Human Capital Formation In India - Class 12 Commerce Economics - Extra Questions

1:Economic growth is the increase in the capacity of the economy to produce more of goods and services as compared to the previous year.
2:It can be calculated as the percentage increase in the GDP of a country.

Economic development is the process in which an economy continuously tries to improve its economic, social and political well-being of its people. It aims to improve the standard of living of its people.

The following are the differences in the nature of unemployment in rural and urban areas:

The following are the reasons why it is essential to invest in human capital:

• Investment in human capital is immensely important for society as a whole because it creates a labor force that will be capable of creating economic growth.
• Humans capital has the knowledge, skill, and adequate technology to make the maximum utilization of the resources around us.
• Humans are not only able to utilize and make proper use of resources but even search for new ones.
• With training and education, humans become capable enough to create more resources.

Differences between physical capital and human capital.

Physical Capital	Human capital
1. Any non-human asset made by humans and then used in production it is known as physical capital.	1. When the existing 'human resource' is further developed by becoming more educated and healthy we call it human capital formation that adds to the productive power of the country.
2. It is tangible and can be sold in the market, e.g., goods like a bus or a machine.	2. It is not tangible and cannot be sold in the market because it is naturally built in the mind and body of its owner, only the services of human capital can be sold.
3. Physical capital is separable from its owner.	3. Human capital is inseparable from its owner.
4. Physical capital benefits only the owner.	4. Human capital benefits not only the owner but the society in general.
5. Physical capital is inferior to human capital.	5. Human capital is superior to other resources like land and physical capital.
6. Physical capital cannot become useful on its own.	6. Human capital can make use of physical capital.

Percentage increase in doctors $$= \dfrac {268700 - 61800}{61800}\times 100$$
$$= 334.79$$%
Percentage increase in nursing personnel $$= \dfrac {143887 - 18054}{18054}\times 100$$
$$= 696.98$$%

The role of education in human capital formation is vital. A large population can be turned into a liability if it is not educated. By giving proper education we can make a child well developed, well eligible to do any work. Thus, education adds to the quality of labor. This enhances total productivity, which adds to the growth of the economy. 

Education is the backbone of the modern economy. Human capital is an important element which will help the economy flourish and education enhances the human capital. Educated people have more understanding of themselves and of others. 

The seventh five-year plan recognized the importance of human capital. It says "Human resource development has assigned a key role in any development strategy, particularly in a country with a large population".

In this case study, since Komal is no longer a part of human development because she is not producing goods and services, but she is a human capital because she has a stock of skill, ability, expertise, education and knowledge embodied in the people. Following are the differences between human capital and human development:

Human capital	Human development
i. Human capital is a narrow concept.	i. Human development is a broad concept.
ii. It states education and health as a means to increase labour productivity.	ii. It states that education and health are integral to human well-being because only when people have the ability to read and write, they have ability to make healthy life.
iii. It treats human beings as a means to an end, the end being the increase in productivity.	iii. It is  an end in themselves.
iv. It considers that investment in education and health is unproductive, if it does not increase the output of goods and services.	iv. It considers that human welfare should be increased through investments in education and health if such investments do not result in higher labour productivity.

Health expenditure is a source of human capital formation as it directly increases the supply of a healthy labor force. It leads to capital formation through optimum utilization of resources. 

We need to invest in human capital to make effective use of physical capital and to increase the productive capital of the country. It improves the profitability of the employees so that more investors can be attracted.

Meaning of human capital- Human capital refers to the skills and knowledge possessed by an individual.
Meaning of human capital formation- Human capital formation is the process of adding to the stock of human capital over time.

Human Capital	Human Development
a) Human capital is a narrow concept.	a) Human development is a broad concept.
b) It states education and health as a means to increase labour productivity.	b) It states that education and health are integral to human well-being because only when people have the ability to read and write, they have the ability to make a healthy life.
c) It treats human beings as a means to an end, the end being the increase in productivity.	c) It is an end in itself.
d) It considers that investment in education and health is unproductive if it does not increase the output of goods and services.	d) It considers that human welfare should be increased through investments in education and health if such investments do not result in higher labour productivity.

A. Human capital formation enhances quality of life. Human capital formation noy only helps the individuals to grow but also contributes in the development of the society. Better job opportunities come up and enriches the lives of upcoming youth through quality education and vocational skills and training.

No, by just spending money in the health and education facilities does not guarantee the success of the policies. It also depends on the capabilities of the doctors and quality of the medicines in the case of health facilities.
There are other factors that impacts its success:

1. Effective implementation and monitoring of the policy mechanism by government officials.
2. Creating a level of awareness about government policies and programmes through local bodies and village communities.
   
3. Eliminating bribe from the system.

The WHO defines an adult who has a BMI between 25 and 29.9 as overweight - an adult who has a BMI of 30 or higher is considered obese - a BMI below 18.5 is considered underweight, and between 18.5 to 24.9 a healthy weight. So, an adult whose Body Mass Index is more than 30 will be classified as obese.

1:Investment in human capital is believed to be positively related to economic growth. It leads to efficient utilisation of the material inputs and capital. With increase in productivity, output increases at an increasing rate and hence economic growth accelerates. 
2:Human capital is the fundamental source of economic growth. It is a source of both increased productivity and technological advancement.Human capital is described as the skills, training, and health acquired through on the job training and education.