human capital to produce other
human capital
like nurses, farmers, teachers, doctors.

2) Why individuals spend money on education?

Ans: Expenditure in education is one f the main sources of human capital
formation. Individuals invest on education with the objective of increasing their
future income. Likewise, parents spend on children’s education to give a better
future and better standard of living.

3) What are the two major sources of human capital in a country?

Ans: 1. Expenditure in Education. 2. Expenditure on health.
4.) What are the indicators of educational achievement in a country?
Ans: educational achievement in a country is indicated in terms of adult literacy
level, primary
education completion rate and youth literacy rate.

5) What factors contribute to human capital formation?

Ans: Investment in education is considered as one of the main sources of human
capital. There are several other sources as well, expenditure in health, on- the
job training, migration and information
are the other sources of human capital formation.

6) What are the various forms of health expenditures?

Ans: 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 expenditure.

VI. Answer the following question in twelve sentences each. (Each question
carries four marks)
1) Education is considered to be an important input for the
development of the nation. How?
Ans: Contribution of skilled person always generates more income than a
uneducated or unskilled person. The contribution of educated person to
economic growth is more than an uneducated or an illiterate person.
1. education provides scientific advancement in a way better inventions and
innovations.
2. Facilitates new adaptation of new technologies.
3. It enhances salary and standard of living of a person.
4. Helps to understand the changing society and the trends.
5. In a broader sense facilitates development and growth of a country.
2) How does investment in human capital contribute to growth?
● Ans: Economic growth refers to increase in real national income of a
country over a period of time
● Human capital refers to skills and knowledge imbibed in human beings
● The human capital contributes substantially towards increasing labour
productivity.
● It stimulates innovations and inventions.
● Creates ability to absorb new technologies.
 Thus, higher rate of human capital contributes towards a country’s
economic growth.

3) Bring out the need for on-the-job-training for a person.

Ans: 1. Firms given on-the-job- training to enhance the productive skills of the
workers.

2.Technical training adds to the capacity of the people to produce more.

3. Enable them to absorb new technologies and modem ideas. It can be given in
two forms:
a) The workers may be trained in the firm itself under the assistance of a senior
and experienced worker.
b) The workers may be sent off the firm campus for the training.
4.Facilitates inventions and innovations.
In conclusion we can say that trained work force in a way contribute to
economic growth of the country.

4.Discuss the need for promoting women’s education in India.

Ans: The need to promote education for women in India is imminent for
various reasons such as
a) improve economic independence b) improve social status of women C)
women education makes a favourable impact on fertility rate and health care of
women and children. Therefore, we cannot be complacent about the upward
movement in the literacy rates and we have miles to go in achieving cent per
cent adult literacy. In a way women’s education bring about gender equity
contributing to a positive development in gender equity.

VII. Answer the following question in twenty sentences each. (Each

question carries six marks)
1) Discuss the following as a source of human capital formation.
[1] Health Infrastructure [2] Expenditure on migration.
Ans: Human capital refers to that part of the population which possesses skills,
knowledge, education and experience.
1. Expenditure on Education
● Education not only raises the standard and quality of living but also
encourages modern attitudes of people.
 ● Moreover, education increases the productive capacity and productivity
of a nation’s workforce through their skills.
● Further, education increases the acceptability of the modern techniques
and also facilitates a primitive economy to break the shackles of tradition
and backwardness.
● An investment in educational sector has two-fold benefits. It not only
increases the income earning capacity but also reduces the skewed
distribution of income, thereby forming an egalitarian society.

2.Expenditure on Health Infrastructure

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

2) Examine the role of education in the economic development of a nation.

Ans: Education is the prime and top most priority under human capital
formation. It will
1. Education not only changes attitude and behaviour of the people it will
help them to modernize their thinking and to make right value
judgements.
2. It promotes innovations, inventions specially in the field of science and
technology.
3. Education acts as source of knowledge: There is no room for illiteracy
and ignorance.
4. Increases free mobility of labour force from one country to other country
or from state to state in search of better opportunity and better standard of
living.
5. It generates skilled and trained workers in the field of both technical and
general field. It will in way contribute to the overall development of the
country.
6. It creates awareness about culture and politics where people re able to
respect and follow the rich cultural heritage of nation.
7. It develops values, especially moral values and civic sense among the
citizens of a country.
 8. Overall development of the country through the contribution made by the
educated people in various spheres will lead a nation to a greater hights.

3) Trace the relationship between human capital and economic growth

Ans: