CBSE Class 11 Economics Human Capital Formation In India Worksheet Set B

Learning Objectives:

- Introduction

- Physical Capital & Human Capital

- Meaning of human capital formation

- Sources of human capital formation

- Importance/Role of human capital formation

- Reasons for poor human capital formation in India

- Human capital and Human Development

- Growth of Education sector in India

- Weaknesses of the Educational sector

Question. Why do we need to invest in human capital?
Answer: We need to invest in human capital to make effective use of physical capital and to increase productive capacity of the country.

Question. What are the various forms of health expenditure?
Answer: Preventive medicine, curative medicine, social medicine, provision of clean drinking water and good sanitation are the various forms of health expenditure.

Question. Why there is need for acquiring information relating to health & education expenditure from the effective utilization of human resources.
Answer: Such information helps in making decision regarding investments in human capital as well as for effective utilization of acquired human capital stock.

Question. How is on-the-job training a source of human Capital formation?
Answer: It is a source of human capital formation as it increases the skill & efficiency of the workers & leads to an increase in production & productivity.

Question. Why there is a need to promote women’s education in India.
Answer: Women’s Education need to be promoted because:
a) They can become economically independent
b) Women education makes favorable impact on fertility rate & health care of women and children.

Question. Why do we observer regional differences in Educational attainment in India?
Answer: Regional differences in educational attainment in Indian can be due to regional inequality in incomes and expenditure of government on development of educational facilities.

Question. Give the meaning of human capital.
Answer: Human capital refers to the stock of skill, ability, expertise, education and knowledge involved in the people.

Question. Mention two government organizations each, that regulate the health and education sectors.
Answer: Indian Council for Medical Research (ICMR) and National AIDS control Organization regulates health. National Council of Educational Research and Training (NCERT) and University Grants Commission (UGC)

Question. Why has India not been able to achieve 100% literacy even till today?
Answer: India has not been able to achieve 100% literacy because of its failure to provide free & compulsory education for all children up to the age of 14 years.

Question. Why do people migrate?
Answer: people migrate from one place to another in search of jobs that fetch them higher salaries.

Question. Why are workers required to work for a certain period after the on-the-job training?
Answer: Workers are required to work for a certain period after the on-the-job training so that firm can recover the benefits of the enhanced productivity owing to the training.

Question. What do the differences in male & female literacy rates indicate?
Answer: The differences in male & female

Question. What is meant by physical capital?
Answer: Physical capital refers to all those inputs which are required for further production, like plant and machinery, factory, buildings, raw materials, etc.

Question. What re the two major sources of human capital in a country?
Answer: The two major sources of human capital are
1) Investment in Education
2) Investment in health

Question. What is meant by human capital formation?
Answer: Human Capital formation implies the development of abilities and skills among the population of the country.

HUMAN CAPITAL FORMATOI

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.
c. On the job training: productivity of physical capital is substantially increased with the 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.
d. Expenditure on migration: – people migrate to one place to another that gives them higher salaries. 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.
e. 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 fir 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.
 

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 64.84% in 2001

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
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%

CASE STUDY-1

Traditionally, economic theory has given emphasis on physical capital accumulation as the most robust source of economic growth, at least in the short-run, with exogenous technical progress being the long-run determinant of growth. The exogeneity of technological progress in the neoclassical growth model and the difficulty of explaining long-term economic growth have restricted the analytical capacity of the neoclassical model and its empirical verification. Human capital theory suggests that individuals and society derive economic benefits from investments in people. Education has consistently been emerged as the prime human capital, but Becker and Schulz have argued that health and nutritional expenditure is also a part of human capital investment. This is because education is perceived to contribute to health and nutritional improvements.

Questions:

Question: Economic growth depends upon:
a) development of physical capital
b) development of human capital
c) development of working capital
d) all of these
Answer: D

Question: Economic development depends upon which of the following components?
a) development of physical capital
b) development of human capital
c) development of working capital
d) all of these
Answer: B

Question: Human capital is __________ concept as compared with human development.
Answer: narrow

Question: Which of the following are types of on-job-training?
a) On campus training
b) Off-campus training
c) both (a) and (b)
d) none of these
Answer: C

CASE STUDY-2

Human Capital and Human Development are related concepts, but certainly not identical. Human capital is a means to an end. Human capital is a means in the sense that it consists of ‘skills’ as used in the process of production. It consists of ‘kn owhow ‘, abilities and expertise used as inputs in the production activity. Increase in productivity (referring to output per unit of input) is the end result. Thus, we want to achieve higher and higher levels of output through extensive and intensive application of human capital. Human development is an end itself It refers to development of the individuals as valuable personalities by acquiring good education and attaining good health. Human development occurs when more and more individuals in a society are educated, healthy and skill-oriented

Questions:

Question: Human development occurs when more and more individuals in a society are educated, healthy and skill-oriented
a) skill-oriented
b) educated
c) healthy
d) all of the above
Answer: D

Question:Differentiate between human development and human capital.
Answer: Human capital is a means to an end. Human development is an end itself It refers to development of the individuals as aluable personalities by acquiring good education and attaining good health. Human development occurs when more and more individuals in a society are educated, healthy and skill-oriented.

