Indian Economic Development Chapter 5 Human Capital Formation In India

Human capital may be defined as the stock of 'skill and expertise' of a nation at a point of time. 

Human capital formation is the process of adding to the stock of human capital over time.

Human stock formation = 25000-20000 = 5000.

Sources of human capital formation means the determinants of human capital formation.

Because a professor has the skill or abilities to produce more whereas the peon in the college does not have this skill.

Human development refers to development of individuals as distinct personalities by acquiring good education, training and good health. It is an end itself.

Giving training to their workers by the firms is known as on the job training.

There are mainly two different forms of 'on the job training'. One the workers may be trained in the firm itself under the supervision of a skilled worker and another, the workers may be sent far off-campus training.

Expenditure regarding on the job training is a source of human capital formation as a return of such expenditure in the form of enhanced labour productivity is more than the cost of it.

Investment in education is spending money by parents on the education of their wards.

(i) Education, (ii) Health, (iii) Housing, (iv) Water SuppIy.

It is a positive state of physical and mental well being and not only avoidance of disease.

Education, training, research, health, housing and other civic amenities are the main social infrastructure.

It means to make people better by increasing their level of productivity and efficiency.

Technical education makes significant contribution in raising efficiency and productivity by encouraging science and technology in the country.

It was announced in 1987-88.

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Economic development depends on quality, capacity and ability of the people.

Health, education, training and good environment are included in social infrastructure.

Health, education training, housing, water supply, sanitation, pollution-free environment increase the efficiency and productivity of people.

Education prepares people for the ever changing situations by developing appropriate values, aptitudes, knowledge and skills. It provides capacity and flexibility to the people and enables them to contribute in the economic development of the country.

General education raises the level of understanding of the people and technical education makes significant contributions in raising efficiency and productivity by encouraging science and technology in the country.

Medical education improves the health of the people and provides appropriate medical facilities at the time of illness.

Education generates the consciousness towards nation, society and development. It inculcates rational and scientific outlook in people. It stimulates cultural and creative faculities also.

Education strongly influences improvement in health, hygiene, demographic profile, productivity and quality of life.

Its objective is to provide free and compulsory education to all children upto age of 14 years.

Central government has declared compulsory elementary education to all children upto 14 years of age and constitutional amendment has made the right of elementary education as a fundamental right. A new scheme Sarva Shiskha Abhiyan (SSA) has been started to persue universal elementary education with a missionery zed.

A programme of non-formal education (NFE) was launched in 1979-80 to provide education to all. It is for children who remain outside the formal system due to various reasons.

The two major sources of human capital in a country are:

1. Investment in health.

2. Investment in education.

Investment in education and health, on the job training, migration and information are the services of human capital formation.

A person with sound health can work better.

Various forms of health expenditure are preventive medicine, curative medicine, social medicine and provision of clean drinking water and good sanitation.

People migrate in search of jobs that fetch them higher salaries than what they may get in their native places.

Unemployment is the main reason for the rural-urban migration in India.

Migration involves cost of transport, higher cost of living in the migrated places and psychic costs of living in a strange social cultural set up.

Economic growth means the increase in real national income of a country.

The independent reports on the Indian Economy in recent times have identified that India would grow faster due to its strength in the human capital formation.

Deutsche Bank - a German bank identified that India will emerge as one among four major growth centres in the world by the year 2020.

The expenditure on education by the Govt, is expressed in two ways: (i) as a percentage of total govt, expenditure and (ii) as a percentage of Gross Domestic Product (GDP).

It indicates the importance of education in the scheme of things before the government.

It express how much of our income is being committed to the development of education in the country in general.

Elementary education takes a major share of total education expenditure in India.

It is Rs. 3,440 in Lakshadweep

It is Rs. 386 in Bihar.

Through 86th amendment of the Constitution of India.

The need to promote education for woman is imminent for improving economic independence and social status of women.

The statement indicates that less and less number of people reach the higher education level.

Literacy just refers to the ability to read and write whereas education comprises primary education, secondary education, higher (tertiary) education.

The expenditure on education by the government is expressed in two ways:

(i) as a percentage of total government expenditure and

(ii) as a percentage of Gross Domestic Product (GDP).

