HUMAN CAPITAL FORMATION

There are many poor countries in the world which are RICH in natural
resources. For example, several African countries
There are many rich countries in the world which are POOR in Natural
resources. For example, Japan

HOW DO WE EXPLAIN THIS PARADOX?

An important explanation is that Poor countries with plenty of natural
resources could not achieve fast economic growth and development
because of their low human capital.
On the contrary , even though Japan doesn’t not have major natural
resource , it has one the best and most productive Human Resources in the
world.
Therefore, Human Resource or Human capital are vital from the point of
view of economic development
The development of Human Resources mean:
1. increase in the quality of human beings which help in process of growth
and development of the country .
 what is human capital?
Think of a person who is uneducated , untrained and not in good health .
He/she is a human being . But that person is not productive. He/she
cannot contribute to the production .
On the other hand , educated and trained person , even if he/she is not
healthy(say physically handicapped) , it is productive .
For India’s software companies employ many physically challenged
persons . There are educated, trained and hence productive .
Human beings when they are given education or training , becomes
Human Resources or human capital .
For example, constructing building is a physical capital formation .
Similarly converting human beings through education and training into
Human Resources like teachers , doctors , engineers , technicians etc is
human capital formation.

Definition
Human capital can be defined as the knowledge , ability , skill and
physical capacity of the people which help them to produce more.
OR
Stock of skills and expertise Of a nation at a given point of time

Population

Human resources

Training and skill

Economic
development
Difference between physical and human capital

PHYSICAL CAPITAL HUMAN CAPITAL

1)increases physical goods 1)increases knowledge and
efficiency
2)economic and technological 2)partly the decision of conscious
process decision and partly a social
process
3)tangible 3)intangible
4)can be sold in the market 4)it cannot be sold in the market
only its services can be sold in the
 market
5)physical capital is separable from 5)it’s capital is not separable from
its owner its owner
6)physical capital is completely 6)human capital is not perfectly
mobile between the countries mobile between the countries
7) physical capital formation can 7) human capital is to be built even
be built through imports through conscious policy
formulation
8)creates only private benefits 8)both private and social benefits

BASIS PHYSICAL CAPITAL HUMAN CAPITAL

Tangible Tangible.It can be easily Intangible.it cannot
and sold in the market like any be sold in the
intangible other commodity market, only the
services of the
human capital can
be sold
Owner Physical is separable from Inseparable from
its owner its owner
Mobility Completely mobile between Not perfectly
across countries except for some mobile between
space artificial trade restrictions countries as
movement is
restricted by
nationality and
culture
Nature of Depreciated due to Depreciation taking
depreciation continuous use place with ageing
but can be reduced
to a large extend
through continuous
investment in
education ,health
etc
Nature of Physical capital only creates Benefits not only
benefits private benefits the owner but also
the society in
general.foreg: an
educated person
can effectively
contribute to the
 socio economic
progress of the
nation

Physical capital is defined as sense as capital goods, consisting of tools

and instruments, machinery, plants and equipment, factories etc..

Human capital

The Stock of

 Knowledge
 Ability
 Skill
 Physical capacity of the people

At a point of time which helps the human factor to produce more

Human Capital Formation

Human capital increases the capacity to produce in the same way as

physical capital
Human capital formation refers to the process of improvement in the
knowledge, skill, ability and physical capacity of the people

Human capital formation

Human resource management

process of improvement in
 knowledge,
 skill,
 ability
 physical capacity of the people
Development of human resources requires
a. education
b. health service
c. water supply
d. housing
e. nutrition
f. family welfare facilities

SOURCES OF HUMAN CAPITAL ORFACTORS CONTRIBUTING TO

HUMAN CAPITAL FORMATION

Human capital is created through investment in

1)investment in education
a)one of the main sources of human capital. Spending on education by
individual is similar to spending on capital goods by companies with
Objective of increasing future profits over a period of time
1. Investment made in education can accelerate economic growth. The
role of education in human capital formation can be judged from the
following facts
● Education increases productivity and efficiency
● Education improves / modifies human behaviour
● Develops personality and sense of national consciousness
among the people which are important for rapid economic growth
● produced trained and skilled workers
● Makes them good citizens who help in choosing an intelligent
government

