Human Capital Formation in India test - 1

This definition states what human capital means. Human capital refers to the skills, knowledge and experience of an individual or a population at large.

Health and education are two integral aspects in human capital formation. It is only a healthy person who can contribute to society and the nation. Therefore expenditure on health is important to build and sustain a healthy nation.

Human capital is always evolving with respect to skiils, education and health. For purposes of measurement, the existing productive skill sets are taken into account.

Human capital includes the inherent and acquired skill sets of the entire population of a country. However, education, health, on-job training enhance the quality of human capital.

It is true that human capital is effective only when individuals possess the skills to work, are healthy and therefore willing to work. Age of human capital is a measure of physical ability and experience.

Physical capital refers to tangible capital like plant and machinery, buildings, computers, etc which are built by humans to be used for productive purposes.

People falling in the age group of 15-60 have the education and health and can be trained on-the-job as well. They thus contribute extensively to the society.

The human capital is the brain behind the technicalities and processes of the physical capital. Both are needed for a society or nation to grow.

Human capital formation is a continuous process as there is scope for skill development, change in technology, better educational and health facilities. A rising population is a huge challenge especially in India where there is an increase in the number of people living below poverty line. These people become dependent on the government to provide basic facilities.

The Seventh Five Year Plan had the development of human capital formation as its prime objective. India believed that the population could become an asset, if trained and educated on sound lines which would lead to economic and social growth.