Unit III- Human Capital Formation In India

Meaning of Human Capital and Sources of Human Capital Formation

Objective

After going through this lesson, you shall be able to understand the meaning of human
capital and human capital formation. Also, we will explore the various sources of human
capital formation.

Human Capital and Human Capital Formation

You can see around yourself people having varied knowledge and skill. Some are
doctors, engineers, professors, artisans, scientist, researchers, etc. All these people are
a capital for the economy. They contribute to the process of economic growth. An
educated and skilled labour force is more productive and efficient than an uneducated
labour force. Similarly, a healthy person can contribute more effectively to the work.

The stock of such skills and expertise of nation at a particular point of time is
called as human capital. In other words, it is the sum total of skills and expertise of all
persons engaged in the process of production. Human resource (population) becomes a
human capital when it is endowed with education, training, skill and health. It is the
human capital and not the human resource that contributes to the production process
and thereby, to the economic growth. The contribution of human skills and expertise
towards economic growth and development is invaluable. This is because a stock of
quality-enriched human capital raises individual efficiency and productivity thereby,
raising the aggregate production and economic well-being of a country.
Over time, with constant efforts in the form of investment in the education and health,
the stock of human capital builds up. The number of skilled and educated professionals
(such as doctors, teachers, engineers, etc.) who can contribute positively to the
production process also increases. This process of addition to the stock of human
capital overtime is referred as human capital formation. For example, if the number of
skilled persons in a labour force increases from 1 crore to 1.5 crore, then there is
human capital formation by 0.5 crore.

Sources of Human Capital Formation

Human capital formation is an aggregate outcome of the investments in education,

health, transport and communication sector, technical know-how and on-the-job training
and migration. These factors are explained below.

1. Education: Education increases the productive capacity and productivity of a nation’s

workforce by honing their skills. An educated labour force is not only more productive,
but it also increases the acceptability of the modern techniques. Besides, education also
helps in raising the standard and quality of living. It also encourages modern attitudes of
people. It facilitates a primitive economy to break the shackles of tradition and
backwardness.

An investment in educational sector has two fold benefits. It not only increases the
income earning capacity but also reduces the skewed distribution of income, thereby,
forming an egalitarian society. The investment in educational sector has long lasting
returns. It not only enhances the present economic condition but also improves the
future prospects of a country.

The importance of education is not only limited to making people educated but also in
facilitating an underdeveloped economy to solve different but interrelated macro
economic problems such as poverty, income inequality, population, investments and
under utilisation of resources. Therefore, investment in education must be accorded
high priority in a country.

2. Health: There is a saying “The greatest wealth is health”. The wealth of a country can
be increased with the efforts of healthy workforce. Investment in health sector increases
efficiency, efficacy and productivity of a nation’s workforce. In contrast to an unhealthy
person, a healthy person can work better with more efficiency and, consequently, can
contribute relatively more to the GDP of a country.

Good health and medical facilities not only increases the life expectancy but also
improve quality and standard of living. Investing in health sector ensures the perennial
and uninterrupted supply of healthy workforce. Some of the common expenditures
incurred in the health sector are on providing better medical facilities, easy availability of
life saving drugs, common vaccination, spread of medical knowledge, provision of
proper sanitation clean drinking water, etc. Thus, the expenditure incurred on health is
important in building and maintaining a productive work force.
3. On-the-Job Training: Training refers to the act of acquiring skills, knowledge and
competency required to perform a particular job efficiently and effectively. On-the-job
training is the most effective kind of training to a trainee, imparting him the technical
skills and know-how at the actual work site. In this type of training, a trainee is assisted
(or hands on) and trained by a trainer (usually by an experienced employee) when the
trainee is actually doing the job.

This helps the trainee not only to acquire the theoretical and practical skills
simultaneously but also enables him to learn from the experiences of his trainer and,
thereby, can increase his efficiency and productivity.

This is the most common type of training program because the returns in terms of
increased productivity far exceed the cost of the training. Thus, the expenditures on
such training improve the quality of human capital by enhancing its productivity,
efficiency and income earning capacity.

4. Migration: Migration refers to the movement of people from underdeveloped or

developing countries to developed countries in search of better avenues. Migration
contributes to human capital formation as it facilitates the utilisation of inactive or
underdeveloped skills of an individual. However, migration involves cost in terms of
transportation and cost of living at the migrated places.

Usually, the cost of migration is very high due to the high cost of transportation and high
cost of livelihood in the developed countries. But still, people migrate in search of better
job opportunities and handsome salaries. Migration of human capital helps the
underdeveloped countries to acquire technical skills, effort reducing methods and
efficient way of performing tasks.