According to UNESCO
"education, training and economic progress go hand in hand "

Education
 the process of teaching, training and learning in schools and colleges to
improve knowledge and develop skills.
 Improves learning capacity and ability to understand
 Analyse the changes taking place in the socio economic environment
 Encourage research and results in many innovations
 Make a person modern in outlook and rational in behaviour
 Enables one to make the right choices in various aspects of life.
Expenditure on health
Health is a sense of complete mental, physical and social soundness
Government and parents spend lot of money on healthcare only. Healthy
persons can work ,sick person cannot. health is an important source of
human capital.
Improved health contributes to Eco growth in the following ways
1. Reduces production loss caused by workers illness
2. Increases efficiency of workers
3. Increases the enrollment of children in schools and makes them able
to learn better.
Various forms of health expenditure:
Expenditure on health takes different forms such as
1. Preventive medicine (vaccination)
2. Curative medicine (treatment during illness)
3. Social medicine (spread of health literacy)
4. Provision of clean drinking water
5. Provision of sanitation facilities
health expenditure directly increases the supply of healthy labourforce.Thus
it becomes a source of capital formation.

Preventive medicine

which prevents diseases and ailments from occuring

Vaccination
 Curartive Medicine

Used for curing diseases when they actually occur

Medical intervention during illness

Social medicine

Spread of knowledge about how to prevent occurrence of diseases

Spread of health literacy

Eg- use of masks, sanitizers, maintaining social distance etc..

On the job training

usually firm spend money on giving on the job training to the workers..
This take of different forms
The workers may be trained in the firm itself under the supervision of a
skilled workers.
b)Theworkers may be send for ‘’offcampus’’ training.
Such type of training enhances productivity
Expenditure regarding on the jobtraining is a source of human capital
formation because the return on such expenditure in the form of
enhancedlabor productivity is more than the cost of it.
 On the job training

Learning by doing the work

Knowledge of the actual work process

Greater efficiency and higher productivity

Expenditure on Migration
Migration is a major trendnow. People migrate due to two reasons
1)unemployment in the home state
2)Better job or living prospectsin abroad
Migration also involves cost such as cost of
a)travel
b)learning specific job abroad
c)higher cost of living abroad
d)real cost of separation if the worker is separated from the family(for eg
many workers in gulf)
e)Psychic cost of living in a strange foreign environment .
In spite of these costs, peoplemigrate because benefits of migration are
higher than the costs.
 Migration

Better earning opportunities

Enables to make better use of skills, knowledge and expertise

Improves productivity and efficiency

Larger output and income

Expenditure on acquiring information about the labormarkets

People spend money to acquire information relating to labour markets and

other markets. For eg people want to know the
1. Level of salaries associated with various types of jobs
2. Information on appropriate educational courses
3. Whether the education institution provide the right type of
employables kills and at what costs.
 This information is necessary to make decision regarding investment
in human capital as well as efficient utilization of the acquired human
capital stock.

RELATIONSHIP BETWEEN HUMAN CAPITAL AND ECONOMIC

GROWTH
1) Economic growth means the increase in the real income of a country
2) Investment in the human capital contributes to economic growth
a) The contribution of an educated person to the economic growth is
more than that of an illiterate person
b) Education provides knowledge to understand the society and
scientific and technological advancements
c) The availability of educated labour force facilitates
i) Discoveries
ii) Inventions
iii) Innovations
Similarly a healthy person could provide uninterrupted labour force for a
longer period of time. Health is an important factor.Education , health ,on
the job training, migration and job market information are the components
sources of human capital formation. The above component increases the
income generating capacity of the nation as well as India’s income.
Cause and effect between capital and
economic growth
Due to measurement problems, it is difficult to prove that increase in human
capital causes economic growth
For eg: education measured in terms of
a. Years of schooling
b. Teacher pupil ratio
c. Enrollment rates
May not reflect the quality of education

Similarly health measured in monetary terms, life expectancy and

mortality rate may not reflect the health status of people in the
country
 It means, it is difficult to establish a relation of cause and effect from
the growth of human capital to economic growth
However growth in each sector has reinforced growth of every
other sector
The relationship between human capital and economic growth has been
explained with the following flow chart