It indicates the importance of education in the scheme of things before government.

It expresses how much of our income is being consumed to the development of education in the country.

Educational achievements in a country are indicated in terms of adult literacy level, primary education completion rate and youth literacy rate.

One factor that has made a great difference in the evolution of mankind is man's capacity to store and transit knowledge.

Mankind has been transmitting knowledge through conversation, songs and through elaborate lectures.

Education is sought because:

(i) it confers higher earning capacity on people and (ii) gives one a better social standing.

Preventive medicine is that medicine which prevents illness. Vaccination is a preventive medicine.

Curative medicine is that medicine which is given during illness. It is known as medical intervention during illness.

Social medicine means spreading of health literacy.

Education, health on the job training, job market information and migration increase an individual's income generating capacity.

The statement signifies a positive development in gender equality.

The labour skills of an educated person is more than that of uneducated person and the former generates more income than the latter. The contribution of an educated person to economic growth is more than that of an illiterate person. The availability of educated labour force facilitates adpaptation of new technology. Income disparities can be removed by providing education, general and technical both. An uneducated person earns less than the educated one.

In a developing country like India, a large section of the population is living below the poverty line. Many of them cannot afford to access to basic education and health care facilities. They cannot afford super speciality health care and higher education. Hence low level of education and health are the main problems of human capital formation. When basic education and health care is considered as a right of the citizens, it is the duty of the government to provide these facilities. Per capita expenditure on health and primary education is not sufficient. At least 6 percent of the GDP should be spent on education, but the current level is only 4 percent which has been quite inadequate

Inspite of a provision in our constitution to provide free and compulsory education up to the age of 14, progress in this sector is far short of the target. The enrolment ratio in schools is not satisfactory. There is shortage of qualified teachers in the schools. In elementary education the dropout rate is very high.

Education prepares people for the ever-changing situations by developing values, aptitudes, knowledge and skills. It provides capacity and flexibility to the people and enables them to contribute in the economic development of the country. General education raises the level of understanding of the people and technical education makes siginificant contribution in raising efficiency and productivity by encouraging science and technology in the country. Medical education improves the health of the people. Education generates consciousness towards nation, society and development. It promotes scientific outlook. Human beings without education be only a unskilled manpower. Investment in education gives them additional skills to do the same job more efficiently or variety of other jobs. Education converts human beings into human capital. The human capital represents the enhanced labour productivity which is an acquired ability and an outcome of deliberate investment decisions.

When the basic education and health care is considered as a right of the citizens, then it is essential that the government should provide education and health services free of cost for the deserving citizens and those from the economically backward classes. If these services are provided by the government free of cost then the poor can be benefitted. If these services are provided by the private institutions which charge high fee for the services it is essential for the government to regulate the fee structure in education and health care institutions so that the poor and oppressed classes may be benefitted.

Investment in education gives additional skills to do the some job or variety of other jobs. It converts human beings into human capital. The human capital represents the enhanced labour productivity which is an acquired ability and an outcome of deliberate investment decisions. The government can play an important role in this respect. If the government makes expenditure on health care vaccination, medical interventions during illness and spread of health literacy, sanitation and pure drinking water, it will keep labourers healthy and enable them to work for a longer period of time. Health and education expenditure directly increase the supply of healthy and educated trained labour force, which is a source of human capital formation.

The formation of human capital is a source of economic growth. Investment in education and health is helpful for the all round development of the poeple. Young people are needed for the professions such as medicines and engineering. The competent people who are educated and trained as teachers, professors and other professionals in education and health care system can provide other doctors and engineers. Training develops the inner qualities of man. Education helps in all round development of the personality of a man. With the help of human capital, more human capital can be produced out of human resources.

Human beings without education have only brutal manpower, that is their physical labour. Investment in education gives them

additional skills to do the many jobs efficiently. It converts human being into human capital. The human capital increases the productivity which is a source of economic growth. Investment in education is considered as one of the sources of human capital. That is why the government makes expenditure on education. Seventh five-year plan says, 'Human resources development or human capital has necessarily to be assigned a key role in any development strategy, particularly in a country with large population. Trained and educated on sound lines, a large population can itself become an asset in accelerating economic growth and in ensuring social change in desired directions.'