These skills and know-how are transmitted by the migrated people to their home
country that not only add to the economic growth and development but also enhance
the human capital of the home country.

5. Information: The degree of availability of jobs, salaries and admissions related

information also play an important role in the determination of human capital. The
availability of jobs and admissions related information not only helps the students to opt
for the best choice according to their interest areas but also lead to the effective
utilisation of human skills and knowledge.

Similarly, the availability of medical information and health awareness determine the
health of the people. Thus, the expenditure on the spread of information (of education
and health) determines the effectiveness and efficacy of human capital.

Human Capital, Physical Capital and Human Development

Objective
After going through this lesson, you shall be able to understand the following concepts:

• Difference Between Human Capital and Physical Capital

• Difference Between Human Capital Formation and Physical Capital Formation

• Difference Between Human Capital and Human Development

Introduction

In the previous lesson, we learnt about human capital and its related concepts such as
human capital formation, human development and physical capital. In this lesson, we
will discuss the difference between these related concepts of human capital.

Human Capital v/s Physical Capital

Often, we come across the word capital. In general, this term is used to represent
physical capital i.e. the stock of tangible assets such as building, machinery tools, etc.
Physical capital is used in the process of production. However, in the previous lesson,
we studied about another variant of capital that is, human capital. Human capital is very
much different from physical capital.

As against the stock of building and machinery, human capital is the stock of knowledge
and skill endowed in the human beings. Thus, while physical capital is tangible (i.e. can
be seen and touched), human capital is intangible. Can you touch or see the level of
knowledge a person has? No. It is just endowed in the minds and body of human
beings.

Accordingly, physical capital can be bought and sold in the market. Machinery, tools,
buildings can be seen traded in the market. Physical capital can be used without the
presence of its owner. For example, a tool can be used in the production process by
anybody irrespective of whether the owner of the tool is present or not. On the other
hand, human capital as such cannot be traded.

It is only the services of the human capital that are traded. For example, people working
in various fields, such as a doctor, an engineer, a teacher, an artisan, etc. sell their
knowledge and skill. The services of human capital can be used only when the owner of
the human capital is present. Can anybody else use the knowledge possessed by you?
No. That is, human capital and its owner are inseparable. Moreover, human capital in
the form of knowledge remains with the person forever, except for some loss due to age
or bad health. On the other hand, what happens to machinery when used continuously?
Yes, it starts wearing out.

The various points of difference between human capital and physical capital are
presented below.
 Basis of Difference Human Capital Physical Capital

Consists of It consists of skill and It includes all the physical

knowledge of the human tools and machinery used
beings. for production.
Nature It is intangible in nature. It is tangible in nature.
Possibility of Trade Only the services of Physical capital as such
human capital can be can be traded in the
traded in the market, not market.
the human capital.
Mutual Relationship Human capital is not Physical capital is created
created by physical by human capital.
capital.
Wear and Tear Human capital does not Physical capital
depreciate except for depreciates over time with
some loss due to old age continuous use.
and bad health.
However, it can be
renewed again with
education and health.
Benefits Human capital creates Physical Capital creates
both private as well as only private benefits.
social benefits.
Mobility Human capital has Physical capital is more
relatively restricted mobile.
mobility due to cultural
and social obstacles.

Human Capital Formation v/s Physical Capital Formation

The difference between human capital formation and physical capital formation are
explained below.
Basis of Difference Human Capital Physical Capital
Formation Formation
Meaning Human capital formation Physical capital formation
refers to the additions to refers to the additional
the skills, knowledge investment made in form of
and capacity of the sophisticated and advance
individuals, so that they tools, machinery and other
could contribute more physical productive
efficiently to the tangible assets used in the
production process. production process.
 Result/Outcome Human capital formation It results in the
leads to the all-round mechanisation of the
development, which economy as a whole.
further results in high
status of all the human
beings in the country.
Contribution to It indirectly aids in the It directly affects the
Production process of productivity and production
production via employing process. This implies use
physical capital. It of advanced machines and
implies use of advanced modern mechanics in the
machines and latest production process.
technology in the
production process by
the qualified and skilled
personnel.
Interrelationship The formation of human Formation of physical
capital can itself lead to capital need not
improvement in physical necessarily imply human
capital. In this sense, capital formation.
physical capital
formation is a derivative
of the human capital
formation.