Question: Human development is a means to an end. (true/false)
Answer: False

Question: Human development is an end itself It refers to development of the individuals as valuable personalities by acquiring _________________ (education/investment)
Answer: education

CASE STUDY-3

You all may have heard of the term ‘capital’ in economics. Adam Smith defines capital as “That part of man’s stock which he expects to afford him revenue”. Capital is one of the four factors of production – land, labour, and entrepreneurship being the other three. There are many types of capital. However, for time being, we shall focus our discussion on two types of capital – physical capital and human capital. India is possessing a huge size of human resources. In order to transform the liability of this huge size of population into assets adoption of various measures for human capital formation is very much essential. The term human capital formation implies the development of abilities and skills among the population of the country. In order to develop various sectors of the economy, the country should introduce manpower planning for the development of its human resources. It is from the 7th Five Year Plan onward that we began to focus on Human Development.

Questions:

Question: The __________ capital is tangible and can be easily sold in the market. (human/physical)
Answer: Physical

Question: Doctors, engineers, etc. are a part of human_________. (capital/resource)
Answer: Capital

Question: How do you think Human Capital and Human Development are different?
Answer: 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 an integral to human well-being because people will lead a valuable life only when they are educated and healthy.

Question: State any two sources of human capital.
Answer: Investment in education, Investment in health.

CASE STUDY-4

On-the-job training, also known as OJT, is a hands-on method of teaching the skills, knowledge, and competencies needed for employees to perform a specific job within the workplace. Employees learn in an environment where they will need to practice the knowledge and skills obtained during their training. On-the-job training uses the existing workplace tools, machines, documents, equipment, and knowledge to teach an employee how to effectively do their job. Consequently, no stand-ins exist that will require an employee to make the training transfer to the workplace

Questions:

Question: How is on-the-job training source of human capital formation?
Answer: On-the-job training source of human capital formation as it increases the skill and efficiency of the workers and leads to an increase in production and productivity.

Question: Why are workers required to work for a certain period after the on-the-job training?
Answer: Workers are required to work for a certain period after the on-the-job training so that firm Can recover the benefits of the enhanced productivity owing to the training.

Question: Which are the two different forms of on-the-job-training?
Answer: (i) Training under the supervision of a skilled worker in the firm itself.
(ii) Off -campus training

Question: What is on-the-job-training?
Answer: On-the-job training is a form of training taking place in a normal working situation.

CASE STUDY-5

World Bank in its recent report, India and the knowledge economy – Leveraging strengths and opportunities, states that India should make a transition to the knowledge economy and if it uses its knowledge as much as Ireland does, the per capita income of India will increase from US $ 1000 in 2002 to US $ 3000 in 2020. It further states that the Indian economy has all the key ingredients for making this transition such as a critical mass of skilled workers, a well- functioning democracy and a diversified science and technology infrastructure.

Questions:

Question: Report on Global Growth Centres , 2005 was published by:
(a)World Bank
(b) Deutsche Bank
(c) IMF
(d) RBI.
Answer: B

Question: Name the two independent reports on the Indian economy, which have identified that India would grow faster due to its strength in human capital formation.
Answer: Global Growth Centres, India and the knowledge economy- Leveraging strengths and opportunities.

Question: What are the key ingredients of Indian economy for making a transition to the knowledge economy?
Answer: A critical mass of skilled workers, a well- functioning democracy and a diversified science and technology infrastructure.

Question: Like which of the following country India should use its knowledge economy very effectively?
(a) Germany
(b) Ireland
(c) China
(d) United Kingdom.
Answer: B

CASE STUDY-6

When we talk about economic growth, human capital is the main reason for accelerated growth and expansion for many countries, which provide investment in human capital. This gives the best advantages to these countries for providing the best situation for work and life. A significant advantage in generating a stable environment for growth is that the nation has the expanded high-quality human capital in fields like health, science, management, education, and other fields. Here the main components of human capital are definitely human beings, but presently, the principal component is creative, an educated, and enterprising person, with a high level of professionalism.