Rise in human Rise in economic

capital growth

Modern attitude and Rise in per capita

outlook, better income
quality of life, higher
life expectancy More investment in
education and health
More efficiency
Rise in human capital
More production

More economic
growth
QN.‘Human Capital benefits only the owner and not the society’.
Defend or Refute.
Human Capital benefits not only the owner but also the society in
general.
For eg, an educated person can effectively take part in a democratic
and economic process and contribute to the socio-economic progress
of a nation.
Similarly, a healthy person prevents the spreading of contagious
diseases and epidemics by maintaining personal hygiene and
sanitation.
QN.Cause and Effect Relation between Human Capital and
Economic Growth can be easily proved. Comment whether the
given statement is correct/incorrect and also support your
answer with valid reasons.
Human Capital and Economic Growth have a strong
correlation.Human capital affects economic growth and can help to
develop an economy by expanding the knowledge and skills of its
people but due to measurement problems, it is difficult to establish a
relation of cause and effect from the growth of human capital to
economic growth.
For example, Education is measured in terms of
1. Years of Schooling
2. Teacher-pupil ratio
3. Enrolment Rates may not reflect the quality of
education.
Similarly,health services measured in monetary terms,
life expectancy, and mortality rates may not reflect the
true health status of the people in a country.

Indicators of Development in Education and Health Sectors.

India recognized the importance of human capital in economic growth
long ago. The seventh Five Year Plan says “ Human Resource
Development has necessarily to be assigned a key role in any
 development strategy,particularly in a country with a large population
can itself become an asset in accelerating economic growth and in
ensuring social change in desired directions.

SELECTED INDICATORS OF DEVELOPMENT IN EDUCATION AND HEALTH

SECTORS

Particulars 1951 1981 1991 2001 2016-

17
Real Per Capita 7,651 12,174 15,748 23,095 77,659
Inmcome (in
Rs.)
Crude Death 25.1 12.5 9.8 8.1 6.3
Rate(per 1000
population)
Infant Mortality 146 110 80 63 33
Rate
Life
Expectancy at
Birth (in years)
Male
Female 37.2 54.1 59.7 63.9 67
36.2 54.7 60.9 66.9 70
Literacy Rate 16.67 43.57 52.21 65.20 76

QN. 1.Which of the following indicators shows the direct

relationship between the growth of Human Capital and Economic
Growth?
Ans. Real Per Capita Income.
2. Analyse relation of cause and effect between the growth of
human capital and economic growth.
OR
OR
‘Growth in each sector probably has reinforced the growth of
every sector’. Analyse
 As per the given table, there seems a direct relationship between Real
Percapita Income and Growth of Human Capital.
1.In the year 1951,Real Per capita Income was 7,651 which increased
to 77,659 in 2016-17.
2.The increase in percapita income has resulted in affordability of
health and education facilities.
3. There is a great decline in Crude Death Rate( per1000 population)
and Infant Mortality Rate.
4, There is an increase Life Expectancy at Birth ( in years) and Literacy
Rate.
Therefore we conclude that Growth in each sector probably has
reinforced the growth of every other sector.

World Bank and Deutsche Bank Reports

two reports on the Indian economy have identified that

India would grow faster due to its strength in human capital formation

1. Deutsche Bank, a German bank , In its report on ‘Global Growth centres

identified that
India will emerge as one among four major growth centers in the world
by the year 2020.
It further states that human capital is the most important factor of
production Intodays economy
Increase in human capital is crucial to achieve increase in GDP
Between the year 2005 and 2020 , there will be a 40% rise in the average
years of education in India, to just above 7 years

2. World Bank, in its recent report, “India and the knowledge leveraging
economy empirical strengths and opportunities” states that India should
make a transition to the knowledge economy and
if indian economy uses its knowledge as much as Ireland does, then the
per-capita income of India will increase from
 US $ 1000 in 2002
US$ 3000 in 2020

It further states that the Indian economy has the key ingredients for
making this transitionssuch as:

a. Large no of Skilled workers

b. A well functioning democracy and
c. A diversified science and technology infrastructure.
Thus these two reports point out the fact that
Further human capital formation in India will move its economy to a higher
growth path