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 the information technology. The value of information technology depends greatly on the existing level of economic development. Information technology can make existing assets and processes more effective and efficient. Further human capital formation in India will give its economy a higher growth.

Human development and human capital look alike but human development is wider than human capital. Human Capital represents enhanced labour productivity and also stimulates innovations and creates ability to absorb new technology.

Human development is a much wider concept. It asserts that education and health are integral to human well being. That is why, this approach treats human being ends in themselves and human welfare should be increased through investments in education and health even if such investment does not result in higher labour productivity. Therefore, basic education and basic health are important in themselves, irrespective of their contribution to the labour productivity.

Government organisation that regulate the education sections are:

(a) National Council of Educational Research and Training (NCERT)

(b) University Grants Commission (UGC)

Government Organisation that regulate the health sectors are:

(i) Ministry of health at state level.

(ii) Indian Council of Medical Research (ICMR)

This is rightly said that there is downward trend in inequality world-wide with a rise in the average education levels because education gives confidence among the masses to perform any work. It enables the person to work for a longer period. It helps in improving the productivity and the morale of the worker. It facilitates the person to differentiate between the better and best education and paves the way for healthy and educated generation (human capital) for the future which in turn leads to economic development. Education helps in increasing standard of living of people, thereby, helps in increasing the real per capita income.

Hence it is absolute truth that growth and investment in education result in reducing the inequilities not within the boundaries of a nation abut also across the borders.

On-the-job training is required because:

(i) It improves the confidence and morale of the worker.

(ii) It helps in the introduction of modernisation and innovation.

(iii) It facilitates the use of raw material in an efficient and economical manner.

(iv) It helps in broadening the thinking pattern of workers and they are always ready to accept the newer things in the organisations or changes that are beneficial for the betterment of the organisation and the society as well.

Need for promoting women's education in India:

(i) A woman is the pillar of economy and family as well.

(ii) Women's literacy give strength to economic development.

(iii) Women's education helps in upbringing of family increasing living standards.

(iv) Women's development gives a strong generation which in turn helps in strong human capital formation.

(v) It is rightly said that literacy of one woman helps in literating one family, one locality and the entire society.

Education is sought as (i) it confers higher earning capacity, (ii) it gives one a better social standing and pride, (iii) it enables one to make better choices in life, (iv) it provides knowledge to understand the changes taking place in society, (v) it also stimulates innovations, (vi) it accelerates the development process.

Following are main poverty alleviation programmes :

1. National Rural Employment Guarantee Scheme, 2006

2. National Food for Work Programme

3. Swaranjayanti Gram Swarozgar Yojana.

4. Pradhan Mantri Gramodaya Yojana.

5. Antyodaya Anna Yojana.

Relationship between human capital and economic growth : Human capital refers to the stock of skill, ability, expertise, education and knowledge in a nation at a point of time and Economic Growth means the continuous increase in real national income of a country. Human capital formation raises the process of economic growth and economic growth raises the process of human capital formation. Thus there is cause and effect relationship between human capital and economic growth. It has been shown below :

Rise in human capital is the cause of more economic growth : Rise in human capital brings positive changes in outlook and attitudes in human being. It improves quality of life and raises life expectancy. Modern attitude and outlook, better quality of life and higher life expectancy makes workers more efficient and productive resulting into the increase in real national income of a country (i.e. Economic Growth).

(a) Navodaya Vidyalayas : They were established in 1987-88 to give modern education of good standard to talented students of rural areas.

(b) Central Schools : They have been established by the central government for the benefit of children of transferable employees.

(c) Indira Gandhi National Open University : It was established in September 1985. It is responsible for the introduction and promotion of open university and distance education system on the educational pattern of the country and for the coordination and determination of such systems.

Need for Government intervention in education and health sectors : In India, both private and public institutions exist in education and health service markets. Expenditure on education and health make substantial long term impact and they cannot be easily reversed. Hence government intervention is essential.

