Importance of Human Capital Formation in Economic Development of India
Importance of Human Capital formation in Economic Development of IndiaNisha Genani, Research Scholar Pt. Ravi Shankar Shukla University, Raipur (CG)AbstractThe aim of the present paper is to focus on the Importance of Human Capital Formation in economic growth of Indian economy. Human capital is a collection of resources which includes knowledge, talents, skills, abilities, experience, intelligence, and training which is possessed individually and collectively by individuals in a population. Human Capital represents the wealth of the country which is required to accomplish the national goal and helps in overall economic growth of country. The main source of human capital is investment in education and health. To encourage the human capital of the nation the government of the country plans public expenditure on education to build human capital. This public expenditure in education augments the supply of educated and skilled labour. Like education, health is also considered as an important input in the development of a nation and is also important for the development of individual. The share of expenditure on education in GDP in India has been continuously increasing from 2.9% in 1990-91, after which it declined to 2.4% in 2007-08 and started increasing thereafter to reach to 3% in 2014-15. Even though education has been given vital importance in India, It could not reach the public expenditure target of 6% of GDP. Â Even after 50 years of independence, the enrolment rates remain low in this country, particularly in case of poor and the inhabitants of rural areas. Besides, an expansion of public education expenditure is all the more desirable because of the externalities associated with education, such as, reduced population growth and better health care.
The aggregate spending on health services as a ratio of Gross Domestic Product has been extremely low and has been declining over time.  The share of expenditure on health care in GDP in India has been continuously decreasing from 1.02% in 1990-91 to 0.87% in 2014-2015.In other words even as the cost of providing health services showed a disproportionate increase, the expenditures exhibited a declining trend which implies that the decline in real spending was of a greater magnitude. Economic growth makes it possible to finance good environmental health. In addition, it contributed to improve quality of life and health status of people, via increased life expectancy, falling in infant, child, and maternal mortality rates.Health is considered as an important parameter for the development of the nation. Expenditure in health directly increases the supply healthy labour force and thus enhances the human capital of the country. Finally, to enhance the economic growth of country it is important to increase the investment in human capital formation of the country.  Keywords: Economic Growth, Public Expenditure, Human Capital, Skilled Labour, Educated Labour, Education, Health, India.Introduction:Human Capital plays a vital role in economic growth and development of the country. India has gradually evolved as knowledge-based economy due to the abundance of capable, flexible and qualified human capital. Under the influence of globalization, India has immense opportunities to establish its distinctive position in the world. However, there is a need to further develop and empower the human capital to ensure the nation’s global competiveness.  To develop the human capital of India has taken provision of high-quality education and health care to all of the population of the country. The government has given core importance to education and health in its public policy. The main source of human capital is investment in education and health. To encourage the human capital of the nation the government of the country plans public expenditure on education to build human capital. This public expenditure in education augments the supply of educated and skilled labour. Like education, health is also considered as an important input in the development of a nation and is also important for the development of individual.