India as a knowledge economy

India has the potential to become a leading knowledge based economy by

using IT.
The indian software industry has been showing an impressive record over
the past decade

The knowledge based economy uses IT

innovation and research
Higher education
And Specialized skill to create
Disseminate and
Apply knowledge for growth

Importance of human capital formation

Definition + It can be cleared from the following points :
1. EFFECTIVE USE OF PHYSICAL CAPITAL
The growth and productivity of physical capital depends extensively on
the human capital formation. The physical capital can be created only by
means of
 1. Hard and
2. Intelligent work of human beings in the economy
Hence, human skills and their efforts help in effective utilization of
physical capital.

2. RAISE EFFECIENCY AND PRODUCTIVITY

Investment in human capital
Increases efficiency and productivity and hence yields more income to the
people.

Increase in productivity and quality

Production depends on technical skill of the people, which can be acquired
only by means of
a) Education
b) Training and
c) Maintaining the health of the people

Inventions , innovations and technological improvement

Educations provides knowledge to understand changes in society and
scientific advancements. It facilitates
a) Inventions
b) Innovations
c) Discoveries
Similarly , the availability of educated labour force facilitates adaptation of
new technologies

3. Raise Life expectancy

Formation of human capital rises the life expectancy of the people.
Health facilitates and availability of nutritious food enable people to live a
healthy and long life.

Improves quality of life

Quality of life is indicated by income and health. Income and health
depends upon
the level of education,
health and
skill formation acquired by the person.
Illiterate, unhealthy, unskilled and untrained people can be a
burden in the economy. They cannot contribute much in the development of
the country.
 On the otherhand, literates, healthy, skilled and trained people
are an asset for the economy.
Human capital formation not only makes people productive and creative but
also form the lives of the people.
Thus, quality of population ultimately decides the economic growth of
the country
“Better equality of population means more economic
growth”

Main problems of human capital in indiaare

Human capital development requires investments in
 Health
 Education and
 In the over allwell being of individuals

Main problems of human capital in indiaare

1.Brain drain
A lot of educated people migrate to other countries in search of
better work opportunities.
 This has become a trend and it leads to the loss of quality people like
doctors engineers etc. who have high caliber and are rare in
developing countries
The cost of such loss of quality human capital is very high

2)Rapid growth of population

The continuous rise in population has adversely affected the
quality of human capital.it reduced the per capita availability of
existing facilities.A large population requires huge investments in
education and health. This diverts scarce money to production of
human capital at the cost of physical capital.
 3) Long term process
The process of human development is a long term process because
skill formation takes time.
The process which produces skilled man power is thus low.

4)Lack of proper man power planning

India is facing one of the most explosive problems of discontent and
frustration i.e graduate and post graduate unemployements.
Therefore there is an imbalance between the demand and supply of human
resources of various categories, especially incase of highly skilled
personnel.
As a result, our human resources along with natural resources are
not properly used. Due to this, low level of economic growth is realized.
  Exclusivity
Huge funds are required to provide avenue for research and development
to individuals.
This leads to channeling of resources to selected few, while the larger
sectors of primary and secondary education areignored

 Insufficient resources
The resources allocated to the formation of human capital have been
much less than the resources required.
Due to this reason, the facilities for the formation of human capital have
remained inadequate

Insufficient on the job training inAgriculture:

Agricultural sector is neglected where the workers are not given on the job
training to absorb emerging new technologies
 Many at times it is observes, even in the developed countries that the
govt. has invested enough in the health sector but the results are not
commensurate. This is because unless the life style of the individual
changes for the better ,no amount of medical progress can cut them.
 

“Investment in education stimulates Economic Growth”

Education plays a vital role in development of a country in following ways :

1. It Increases Production
Educated and skilled workers have a higher productivity than illiterate
and unskilled workers. It leads to increase in productivity of the nation.

2. Increase efficiency and productivity

With increase investment in education, efficiency and productivity of
workers increases.

3. Helps to bring positive changes in society

Education brings about positive changes in peoples attitude towards
religion, caste, gender and other socio-economic issues and there by
reduces socio-economic problems.

4.Brings improvement in quality of life.

