Chapter 2

• People as Resource


  Referring to a country's working people in terms of their existing productive skills and abilities
• Human capital

  • The stock of skill and productive knowledge embodied in people
  • Developed through investment in education, training and medical care
• Looking at population from a productive aspect emphasizes its ability to contribute to the creation of Gross National Product.
• Population is thus also a resource called ‘human resource’
• Human Capital Formation

  • Human resource is developed further by becoming more healthy and educated its is called ‘human capital formation’
  • It adds to the productive power of the country just like physical capital formation
• Investment in human capital yields a return just like investment in physical capital
• India‘s Green Revolution

  • Input of Greater knowledge in the form of improved production technologies rapidly increased the productivity of scarce land resources
• India‘s IT Revolution?

  • The importance of human capital has acquired a higher position than that of material, plant and machinery
• The more educated and healthier people gain through higher incomes
• The society also gains indirectly because of educated or healthier population:

  • The advantages of educated or healthier population spreads to those who were not directly educated or given health care
• Human capital is in one way superior to other resources as it can make use of land and capital. Land and capital on its own is not useful
• India’s large population: asset or liability?

  For decades in India, the large population was like a liability than an asset. But this need not be a burden

  It can be turned into a productive asset by investment in human capital
• Investment in human capital

  • Spending resources on education and health
  • Training industrial and agricultural workers in using modern technology, useful scientific researches, etc
• Story of Sakal

  • Two friends Vilas and Sakal (12 years) lived in Semapur. His mother Sheila did domestic chores. His father Buta Chaudhary worked in agricultural field. Sakal looked after younger brother Jeetu and sister Seetu.
  • His parents forced him to join village school in which completed higher secondary exam and later continued his studies of vocational course in computers by loan
  • He completed it and got a job in private firm. He designed new software which helped him increase the sale in firm. The Boss rewarded him with a promotion
• Story of Vilas

  • Vilas was 11 years old. His father Mahesh was a fisherman who passed away when he was 2 years. His mother Geeta bought fish from the landowners pond and sold it in the nearby Mandi. She only earned 150 rs a day.
  • Vilas became a patient of Arthritis but his mother couldn’t afford his treatment or go to school as he wasn’t interested in studies
  • He helped his mother and looked after younger brother Mohan
  • His mother fell sick and there was no one in his family to support them.
  • Vilas sold fish in the same village and earned only a meagre income.
• In two stories we saw Sakal as educated and healthy whereas Vilas as uneducated and sick.

  • Sakal‘s education added to the quality of labor and enhanced his total productivity adding to the growth of economy in turn paying as salary.
  • Vilas had no education or health therefore unskilled and so draws the same salary as his mother
• Importance of education for a child

  A child with investment made on education and health can yield high return in future as high income and great contribution to society.
• Importance of education for a parent?

  Educated parents invest more heavily on education of their child as they have realized the importance of education. They are conscious of proper nutrition and hygiene and accordingly look after their child’s needs.
• A virtuous cycle of educated parent education their child and so on is created
• A vicious cycle may be created by disadvantaged parents who are uneducated and lacking hygiene keep their children in a similar disadvantaged state.
• Japan invested in Human Resources even though they didnt have any natural resource and so import the needed. They invested in people who made use of other resources of efficiency and technology thus making the country rich or developed
• Economic activities by Men and Women

  The various activities have been classified into three main sectors:

  • Primary
  • Secondary
  • Tertiary
• Primary Economic Activities

  • Agriculture, Forestry, Animal husbandry, fishing, poultry, farming, mining and quarrying.
• Secondary Economic Activities

  • Manufacturing the goods into more useful products
• Tertiary Economic Activities


  • Trade, transport, communication, banking, health, tourism, education, services, insurance, etc,
  • These activities result in the production of goods and services
• Economic activities add value to the national income
• Economic activities have two parts

  • Market activities
  • Non market activities
• Market activities


  • Involve remuneration to anyone who performs or activity performed for pay or profit
  • Production of goods or services, including government service.
• Non Market activities

  • Production for self consumption
  • Consumption and processing of primary product and own account production of fixed assets
• Due to historical and cultural reasons, there is a division of labour between men and women in the family.

  Women generally look after domestic chores and men work in the fields.
• Women are not paid for their service delivered to the family. The household work done by women is not recognized in the National Income. Thus women are paid for their work when they enter the labor market
• Education and skill are the major determinants of the earning of any individual in the market.
• Women with meagre education and low skill formation?

  • A majority of women have meagre education and low skill formation.
  • Women are paid low and irregular income compared to men
  • Most women work where job security and legal protection is not there.
  • There is an absence of basic facilities like maternity leave, childcare and other social security systems.
• Women with high education and skill formation


  • Paid at par with the men
  • Teaching and medicine attract them the most
  • Some have entered administrative and jobs that need high levels of scientific and technological competence
• Quality of Population?


  • Depends on the literacy rate
  • Health of a person indicated by life expectancy
  • Skill formation acquired by the people of the country

  The quality of the poulation ultimately decides the growth rate of the country.
• Education

  • Education contributes to the growth of society.
  • It enhances national income, cultural richness, and the efficiency of governance
  • Literacy is not only a right, it is also needed if the citizens are to perform their duties and enjoy their rights properly
• Primary or Elementary Education?

  • Provision made for providing universal access, retention, and quality in elementary education with a special emphasis on girls
  • Establishment of pace-setting of schools like Navodaya Vidyalaya in each district.
  • The primary school system (I–V) has expanded to over 7,78,842 lakh in 2019–20.
• High School Education

  • Vocational streams were developed to equip a plethora of high school students with occupations of knowledge and skills
  • The Gross Enrolment Ratio (GER) in higher education (age group 18 -23 years) is 27% in 2019–20, broadly in line with the world average.
  • Focuses on increasing access, quality, state-specific curriculum modification, networking on information technology, and merging formal, non-formal, distance, and IT education institutions.
  • Past 60 years, there has been significant growth in the number of universities and institutions of higher learning
• The Plan outlay on education

  • Increased from Rs 151 crore in the first plan to Rs 99,300 crore in 2020–21
• The expenditure on education as GDP?

  • Expenditure on education as GDP rose from 0.64% in 1951–52 to 3.1% in 2019–20, and remained stagnant at 3% in the past few years.
  • The Budgetary Estimate as in the Budget Documents of Union State Governments, Reserve Bank of India, the expenditure on education as GDP has declined to 2.8% in 2020–21
  • The literacy rates have increased from 18% in 1951 to 85% in 2018.