Human Capital v/s Human Development

Human capital refers to the stock of a nation’s human skills and expertise at a particular
point of time. On the other hand, a holistic development and well being of human capital
of a nation is termed as human development. In this sense the two concepts of human
capital and human development are interrelated. But it should be noted that the two
concepts are not identical.

Human development is a much broader term than human capital. While human capital
focuses on the improvement in the efficiency and productivity of the workforce, on the
other hand, human development refers to an improvement in the overall well being and
quality of life of human capital. For example, while human capital would focus on
investment in education and health sector to increase productivity and efficiency
of workforce, on the other hand, human development would focus on investment in
education and health sector to increase the general well being and standard and quality
of living of human capital.

In other words, human capital views investment in education and health only as a
means to improve the productivity and efficiency of the human beings. As against this,
human development considers the attainment of education and health important in
themselves so as to improve the quality of standard of living of the people.
The difference between human capital and human development is explained below.

Basis of
Human Capital Human Development
Difference

Meaning It refers to the stock of a It refers to the holistic

nation's skill and expertise development and well being of
at a particular point of time. a nation's human capital.
Means and Ends Human capital considers Human development
human beings as a means considers human beings as
to improve the productivity the end itself i.e., it considers
which is the end. the welfare in human beings
as the end.
Motive of Motive of investment is to Motive of investment is to
Investment improve the efficiency and improve the overall welfare
productivity. even if the productivity and
efficiency does not improve.

Role of Education Education and health are Education and health are
and Health seen only as means to considered to have their own
improve the productivity of importance in improving the
human beings. general welfare of the human
beings.

Role of Human Capital in Economic Growth and Development

Objective

After going through this lesson, you shall be able to understand how human capital
contributes to economic growth and development.

Introduction

In the previous lesson, we learnt about the meaning and concept of human capital
formation. We also learnt that human capital formation in any country not only creates
private benefits but also creates benefits for the country as a whole. In this lesson, we
will understand more clearly why human capital is accorded high priority in the growth
and development process.

Role of Human Capital in Economic Growth and Development

Human capital plays an important role in the growth and development of a nation. No
matter how much physical capital in the form of new machines and technology a country
acquires, it cannot be used effectively without human capital. In other words, human
capital in the form of a healthy and educated labour force is essential for the proper
utilisation of the physical capital.

Moreover, investment in human capital improves the general standard and quality of
living of the people which thereby, contributes to the growth and development process.
In this sense, investment in human capital is of dual importance. First, it helps in
improving the general well being of people of the nation and second it fosters the growth
process.

Improvement in the human capital through investment in education and health serves
as vital input for the economic development. A healthy and educated person can
contribute more towards the production process and thereby, to the growth process
than an unhealthy and illiterate person. Education not only imparts technical skills and
knowledge that increases the productive capacity of a nation but also induces
modernisation.

In other words, an educated labour force can not only use the machines and technology
more effectively but can also adapt to new techniques and innovations. Moreover, it is
through education that the overall thinking pattern of the individual as well as of the
society as a whole changes.Also, it promotes equality and hence, leads to a greater
participation in the economy.

Similarly, a healthy population contributes more to the growth process. A healthy person
provides an uninterrupted supply of his/her labour for comparatively longer period of
time than an unhealthy person. This is because, being less probable to fall ill, a healthy
person can contribute more productively. The importance of health and education in the
growth process is explained below.

1. Rise in standard of living: A healthy and educated population enjoys a better

standard and quality of life. That is, their overall well being improves.

2. Greater participation rate: With improvements in the health and education, the
participation rate of the people in the production process increases. A healthy labour
force proves to be more effective. Similarly, education enhances their acceptability of
modernisation. Thus, health and education improves the overall participation rate in the
country.

3. Eradication of other macroeconomic problems: Various macro economic

problems such as poverty, income inequalities, population, investment bottlenecks,
under utilisation of productive resources, etc can be overcome with the improvements in
education and health.

Thus, we can say that human capital in the form of improved education and health
status plays an important role in the growth and development process.

Lets us now understand the interrelationship between human capital and economic
growth.
Interrelationship between Human Capital and Economic Growth

Economic growth shares a positive relation with improvements in human capital. Higher
the growth of human capital or better the state of human capital, higher will be the
economic growth. The positive contribution of human capital to economic growth is
highlighted in the below mentioned points.

1. Increase in the productivity of physical capital: Skilled workers are better able to
utilise the machines, production plants, tools and equipments. They handle the
productive assets in such a manner that these not only enhance their productivity, but
also lead to an efficient utilisation of the physical capital. When the productivity
increases, the pace of growth is automatically accelerated.