Education makes life more qualitative compare to life of an illiterate
person with an educated person even if he or she is not engaged in
economic activity. An educated person has many advantages over an
illiterate person which makes his life more qualitative.

Technological innovations
 Education helps in bringing latest technologies and innovations in
the market.
HUMAN CAPITAL AND HUMAN DEVELOPMENT
Imagine a very wealthy but illiterate person . he lives in a bungalow travels
in a luxurious car and enjoy all other comfort and luxuries that money can
buy.
But can he read a good book and enjoy it?
No. therefore the standard of living is high but quality of life is low . similar is
the case of a rich person with poor health.
From human development angle, investment in education and health leads
to human development. From the human capital angle, investment in
education and health leads to higher productivity.
From human development perspective improvement in education and
health are desirable in themselves ie even if education and health does not
lead to improvement in productivity, it is desirable because it improves
human welfare ie why modern economies give alot of importance to
education and health.

HUMAN CAPITAL HUMAN DEVELOPMENT

Human capital considers From the human development angle

education and health as a investment in education and health
means to increase labour are integral to human being because
productivity. only when people have the ability to
read and write and the ability to lead
a long and healthy life, they will be
able to make other choices which
they value.
Human capital treats human In human development prospective
beings as a means to increase human beings are ends in
in productivity. themselves.
In this point of view any Human welfare should be increased
investment in education and through investment in education and
health in unproductive if it does health even if such investments do
not enhance output of goods not result in higher productivity.
and services In such a new economy individual
has a right to get basic education
and basic health care.
That is every individual has a right to
 be literate and lead a healthy life.

Basis Human capital Human development

Meaning Defined as knowledge, Based on the idea that
ability, skill and physical education and health
capacity of the people are integral for a human
which helps them to being to lead a healthy
produce more life
conductivity Motive of investment is Considers welfare- a
to increase the labour right of every individual
productivity irrespective of their
contribution to labour
productivity
Treats human beings as Treats humans beings as
treatment means to an end, the an end in themselves for
end being increase in the welfare
productivity
Concept Relatively narrow Broader concept
concept

State any three Economic and Social Benefits of human capital Formation
and Human Development.
Economic Benefits
1. Higher productivity
2. Higher Income
3. Increase Productivity of Physical Capital.
Social Benefits.
1. Effective political participation
2. Better standards of personal hygiene and sanitation.
3 .Prevention of disease and epidemics.

HUMAN CAPITAL FORMATION IN INDIA

Human capital formation is the outcome of:
a) Investment in education
b) Health
 c) On the job training
d) Migration ratio
e) Labour market information.
Both public and private institutions invest in education and health. But major
part of the investment in health and education comes from the government.
Central, state and local government make investment in Primary education
and health care as areas in which market mechanism does not function
effectively so the government plays an important role.
In areas where the private sector plays a role, it is the government
responsibility to ensure that private sector has to follow the standards
stipulated by government and charges the correct price.
Need for government intervention in education and health
sectors.
SUBSTANTIAL LONG TERM IMPACT
1. Expenditure on education and health make substantial long
termimpact and they can not be easily reversed.
I. For eg: once a child is admitted to a school or health care
center, where the required services are not provided, before
the decision is taken to shift the child to another institution ,
then a substantial amount of damage would have been
incurred. Hence govt intervention is essential.
INCOMPLETE INFORMATION
II. individual consumers of these services do not have
complete information about the quality of the services and
their costs.

MONOPOLY POWER
The providers of education and health services acquire
monopoly power and gradually they are involved in
exploitation.
Therefore the government should ensure that the private
providers of these services has to follow the standards
stipulated by govt and charge correct price.
III.In developing a country like india, with a large section of the
population living in BPL, many of them cannot afford to
access
a. Basic education
 b. Health care facilities.
c. Higher education
But basiceducation and health care facilities are the birthright of every
citizen.Therefore, the government should provide basic education and
health services free of cost for the deserving citizens and oppressed
classes.