Questions:

Question: ____________refers to the stock of skill, ability, expertise, education and knowledge in a nation at a point of time.
a) Human capital
b) Physical capital
c) Natural capital
d) None of the above
Answer: A

Question: Human capital increases
a) Labour in market
b) Labour Productivity
c) Trained labour
d) None of the above
Answer: B

Question: Innovation leads to
a) Growth
b) Development
c) production
d) All of the above
Answer: D

Question: The human capital in the economy manages the central portion of the _____________ of the country.
Answer: national wealth

CASE STUDY-7

The Indian software industry has been showing an impressive record over the past decade. Entrepreneurs, bureaucrats and politicians are now advancing views about how India can transform itself into a knowledge-based economy by using information technology (IT). There have been some instances of villagers using e-mail which are cited as examples of such transformation. Likewise, e-governance is being projected as the way of the future. The value of IT depends greatly on the existing level of economic development.

Questions:

Question: What does this paragraph talk about- Physical capital or human capital?
Answer: human capital

Question: How can a healthy person contribute to the nation?
Answer: A healthy person, by maintaining personal hygiene and sanitation, stops the spread of contagious diseases and epidemics

Question: Does human capital benefit society?
Answer: Yes, Human capital benefits not only the owner but also the society in general.

Question: How do you think IT brings in rural transformation?
Answer: Use of e-mails, e-governance, e-market.

CASE STUDY-8

India is possessing a huge size of human resources. In order to transform the liability of this huge size of population into assets adoption of various measures for human capital formation is very much essential. The term human capital formation implies the development of abilities and skills among the population of the country. In order to develop various sectors of the economy, the country should introduce manpower planning for the development of its human resources. Manpower planning indicates planning of human resources for meeting the development needs of the economy. Just for the proper utilization of manpower resources the country should impart proper education to its population and train its labour force in technology, engineering, management, medicine and in many other fields connected with the development of various sectors of the economy.

Questions:

Question: On what key areas India should focus to improve its human Capital.
Answer: Education and health

Question: Human capital formation implies
(a) Increase in Per Capita Income
(b) Increase in Life expectancy rate
(c) Development of technology and skills
(d) Increase in GDP
Answer: C

Question: India should introduce ____________ for the development of its human resources.
Answer: Manpower planning

Question: What steps should India take for proper utilization of manpower resources
Answer: India must impart proper education to its population and train its labour force in technology, engineering, management, medicine and in many other fields to better utilize its manpower resources.

CASE STUDY-9

Prime Minister Narendra Modi interacted with leading economists of the country on charting the economic agenda in the post -COVID world and highlighted government’s commitment to developing world-class infrastructure and the economic potential set to be unleashed by National Optical Fibre Network. He highlighted the faith shown by foreign investors in India’s growth story, with foreign direct investment growing by 11 per cent between April and October, despite a global recession. The participants stressed the importance of investing in public health and education, as human capital would also likely emerge as a driver of growth, especially in the knowledge economy going forward. They also stressed on labour-intensive manufacturing given the success India has achieved in launching the PLI scheme in mobile manufacturing.

Questions:

Question: ___________ capital refers to the stock of skill , ability, expertise ,education and knowledge embodied in the people.
Answer: Human Capital

Question: Which one of the following is a major source of human capital formation in a country?
(a) Expenditure on Education
(b) Expenditure on Infrastructure
(c) Expenditure on defense
(d) None of these
Answer: A

Question: Why do we need to invest in human capital?
Answer: We need to invest in human capital to make effective use of physical capital and to increase productive capacity.

Question: Which international organization recognized India as the Knowledge Economy in its report, ‘Leveraging Strengths and Opportunities’?
Answer: World Bank

CASE STUDY-10

Though literacy ratio for both- adults as well as youth- have increased, still the absolute number of illiterates in India is as much as India’s population, was at the time of independence. In 1950, 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 upto the age of 14 years within 10 years from the commencement of the Constitution.

Questions:

Question: Education cess has been imposed by the government on all union taxes.
a) 3%
b) 4%
c)10%
d) 2%
Answer: D

Question: Government expenditure on education is measured as a percentage of total government expenditure and as a percentage of______________ .
Answer: GDP

Question: Government Organizations that regulates education sectors:
a) NCERT
b) ICMR
c) UGC
d) Both A and C
Answer: D

Question: ______________ is a means to an end.
Answer: Human Capital