2. Innovation of skills: An educated person is more productive and skillful. He has the
potential to develop new skills and create new and innovative techniques that can be
more efficient and productive. Also the adaptability to the new techniques and
innovation is higher for an educated person. Greater the number of skilled and trained
personnel, greater will be the probabilities of innovations.

3. High participation rate and equality- Human capital endowed with higher technical
skills and better health is more productive and efficient. This increases the participation
of more people in the process of economic growth and development. Higher the
participation rate, higher is the degree of social and economic equality in the country.

4. Increase in output levels: The formation of human capital in a country leads to

increase in skills and capacity of the individuals. With increased capacity and skills,
people are able to contribute more towards the process of production. Higher
contribution of people with greater skills and knowledge, results in increased in output
levels in the economy.

5.Increase in competitiveness: Higher level of human capital helps the country to

leave its mark on other countries of the world (especially the developed countries). This
not only improves the overall country's image but also raises the demand for the human
capital of that particular country. For example, Indian doctors have a great demand in
the developed nations. Thus, in this way, a good level of human capital enhances a
country's competitiveness in the world.

6. Change in social outlook: Enhancement in the human capital leads to improvement

in the thinking pattern of the human beings. Education imparts a modern and holistic
outlook to human thinking. This change in the social outlook helps in the development of
the country as a whole.

Thus, we can say that human capital is imperative for the growth and development of a
nation.

Problems of Human Capital Formation in India

Objectives

In this lesson, we will analyse the state of human capital in India and the problems of
human capital formation in India.

Introduction

We know that human capital plays an important role in the growth and development
process of a country. Let us now discuss the state of human capital in India and the
major challenges/problems faced by India in the human capital formation.

Human Capital Formation in India

In view of the importance of human capital in economic growth, India accorded it a high
priority in its planning. It was realised that the vast population can become an asset and
contribute to economic growth only if it is educated, trained and healthy. The growth
process could be accelerated with a sound human capital. Even the international
institutions highlight the importance of human capital for India.

According to the report of the Deutsche Bank, owing to the improvements in the human
capital, India will emerge as a major growth center in the world by the year 2020. The
World Bank identifies India as a 'knowledge economy'. According to it, if India efficiently
utilises its knowledge then the per capita income of India can increase by as much as
three times by the year 2020.

In India, the expenditure on the health and education are carried at all the three tiers of
the government (union, state and local government) simultaneously. Although a number
of private players have also entered the field, still the government has a crucial role to
play in the development of health and education facilities. The following points explain
the need for government intervention in the field of education and health.

1. Profit motive of the private institutions: Private institutions are guided by the profit
motive and the demand-supply relation. Consequently, the price of education and health
facilities provided by these institutions remains high. Thus, government intervention
becomes essential to regulate the fees and make these facilities accessible to the
masses.

2. Interest of the weaker section: Owing to the widespread poverty, a majority of the
people cannot afford to avail services rendered by the private institutions. Therefore, to
protect the interest of the weaker and the underprivileged section of the society, the
interference of the government is required.

3. Lack of information: People do not have complete information about the quality of
services and various relevant costs. Consequently, government interference becomes
necessary so as to protect the interest of the society.
4. Neglect of rural and backward areas: The private institutions confine their
operations to the urban areas due to greater profit viability of these regions. Thus, the
rural and backward regions remain neglected. The government must step in to develop
health and education facilities in these areas.

5. Long gestation periods: Education and health sectors have long gestation periods.
However, their benefits are far reaching. Therefore, the government cannot completely
rely on the private sector to develop these important sectors.

To boost the health and education facilities the government has set up various
organisations. Following are some of the important institutions set up by the
government.

i. NCERT (National Council of Education Research and Training): This is

responsible for designing the textbooks up to standard 12th. The textbooks designed by
NCERT forms the base of school curriculum in India.

ii. UGC (University Grants Commission): It is the prime funding authority for university
education.

iii. AICTE (All India Council for Technical Education): It enforces rules and
regulations regarding technical and engineering education in the country. All the
technical and engineering institutes in India function as per the AICTE norms and
regulations.

iv. ICMR (Indian Council for Medical Research): Similar to AICTE in the technical and
engineering education, ICMR formulates rules and regulations relating to education and
research in health sector.

v. National Institute of Health and Family Welfare: This institute is responsible for
promotion of health and family welfare programmes.

