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Human Capital Formation in India Notes for Class 11 Economics

Please refer to Human Capital Formation in India Notes for Class 11 Economics provided below. These revision notes have been prepared to help you understand and learn all important topics given in your NCERT Book for Class 11 Economics. We have provided Notes for Class 11 Economics for all chapters provided in your textbooks. These concepts, notes, and solved questions have been prepared for Standard 11 Economics by our expert teachers t help you gain more marks in exams and class tests.

Class 11 Economics Chapter 6 Human Capital Formation in India Notes

Please carefully read the Human Capital Formation in India Notes for Class 11 Economics provided below. Use them prior to your exams as this will help you to revise the entire chapter easily. We have also provided MCQ Questions for Class 11 Economics which will be asked in the upcoming exams.

♦ Physical capital-

It includes all thos inputs which are required in the process of production, such as plant, raw materials, machinery, building etc.

♦ Human capital-

It refers to the knowledge, skill and efficiency of human beings in a nation at a point of time.

♦ Human Capital formation-

It is the process of acquiring and increasing the number of persons who have the skill, education and experience which are essential for the economic and political development of the nation.

Sources of human capital formation

1. Investment/experience on education-

The most important source of human formation is to invest on the education system and training of people. Education enables an individual to make good living throughout his life.
A good education system results in the overall development of the economy as education generates technical skills and creates a manpower which suites for improving the total productivity of the economy.

2. Expenditure on health

‘Health is wealth’ is an old saying which directly signifies that a healthy mind is much more effective and productive than a sick mind.
Expenditure on health makes an individual more productive and hence it contributes more in the GDP of the nation.

3. On the job training

It refers to the training of employees while they are performing a job.

The concept of on the job training increases the productivity of labour and sharpens their skills as they work under profesesional guidance and with practical application. Moreover, it enables the owrkers to adapt new technologies and hence creates human capital.

4. Expenditure on information

Information related to job markets and educational institutes offering specialized skills is an important determinant of skill formation as it enables the individual to actualize their true potential.

5. Migration

It refers to moving from one place to other.

It contributes to human capital formation as it enables the utilization of inactive skills of the people or it facilitites better utilization of resources.
People migrates from rural to urban areas in order to find better earnings and a good standard of living.

Role of human capital formation in economic growth

1. Increase production

Human capital formation focuses on building a productive environment by providing skills and education to the people of the country. The productivity of the economy will automatically increases with increase in the level of education and skilled work force.

2. Raises life expectancy

Human capital formation increased the life expectancy of the people.

Better health facility and good food increases the life span of people and raises the quality of life.

3. Improves the quality of life

People migrate for better earning and quality of life.

The quality of life depends upon the level of education, health care facilitites, better working environment and good quality food.
Human capital formation increases the quality of life of people of the economy.

4. Increases participation and brings equality

Here participation refers to the percentage of labour force participating, the process of production.
Human capital formation leads to enhancement of productive capacity of the labour which ultimately leads to greater employment and equality in the distribution of income and wealth.

5. Innovative skills

With the increase in the number of skilled and trained workers, the possibilities of innovation also increase in the process of production. Innovation always plays a key role in the path of development of the economy and generation of income.

Problems facing in human capital formation

1. Rising population

Increasing population reduced the per head availability of existing resources and facilitates such as hospital, education, employment, water supply etc.
The reduction in resource reduces the quality of life of the people.

2. Brain drain

Skilled and technically efficient people migrate from India to foreign countries in search of better salaries and standard of life. This is a threat in the process of human capital formation for the country as it slows down the pace of development of the economy.

3. Insufficient man power planning

One of the main causes of unemployment is the deficit of proper man power planning.
There is always a gap between demand and supply of rising labour force in the country. Increase in the number of employment opportunities is far behind the number of available work force.

4. Inefficient education system

Everything in the economy changes with the changing environment except the

education system of our economy. The education system of our economy is around 100 years old, the number of universities increases with the great pace lacking behind the quality of education.

5. Insufficient on the job training in agriculture

India is an agriculture based economy and yet agriculture does not received much attention in the area of professional skills. The concept of on the job training rarely applied in this sector which ultimately results in traditional methods of farming and low level of productivity.

6. Insufficient resources

The amount of resources allotted for the development of human capital is very low as compared to actual amount of resources required. Due to this the resources remains inadequate and insufficient to for the formation of human capital.

Education sector: An essential part of human capital formation
 Education refers to the process of teaching, training and learning especially in schools and colleges to improve knowledge and to develop skills Basically education is termed to be the most important part of human capital formation as it enables the people to change their outlook, become more efficient and to increase their productivity.
In India the education sector has been developed since independence.

1. Elementary education

♦ It covers the students from class 1 to class 8 (6-14 years).

♦ The number of primary and middle school (upto class 8) has increased from 2.24 lakhs in 1950-51 to 11.92 lakhs in 2011-12.

♦ Nearly 97% children receives elementary education.

♦ Government introduced various policies to strengthen elementary education such as Sarva Sikhsha Abhiyan, right to education, mid-day meal programme and so on.

2. Secondary and senior secondary education

♦ It covers the students from class 9 to class 12 (14-19 years)

♦ The number of Secondary and senior secondary school has increased from 7.4 thousands in 1950-5 1 to 2.32 lakhs in 2011-12.

♦ The number of students also increases from 15 lakhs in 1950-51 to 482 lakhs in 2011-12.

♦ An important role is played by Navodaya schools and kendriya vidhyalayas at central level.

3. Higher education

♦ The number of colleges (general) has increased from 578 in 1950- 51 to 35,839 in 2011-12.

♦ The number of universities has also increased from 27 to 665.

♦ The number of students getting higher education is about 130 lakhs (2011-12)

♦ The expenditure on education has also increased from 1.5% of GDP in 1950 to 3.1% in 2015-16.

Important terms

♦ Gross enrollment ratio

It refers to the number of students enrolled in school at several different grade levels (primary, middle and high school)

♦ Literacy rate

It refers to the percentage of people above 7 years who can read, write and understand any one language.

The literacy rate of India is approx 74.4%.

Most literate state is kerala with 93.9% whereas the least literate state is bihar with 63.8%.

♦ Human resource development

It refers to the development of the set of individual that makes up the workforce of an organization business sector or economy.

In India

♦ Ministry of education at the centre and state level, NCERT(National council of educational research and training), UGC (University grant commission), AICTE (All India council of technical education) regulate the educational sector.

♦ Ministry of Health at the Union and the state level and ICMR.


♦ Physical capital

♦ Human capital

♦ Human capital formation

♦ Sources of human capital formation

♦ Investment/expenditure on education

♦ Expenditure on health

♦ On the job training

♦ Expenditure on information

♦ Migration

♦ Role of human capital formation in economic growth

♦ Increases production

♦ Raises life expectancy

♦ Improves the quality of life

♦ Increases participation and brings equality

♦ Innovative skills

♦ Problems facing in human capital formation

♦ Rising population

♦ Brain drain

♦ Insufficient man power planning

♦ Inefficient education system

♦ Insufficient on the job training in agriculture

♦ Insufficient resources

♦ Education sector: An essential part of human capital formation

♦ Gross enrollment ratio

♦ Literacy rate

♦ Human resource development

Human Capital Formation in India Notes for Class 11 Economics

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