For example, once a child is admitted to a school or healthcare centre where the required services are not provided before the decision is taken to shift the child to another institution, substantial amount of damage would have been done. Moreover, individual consumers of these services do not have complete information about the quality of services and their costs. In this situation, the providers of education and health services acquire monopoly power and are involved in exploitation. The role of government in this situation is to ensure that the providers of these services adhere to the standards stipulated by the government and charge the correct price.

Need : The need to promote education for women in India is still emminent for following reasons: 

1. For improving economic independence of women.

2. For improving social status of women.

3. For making a favourable impact of fertility rate and health care of women and children.

In economic development, growth in education and health are the important parameters.

Investment in education converts human beings into human capital that provides the way for increase in future productivity. The spread of education ensures simultaneous growth in economic development, equitable distribution of resources and an even growth of every sector of the society. Two independent reports on the

Indian economy have proved that investment in education leads to higher human capital formation and thus, consequent increase in economic development.

1. Deutsche Bank, a German Bank, in its report on 'Global Growth Centre's (Published on 1.7.05) identified that India will emerge as one among four major growth centres in the world by the year 2020. The reason behind this success in increasing awareness towards education (Primarily elementary education) and growth in human capital.

2. World Bank, in its recent report 'India and the knowledge Economy - beveraging Strengths and Opportunities' states that India should make a transition to the knowledge economy and it should use its knowledge as much as Ireland does (as Ireland uses its knowledge very effectively), the per capita income of India will increase from a little over 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 as she has a critical mass of skilled workers, a well functioning democracy and a diversified science and technology infrastructure.

This clearly shows the role of education in the economic development of a nation.

There are regional differences in educational attainment in India because of the following factors:
(a) Illitracy among the weaker sections of society : It is the irony of Indian economy that majority of population is illiterate and poor. In order to improve their living standards they think that as many hands they have, they assist them. So, in order to earn money, they prefer that children should work instead of getting education. This trend is quite popular in same of the states like Uttar Pradesh, Orissa, Bihar etc.

(b) Availability of resources : In India, there are wide disparities in states in terms of availability of resources, availability of schools, colleges and awareness for education etc. Hence, this is also one of the reasons responsible for the present regional differences in educational attainment.

(c) Lack of proper implementation of government's policies : In some of states of India either the benefits of government policies on education donot reach or if they reach, there is lack of proper implementation. Consequently the children of these states are deprived of even elementary education.

Differences between human capital and human development:
1. Human Capital considers education and health as a means to increase labour productivity. Investment in education converts human beings into human capital. Human Capital represents enhanced labour productivity, which is an acquired ability and an outcome of deliberate investment decisions with the expectations that it will increase future income sources.

Human development is based on the idea that education and health are integral to human well being because only when people have the ability to read and write and the ability to leed a long and healthy life, they will be able to make other choices which they value.

2. Human capital treats human beings as a means to an end, the end being the increase in productivity. Human development treats human beings as ends in themselves because human welfare should be increased through investment in education and health even if such investment doesn't result in higher labour productivity.

Major problems of eduational development in India:

1. Wastage of Resources : There is a good amount of wastage of resources in our educational system. The dropout rate is very high. It leads to wastage of financial and human resources.

2. Illiteracy : Illiteracy among scheduled tribes and scheduled casts and backward classes continue to be high.

3. Disparities in Standard : Wide disparities in educational system exist among different states and educational institutions.

4. Lack of Funds : Most of the educational institutions in India lack funds. They fail to equip themselves with adequate buildings, library, laboratories and sports facilities.

5. Problem of Brain Drain : Intelligent and telented persons are not getting good jobs in the country so they migrate to other countries for better salary and facilities.

Human development means to make people better by increasing their level of productivity and efficiency.

It was less than two percent.

Two fold objective:
1. To get raw materials from India at cheap rate and thus to reduce India to a mere exporter of raw materials to the British industries.

2. To sell British manufactured goods in Indian market at high prices.

1. To mobilise the army within India.

2. To draw out raw material from countryside to the nearest railway station.

3. To have control over administration.

Economic growth means the increase in real national income of a country. The contribution of the educated person to economic growth is more than that of an illiterate person. Education and health are important factors of economic growth.

