HUMAN CAPITAL v/s HUMAN DEVELOPMENT

HUMAN CAPITAL AND HUMAN DEVELOPMENT

• Human capital considers education and health as a means to increase labor productivity. On the other hand, according to human development, education and health are integral to human well-being because 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 beings as a means to increase productivity. Any investment in education and health is unproductive if it does not enhance the output of goods and services. However, according to human development, human beings are ends in themselves. Human welfare should be increased through investments in education and health even if such investments do not result in higher labor productivity.

HUMAN CAPITAL FORMATION IN INDIA:

• Ours is a federal country with a union government, and state government’s local governments (Municipal Corporations, Municipalities and Village Panchayats). The Constitution of India mentions the functions to be carried out by each level of government.
• Accordingly, expenditures on both education and health are to be carried out simultaneously by all the three tiers of the government.
• Education and health care services create both private and social benefits. As a result, bout private and public institutions exist in the education and health service markets.

Need for Government Intervention:

• The expenditures on education and health make a substantial long-term impact and they cannot be easily reversed. For example, if a child is admitted to a school or health care center and required services are not provided in such an institute, then a substantial amount of damage would have been done before the decision is taken to shift the child to another institution.
• Individual consumers of these services do not have complete information about the quality of services and their costs.
• The providers of education and health services may acquire monopoly power and may get involved in exploitation. So, the role of the government is important to ensure that the private providers of these services adhere to the standards stipulated by the government and charge the correct price

Regulatory Authority

• In Education, the ministries of education at the union and state level and departments of education and various organizations like the National Council of Educational Research and Training (NCERT), University Grants Commission (UGC) and All India Council of Technical Education (AICTE) regulate the education sector.
• In Health, the ministries of health at the union and state level, departments of health and various organizations like the Indian Council for Medical Research (ICMR) regulate the health sector.