Chapter 2: People as Resource

1. Introduction – Understanding ‘People as Resource’

1. “People as Resource” is a perspective that treats population as productive assets, not just consumers.

2. Human beings are considered resources when they contribute to the generation of goods and
services.

3. Human Capital = The stock of skills, knowledge, experience, and health of people.

4. Human capital is created through investment in education, health, skill development, and training.

5. Physical capital (tools, machines, factories) is important, but without human capital, it remains
unused.

6. Human resources can make physical capital productive — e.g., a tractor needs a skilled driver.

7. Investment in human capital → Higher productivity → Higher income → Economic growth.

8. India’s Green Revolution and IT sector show how educated, skilled people transformed key sectors.

9. Population becomes an asset when it contributes to national income; otherwise, it's a liability.

2. The Stories of Sakal and Vilas – A Contrast in Human Capital

Sakal (A Case of Investment in Human Capital):

1. Went to school, completed higher secondary and vocational training in computers.

2. Got a job in a private firm, became productive, and developed software that helped the company grow.

3. Result: Higher income, job satisfaction, contribution to the economy.

4. Represents a virtuous cycle where educated individuals build better futures for themselves and
society.

Vilas (A Case of No Investment in Human Capital):

1. Couldn’t go to school due to poverty and illness (arthritis).

2. Had no access to health facilities, remained uneducated and sick.

3. Took up his mother’s job of selling fish, earning a meagre income.

4. Represents a vicious cycle of poverty, poor health, and lack of education.

Key Learnings:

1. Education and healthcare are fundamental investments in individuals.

2. Lack of these leads to low productivity and intergenerational poverty.

3. Returns from human capital can be higher than from physical capital.

3. Economic Activities by Men and Women

1. Economic activities are those that add value and contribute to national income.
2. Categorised into three sectors:

o Primary: Agriculture, forestry, fishing, animal husbandry, mining.

o Secondary: Manufacturing and industrial work.

o Tertiary: Services like transport, communication, banking, healthcare, education.

3. Market Activities: Performed for pay/profit (e.g., working in a school or factory).

4. Non-Market Activities: Performed for self-consumption (e.g., cooking, collecting firewood).

5. Gender Inequality:

o Women often work in non-market activities like housework, which are unpaid but essential.

o In paid jobs, women are paid less due to low skill levels and poor access to education.

6. Women in the unorganised sector lack maternity leave, social security, and regular income.

7. Educated women entering fields like teaching, medicine, and administration show that investment in
women’s education yields high returns.

4. Quality of Population

1. Quality of population = Education + Health + Skill level of people.

2. A high-quality population increases labour productivity and leads to a higher GDP.

3. Indicators of population quality:

o Literacy Rate: A key measure of educational attainment.

o Life Expectancy: A reflection of health conditions.

o Skill Formation: Ability to use technology and innovate.

4. Literate and healthy people live longer, work better, and contribute more.

5. Virtuous Cycle: Educated parents invest in their children → Better future generations.

6. Vicious Cycle: Illiterate parents → Poor child health, education → Perpetuated poverty.

7. Countries like Japan and South Korea have grown by investing in people, not natural resources.

5. Role of Education in Human Capital Formation

1. Education enhances one’s:

o Employability and earning potential.

o Decision-making ability and social awareness.

o Innovation and creativity.

2. It helps people move from low-paid to high-paid jobs.

3. India’s Educational Initiatives:

o Samagra Shiksha Abhiyan: Integrated school education.

o Mid-day Meal Scheme: Increases attendance and reduces dropout.

4. Challenges:

o Education spending is only ~3% of GDP (target is 6%).

o Dropout rates are high due to poverty and poor infrastructure.

o Rural and girl child education still face barriers.

5. Gross Enrolment Ratio (GER) in higher education (18–23 age group) is around 27% (2020–21).

6. Education drives economic development and democratic participation.

6. Role of Health in Human Capital Formation

1. Health determines the ability to work efficiently and for longer periods.

2. An unhealthy worker has low stamina, poor performance, and high absenteeism.

3. Health investment includes:

o Public health infrastructure (PHCs, hospitals).

o Nutrition programs (e.g., POSHAN Abhiyan).

o Preventive care (vaccination, sanitation).

4. Key Data (2020–21):

o Life expectancy: 67.2 years.

o Infant Mortality Rate (IMR): 28 per 1,000 live births.

o Crude Birth Rate: 20, Death Rate: 6 (per 1,000).

5. Health Inequality:

o Urban areas and rich families have better access to healthcare.

o Rural areas lack doctors, medicines, and clean facilities.

6. Public vs Private Sector:

o Private care is often better but unaffordable for many.

o Government hospitals serve the poor but face quality issues.

7. Unemployment

1. Unemployment = Situation where willing and able people can’t find work.

2. Types of Unemployment:

o Seasonal: In agriculture, people are jobless for months.

o Disguised: Too many people doing a job that fewer can do (e.g., family farms).

o Educated: Qualified youth can’t find jobs due to skill-job mismatch.

3. Impact of Unemployment:

o Wastes valuable human capital.

o Increases poverty, dependency, and frustration.

4. Why Unemployment in India is Underreported:

o People are forced to take up low-paying work.

o Many are counted as employed even with negligible income.

5. Structural Causes:

o Mismatch between education and industry needs.

o Lack of job creation in non-agricultural sectors.

o Regional imbalances in job availability.

6. Solution: Skill training, entrepreneurship support, vocational education.

8. The Story of a Village – Human Capital Transforms an Economy

1. A boy is sent to an agricultural college and returns as an agro-engineer.

2. His innovation improves productivity → profits → more jobs.

3. Other families start investing in education and training.

4. A teacher, tailor, and other professions emerge.

5. The village transforms from a self-sufficient subsistence economy to a modern, diversified economy.

6. Lesson: Investment in people leads to job creation, income generation, and development.