Human capital contributes not only towards increasing labour productivity but also stimulates innovations and creates ability to absorb new technologies. Education provides knowledge to understand changes in society and scientific advancements. Higher income causes building of high level of human capital and also the high level of human capital causes growth of income,

It is difficult to establish a relation of cause and effect from growth of human capital to economic growth but with the help of the following table we can establish relationship between the two.
Select Indicators of Development in Education and Health Sectors:

The Table 5.1 shows that growth in each sector probably has reinforced the growth of every other sector. With the increase in literacy rate, per capita income and the life expectancy at birth have increased and infant mortality rate and crude death rate have decreased. Human capital is the most important factor of production in today's economy. Increase in human capital are important to achieving increase in GDP.

The importance of education for the development of human resources was recognised long ago. Adam Smith published his 'Wealth and Nation' nearly 200 years ago, considered education and specialised training in various crafts useful for the society. Expenditure on these items creates a sort of fixed capital which raises production ability of both individuals and the society. The education system performs the following functions :

1. It results in greater awareness of available opportunities and mobilities of labour.

2. It produces the skilled and trained personnel needed by the economy and society.

3. It promotes science and technology, scientific outlook and increased participation of citizens in the affairs of the country.

4. It builds human capacity for appreciation of art and literature.

5. It generates national and development consciousness.

6. It is needed for cultural needs and develops personality.

(i) Education is sought not only as it confers higher earning capacity to the people but also for its other highly valued benefits.

(ii) It gives one a better social standing and pride.

(iii) It enables one to make better choices in life.

(iv) It provides knowledge to understand the changes taking place in society.

(v) It also stimulates innovations.

(vi) The availability of educated labour force facilitates adaptations of new technologies.

(vii) Economists have stressed the need for expanding educational opportunities in a nation as it accelerates the development process.

(viii) Education enables the society to use new means of technology so that the rate of economic growth can be accelerated. Consequently, standard of living can be made high.

(i) Health infrastructure : Expenditure on health is an important source of human capital formation. Health expenditure directly increases the supply of healthy labour force and is, thus, a 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.

Expenditure on Migration : 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. Migration in both these cases involves cost of transport, higher cost of living in the migrated places and socio psychi costs of living in a strange socio-cultural setup. The enhanced earnings in the new place outweigh the cost of migration, hence expenditure on migration is a source of human capital formation.

We need investment in human capital to produce more human capital out of human resources because a sick person or an ill person can not contribute to the work rather he/she will try to abstain from work, that will result in loss of productivity. Hence, it is important to know that how much expenditure is required to make a person healthy and literate.

People spend to acquire information relating to the labour market and other markets like education and health e.g. people want to know the level of salaries associated with various types of jobs, whether the educational institutions provide the right type of employable skills and at what cost. This information is necessary to make decisions regarding investments in human capital as well as for efficient utilisation of the acquired human capital stock. Expenditure incurred for acquiring information relating to the labour market and other markets is also a source of human capital formation.

Investment in human capital contributes to economic growth a lot because the labour skill of an educated person is more than that of an uneducated person and he/she generates more income. Economic growth means the increase in the real National Income of a country, hence healthy persons could provide uninterrupted labour supply for a longer period of time. So, investment in both education and health along with many other factors like on the job training, job market information and migration to increase an individual's income generating capacity. Empirical evidences have shown that increase in human capital causes

economic growth at a much faster rate, but, unfortunately the growth in human capital and economic development does not result in the growth of per capita real income at the same speed as in the economic growth.

India recognised the importance of human capital in economic growth long ago. The Seventh Five Year Plan says 'Human resources development has necessarily to be assigned a key role in any development strategy, particularly in a country with a large population. Trained and education on sound lines, a large population can itself become an asset in accelerating economic growth and in ensuring social change in desired directions'. The following table shows how the different sectors of the economy have grown simultaneously.

Educational achievements in a country are indicated in terms of adult literacy level, primary completion rate and youth literacy rate as is shown by the table below.

 In this table Showing Educational Achievement in India

Human capital formation is crucial for the removal of backwardness of the underdeveloped countries in following ways.

(i) It can play an important role in making the existing resource yield? output by impriving upon the labour efficiency.

(ii) It can help increase the mobility of laboure force so that they can get better jobs and increase in income.