REGULATORY BODIES
In India, we have the ministries of education and health at the central and
state level to regulate the educational sector.
For example
NCERT – National council for educational research and training
UGC – University grants commission
AICTE – All India council for technical education
ICMR – Indian Council for medical research ( regulates the health sector)

GROWTH IN GOVERNMENT EXPENDITURE ON EDUCATION

In December 2002, the government of India passed the 86th amendment of
the constitution of India i.e. free and compulsory education to all children up
to the age of 14 years (6-14 age groups)
Considering the importance of education and health care in human capital
formation and human development, the govt of India has been increasing its
expenditure on them.
Thus, expenditure is expressed in two ways.
1) As a percentage of total government expenditure ( it indicates the
importance the govt gives to education)
2) As a percentage of GDP ( it indicates how much of our income is spent
on education.

GOVERNMENT EXPENDITURE ON EDUCATION

YEAR GDP % TE
1952 0.64 7.92

2002 4.02 13.7

From 1952 to 2002, education expenditure as % of total government
expenditure increased from
7.92 to 13.7
And as a % of GDP increases
0.64 to 4.02
 In 2009, the government of India enacted the “Right to Education Act”
for free and compulsory education for all children in the age group of 6
to 14 years.
 The central budget of 2004-2005 levied an “education cess” of 2% on
all union taxes.The revenue proceeds from this cess is used
exclusively for elementary education.
 Apart from this, many scholarships and liberal bankcredits are
available for higher education.

A major part of government expenditure on education is spent on

elementary education because the numberof students is much higher.
The government expenditure on education as a percentage of GDP has
crossed 4%, but it is still lower than the desired level; the desired level is
regarded as 6%.
Education Comission-1964-66.
QN. ‘Education Comission-1964-66 HAD RECOMMENDED that at least
6% od GDP must be spent on education’. How far India has been able to
achieve the said goal?
OR
‘India has failed to implement the recommendation of Education
Commission of 1964-66’. Comment.

Investment in the education system in India has been very low since
independence.
The fact of the matter is that,in 1952 we were spending a meager 0.6% of
our GDP on education which rose to only 4% in 2014 but fell to 3 % in
2018-19.
This has fallen well short of the 6% target as proposed by the Education
Commissionin 1964.
Moreover, throughout this period the increase in education expenditure
has not been uniform and there has been an irregular rise and fall.
This shows the failure of the Government to invest in the education
system.If the recommended 6% of GDP would have been spent
properlythe present education system would have reached the heights.

Important observation related to expenditure on education

4. Lack of uniformity
5. Major share of elementary education
6. Expenditure per student in tertiary education is
higher
7. Variation in expenditure across states
8. Inadequacy in expenditure
a. Education commission
b. Tapas Majumdar committee
c. Free education
d. Education cess
e. Large outlay for higher education

Education sector in India

Educational Achievements in India
Education profile in the country is as follows:

LITERACY RATE
Literacy is a state of the person who can read and write a simple
passage with understanding
The ratio of literate persons to the total population of age 7 and above is
known as the literacy ratio.
1951- literacy rate was 5.7 CR and 2011- 77.8 CR
 The adult literacy rate has increased from 49.9% in 1999 to 72.15% in
2012

ELEMENTARY EDUCATION
Elementary education in India comprises two parts
b. Primary school- 1to5 age group 6-10
c. Upper primary school – 6 to 8- age group 11- 14
A landmark in the Indian constitution came in the year 2009 with
the enactment of the right to Education Act, education up to
middle school to all children

SECONDARY EDUCATION
It consists of
a. 9 to 10
b. 11 to 12
(age group 14-18)
HIGHER EDUCATION
The Indian higher education system is one of the largest in the world. It
consists of general and technical education.
 Educational Attainment in India

Generally, educational achievements in a country are indicated in terms

of

PARTICULARS 1990 2000 2017-

18
1) Adult literacy rate(% of people
aged 15+) 61.9 68.4 82
a)male 37.9 45.4 66
b)female

2) Primary Completion rate (% of 78 85 93

relevant age group) 61 69 96
a)male
b)female
76.6 79.7 93
3) Youth literacy rate (% of people 54.2 64.8 90
aged 15 to 24)
a)male
b)female

It’s clear from the table that we have made great progress in education.
1.State any two indicators which show educational achievement in a
country.
Educational achievements in a country are indicated in terms of
a) Adult Literacy Rate
b) Primary Education Completion rate
c) Youth literacy rate

