2. Human capital is a narrow concept which treats human beings as a means to achieve an end which is higher productivity, failing which the investment is not considered to be productive.

Human Development

1. Human development is based on the idea that education and health are integral to human well-being since only when people have the ability to read and apply their knowledge to derive maximum benefit they will be able to lead a long and healthy life.

2. Human development is a broader concept which considers human beings as ends in themselves. Human welfare can be achieved through investments in education and health. It considers welfare — a right of every individual irrespective of their contribution to labour productivity. Every individual has right to be literate and lead a healthy life.

Question - 5 : - How is human development a broader term as compared to human capital?

Answer - 5 : -

Human capital is a narrow concept which treats human beings as a means to achieve an end which is higher productivity, failing which the investment is not considered to be productive.
Human development is a broader concept which considers human beings as ends in themselves. Human welfare can be achieved through investments in education and health. It considers welfare—a right of every individual irrespective of their contribution to labour productivity. Every individual has right to be literate and lead a healthy life.

Question - 6 : - What factors contribute to human capital formation?

Answer - 6 : -

Sources of Human Capital Formation :

Expenditure on Education
Training
Expenditure on Health
Migration
Expenditure on Information.

Question - 7 : - Mention two government organisations each that regulate the health and education sectors.

Answer - 7 : -

In India, the ministries of education at the Centre and State level, departments of education and

various organisations such as National Council of Educational Research and Training (NCERT),

University Grants Commission (UGC) and All India Council of Technical Education (AICTE) regulate the education sector. Similarly, the ministries of health at the Union and State level, departments of health and various organisations like Indian Council for Medical Research (ICMR) regulate the health sector.

Question - 8 : -
Examine the role of education in the economic development of a nation.

Answer - 8 : -

Expenditure on education is an important source of capital formation. Education is an important source of human capital formation, because:

It generates technical skills and creates a manpower which is suited for improving labour productivity. It, thus, results in sustained economic development.
It tends to bring down birth rate which, in turn, brings decline in population growth rate. It makes more resources available per person.
It results in social benefits since it spreads to others who may not be skilled. Thus, investment in education leads to higher returns in future.

Question - 9 : -
Discuss the following’as a sources of human capital formation
(a) Health infrastructure
(b) Expenditure on migration.

Answer - 9 : -

1. 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. Migration. People sometimes migrate from one place to the other in search of better job. It includes

migration of people from rural areas to urban areas in India and migration of technical personnel from India to qther countries of the world. Migration in both these cases involves cost of transport, higher cost of living in the migrated places and psychic costs of living in a strange socio-cultural set-up. The enhanced earnings in the new place outweigh the costs of migration. Expenditure on migration is also a source of capital formation.

Question - 10 : - Establish the need for acquiring information relating to health and education expenditure for the effective utilisation of human resources.

Answer - 10 : - People need to have information on the cost and benefit of investment in health and education. When people know the benefits of their investment in these two areas, they make more expenditure. The result is more human capital formation.

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Chapter 5 – Human Capital formation in India Solutions

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