(iii) It can help to increase the knowledge of the worker.

(iv) It can help in the removal of backwardness in underdeveloped countries through use of modern technology.

(v) In underdeveloped countries human capital formation is of special significance at the early stage of development when physical capital formation is more urgently needed, in contrast to the experience of developed countries which require human capital formation at later stage of their progress.

(vi) It helps in creating the necessary skills in a man as a productive resources and providing him gainful employment.

Investment in human capital formation is also important for accelerating the rate of economic growth in underdeveloped countries and for maximum utilisation of capital (man-made) and non-capital (natural) resource of the economy.

The major problems facing the human capital formation are as under:

(i) Repidly rising population adversely affects the quality of the human capital in underdeveloped and developing countries like India. It reduces per head availability of the existing facilities like sanitation, employment, drainage, water-system, housing, hospitals, education, local supply uutrition, roads, electricity etc. In short, the population pressure reduces the capacity of these countries for building human capital. An that is how rapidly rising population becomes a negative factor in the human capital formation.

(ii) Another problem of human capital formation is the migration of persons born, educated, trained in the under-developed countries to developed countries. The personnel migrated is of high caliber, consisting largely of scientists, administration, executive, engineers, physician, educationist, etc. This is described as the problem of brain-drain. This adversely affects the economic development of the underdeveloped and developing countries.

(iii) There is insufficient manpower planning in less developed countries where no efforts have been made either to raise the standard of education at different stages, or to maintain demand and supply of technical labour force. As a result, with their present pattern of education expansion, many developing countries will have to face one of the most explosive problems.

(iv) Agriculture is the backbone of underdeveloped countries, but less altention is paid on agricultural development and there is no provision of on-the-job training programme in such countries. Little is done in the field of educating former to use modern agricultural technologies is responsible for the ?? attention on agricultural development and human capital formation in underdeveloped countries.

(v) In case of physical capital accumulation the growth rate is measurable, but it is very difficult to measure absolutely the growth rate of human capital and one does not have any empirical evidence to prove the different growth rates of human capital required on attained by underdeveloped countries at the various stages of development. Many factors that increase productivity of human beings are non-quantitiable in charactor. Further, it is difficult to select a suitable way of measuring human capital formation.

(vi) Another problem of human capital formation is the lowering of academic standards. Underdeveloped countries in their enthusiasm to spread higher education have been opening to many universities without caring for their academic standards. No restrictions are placed on higher university levels is very high. Mass features and the development and human capital formation in underdeveloped countries.

(v) In case of physical capital accumulation the growth rate is measureable, but it is very difficult to measures absolutely the growth rate of human capital and one does not have any empirial evidence required on attained by underdeveloped countreis at the various stages of development. Many factors that increase productivity of human beings are non-quantifiable in charactor-further, it is difficult to select a suitable way of measuring human capital formation.

(vi) Another problem of human capital formation in the lowering of academic standards. Underdeveloped countries in their enthusiasm to spread higher education have been opening to many universities without caring for their academic standards. No restrictions are placed on higher university levels is very high. Mass features and the general lowering at academic standards tendes to lower the eficiency of graduates and post-graduates employed in both public sector and privates sector.

(vii) In underdeveloped countries, pattern of investment in education is rather problem creating. Mostly these countries provide a high priority to primary education which is offer free and compulsory. On the other land, the secondary education receives low priority in these countries. However, secondary education is rather significant and needs the most attention to provide technical hands for economic development.

Growth in Govt, expenditure on education : Govt. expenditure on education is expressed in two ways : (i) as a percentage of total Govt. expenditure and (ii) as a percentage of GDP.

1. Govt, expenditure on education as a percentage of total expenditure : The percentage of education expenditure of total government expenditure indicates the importance of education in the scheme of things before the government. The percentage of education expenditure of GDP express how much of our income is committed to the development of education. During 1952-2002, education expenditure as percentage of total Govt. expenditure increased from 7.92 to 13.17.

Fig.