2.The difference in literacy rates between males and females are

narrowing signifying a positive in gender equality. Evaluate.
1. Adult Literacy Rate has increased significantly from 37.9% in 1990
to 66% in 2017-18.
2. The Primary Completion Rate for females has also increased
notably from 61% to 96% in 2017-18.
3.Female Youth Literacy Rate has risen from 54.2% in 1990 to 90 % in
2017-18.
Name any three steps taken by the Government of India to enhance
educational achievements in India.
1. Right to Education Act 2009.
In 2009, the Government of India enacted the Right of Education Act
to make free education a fundamental right to all children in the age
group of 6-14 years.
2 .Education Cess
The government of India has also started levying a fixed percent ‘
Education Cess’on all union taxes.
The revenue from the education cess has been reserved for spending
on elementary education.Large Outlay for Higher Education.

The Government sanctions a large outlay for the promotion of higher

education and new loan schemes for students to pursue higher
education.

Future Prospects of Education

Or
Challenges for the future
Even though we have made progress in educational attainments there
are major deficiencies here.Thesedeficienciesare also called future
challenges.
1) Education for All-Still a Distant Dream:

India has a large number of illiterates

A literacy rate of 68% means an illiteracy level of 32%
Therefore we can not be satisfied with the upward movement in the
literacy rateand we have miles to go to achieve 100% literacy.
2. Gender disparities are glaring. While male literacy is 68.4%,
Female literacy rate is only 45.4%
This is one of the lowest in the world. Similar gender disparities
can be seen in primary completion rate and youth literacy rate
3)Low participation in higher education
 In India only a small % of students who complete schooling go for
higher education. This has to be improved.
Another major deficiency related to the education sector is the high
rate educated unemployment Compared to among there who have
completed primary education

Objective
Educated class should get employment to achieve this objectives
Increase expenditure on higher education to achieve this
Indian Education pyramid is steep indicating:
1. lesser and lesser no. of people reaching higher education level.
2. The level of unemployment among educated youth is the highest .
3. As per NSSO (2011-12) the rate of unemployment among youth male
who studied graduation and above in rural areas was 19% percent hike
the urban areas it was 16% .
4. Young rural female graduate - 30% are unemployed. 3-6% of the
primary level educated youthin rural and urban areas are unemployed.
Therefore , the government should increase expenditure in higher education
and also improvethe standard of higher education institution. So that the
students are imparted employable skillsin such institutions .
Gender equity
The need to promote education for women in India is imminent for various
reasons such as,
1) Improving economic independence and social status of women to save
them from exploitation.
2) Women’s education makes a favorable impact on the fertility rate and
health care of womenand children.

TAPAS MAJUMDAR Committee

Appointed by the government of India in 1998 is estimated on expenditure
of around 1.37 lakh crores over 10 years (1998-2007) to bring all Indian
children of the age group of 6-14 years under thepreview Of school
education.
 Q. “India is a knowledge economy” explain it.
Ans. Refer from notes

Major Features of the National Education Policy 2020

1. Skilled Workforce:
The National Education Policy 2020 states that the
world is undergoing rapid changes in the knowledge
landscape. With various dramatic scientific and
technological advances, such as the rise of big data,
machine learning, and artificial intelligence, many
unskilled jobs worldwide may be taken over by
machines,while theneed for a skilled workforce,
particularly involving mathematics,computer
sciences and data science, in conjunction with
multidisciplinary abilities across the science and
social science and humanities will be increasingly in
greater demand.
3. With climate change, increasing pollution, and depleting natural
resources, there will be a sizeable shift in how we meet the World’s
energy, water, food, and sanitation on needs, again resulting in the
need for new skilled labour, particularly in biology, chemistry,
physics agriculture, climate, science, and social science.
4. Multidisciplinary Learning
 The growing emergence of epidemics and pandemics will also call
for collaborative research in infectious disease management and the
development of vaccines and the resultant social issues heighten
the need for multidisciplinary learning.
5. Demand for Humanities and Art.
There will be a growing demand for humanities and art ,as India
move towards becoming a developed country as well as among the
three largest economies in the world