2. Govt. expenditure on education as a percentage of GDP : During 1952-2002 Govt. expenditure on education as percentage of GDP increased from 0.64

Elementary education takes a major share of total expenditure and the share of the higher/ tertiary education (institution of higher learning like college, polythechnical and universities) in the least thought on an average, the government spends less on tertiary education. Expenditure per student in tertiary education in higher than that elementary education.

The per capita education expenditure differs considerably across states from as high as Rs.3,440 in Lakshadweep to as low as Rs.386 in Bihar.

The expenditure on education is inadequate if we compare it to with the desired level of education expenditure as recommended by the various commission. The Education Commission (1964-66) recommended that at least 6% of GDP should be spent on education so as to make a noticeable rate of growth in educational achievements. But the current expenditure on education is a little over 4% of GDP. It is quite inadequate.

Educational achievements in India:

Generally educational achievements in a country are indicated in terms of adult literacy level, primary education competition rate and youth literacy rate.

1. Adult literacy rate : Adults include people aged 15+. In 1990, adult male literacy rate and adult female literacy rates were 61.9% and 37.9% respectively. They rise to 68.4% and 45.4% respectively in 2000.

2. Primary completion rate : Male primary completion rate grew from 78% to 85% during the ten years (It was 78% and 85% in 1990 and 2000 respectively). As far as female literacy poverty completion rate is concerned it rose from 61% in 1990 to 69% in 2000.

3. Youth Literacy Rate : Youth includes people aged 15+ to 24 years. The male youth literacy rate and the female youth literacy rate were 76.6% and 54.2% in 1990. They rise to 79.7% and 64.8% in 2000.

Educational Achievement in India

Advantages of on the job training:

1. Training increases the efficiency of workers.

2. It increases the morale of the workers.

3. It increases the mobility of workers.

4. It helps in utilising the raw materials efficiently.
5.  It brings about new innovations.

1. National Council of Educational Research and Training (NCERT).

2. University Grants Commission (UGC).

3. All India Council of Technical Education (AICTE).

Human capital refers to the stock of skill and expertise of a nation at a point of time. It is a means to human development, whereas human development is itself an end.Human capital refers to the stock of skill and expertise of a nation at a point of time. It is a means to human development, whereas human development is itself an end.

Literacy means the ability to read and write. It is a narrow concept. It is a part of education which compasses three parameters i.e primary education, secondary education and tertiary or higher education. While all educated people are literate, all literate people are not necessarily educated.

Two independent reports have been given below:

1. Independent Report of Deutsche Bank : Deutsche is a German bank. In its report on 'Global Growth Centres' this bank identified that India will emerge as one among four major growth centres in the world by the year 2020. It further states, 'Our empirical investigation supports the view that human capital is the most important factor of production in today's economies. Increasing of human capital are crucial to achieving increase in GDP.' With reference to India, it states, between 2009 and 2020 we expect 40% rise in the average years of education in India to just above 7 years.

2. World Bank’s report : World Bank, in its recent report 'India and the Knowledge of Economy — leveraging strength and opportunities' states that India should make a transition to the knowledge economy and if it uses knowledge as much as Ireland does, then the per capita income of India will increase from a little over US dollar 1000 in 2002 to US dollars 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 developed science and technology infrastructure.

Education — a challenging proposition in India : Following points show that education in India is a challenging proposition:

1. Low government expenditure on education : Government has committed to spend nearly 6% of GDP on education. But actually it spends only 3-4% of GDP.

2. Gender bias : There is still a significant 'gender bias' in offering the opportunities of education to male and female children. The enrolment ratio is relatively low for the female candidates and their drop out ratio is very high.

3. A large number of illiterate persons : About 26% of India's population live below poverty line. Due to this they are deprived of literacy.

4. Privatisation : There is growing tendency towards privatisation of education. It makes education expensive.

5. Low access level in rural areas : There is a high degree of disparity-access to education. The access level is considerably low for the rural population as compared to the urban population.

6. Inadequate vocational education : Due to insufficient of vocational education the unemployment among the educated young men is increasing.

A.

Real per capita income

C.

Both (a) and (b)

C.

Both (a) and (b)

A.

Education and literacy are not identical terms.

D.

All of the above

B.

We have achieved education for all.

B.

 Human factor activates physical factors.

A.

Education for all is a distant dream.