Problems of Human Capital Formation in India

Despite various efforts by the government for improving the human capital formation in
India, the rate of human capital formation is still very low. Some of the major problems
faced in context of human capital formation in India are as follows.

1. High population growth rate: A rapid increase in population becomes a hindrance

in the way of human capital formation. Population explosion exerts pressure on the
available limited resources. Rising population reduces the per capita availability of
facilities such as housing, water, drainage, etc provided to people. Thus, the standard of
living remains low.

2. Brain drain: Migration not only takes place within the country from rural to urban
areas, but it also takes place from one country to another. If educated and skilled
human capital moves from domestic country to foreign country, it results in economic
loss to the country in terms of loss of quality people having high caliber. It is often seen
that professionals such as doctors, engineers, etc. migrate to another country in search
of better job opportunities. This migration of quality human capital from the LDCs to the
developed countries is termed as brain-drain.

3. Improper manpower planning: With population rising continuously the demand-

supply balance of the resources gets disturbed. Absence of any major efforts to
maintain the demand-supply balance of the rising labour force has led to the wastage
and misallocation of human skills.

4. Low priority to primary education: In India, secondary and higher education have
been assigned comparatively higher priority than the free and compulsory primary
education. Consequently, India is experiencing high rate of primary school drop-outs.

5. Low academic standards: In the recent years, many government and private
educational institutes have been set up. However, often it is found that these institutions
impart inferior quality education and skills which in turn impedes the productivity and
efficiency.

6. Problem in measurement: The physical capital can be measured easily. However,

in case of human beings it becomes very difficult to measure the skills and productivity.
That is, there is lack of scale of measurement of human capital formation.

Education as a Source of Human Development, Future Prospects

Objectives
In this lesson, you will go through the following topics.

• Importance of Education in Human Development

• Assessment of Growth in Education at Different Levels

• Reasons for Low Educational Status in India

• Future Prospects of Educational Status in India

Introduction

You are often asked by your parents and teachers to study well. Have you ever thought
as to why so much importance is given to education? Education is beneficial not just to
the individual itself, but it is also important for the nation as a whole. How? Let us
understand.

Role of Education in Economic Development

Education is one of the important sources of human capital formation. Education

imparts technical skills and knowledge that increases the productive capacity and
productivity of a nation. It also facilitates the process of modernisation. It is an essential
input for the development process of a nation. It acts as a supplier of quality human
capital that facilitates economic growth and development.

The investment in the educational sector has long lasting returns. It not only enables
accomplishment of present objectives, but also enhances the future growth prospects of
the country. It should be noted that it is the education and not literacy that should be the
aim for the development of human capital. Education is a much broader term than
literacy.

Literacy merely refers to the ability of a person to read and write. On the other hand,
education refers to the entire process of learning and attainment of knowledge, usually
through a formal system of primary, secondary and higher education. The importance of
education in the development process of a nation is highlighted in the below mentioned
points.
1. Imparts quality skills and knowledge: Education endows people with quality skills,
thereby, enhancing their productivity. Consequently, it enhances their income-earning
capacities. Moreover, it also enables human capital to utilise the available physical
capital optimally.

2. Enhances productive capacity: Education, by imparting technical knowledge and

skills to the people enhances their productive capacity. Thereby, it helps in increasing
the production scale of the economy.

3. Helps in changing the outlook: It helps an underdeveloped economy to break the

shackles of the traditional cultures, practices, backwardness and superstitions by
making people more aware and rational.

4. Helps in forming egalitarian society: On one hand, education enhances the

income-earning capacity of people and on the other hand, reduces income inequalities
among people. That is, it helps in the correction of skewed distribution of income. In the
process, education helps in forming the basis of an egalitarian society.

5. Raises standard and quality of living: Education enhances the income-earning

capacity of people and thereby, helps in raising the standard and quality of living.

6. Provides solutions to macroeconomics problems: Education alone provides a

single solution for all the macro economic problems such as poverty, inequalities,
population explosion, economic growth, underutilisation of the available resources, etc.
7. Develops mental abilities: Education develops mental abilities of the people and
helps them think rationally and intellectually. Education churns out good citizens by
inculcating high values in them.

8. Enhances participation rate: Education fosters economic development by

increasing the participation of people in the process of growth and development.
Consequently, the benefits of the economic growth are shared by a larger proportion of
people.

9. Acceptability of modernisation: Educated individuals have greater acceptability of

modernisation. This not only helps the economy to grow, but also facilitates a primitive
economy to break the shackles of tradition and backwardness.

Assessment of Growth in Education Sector in India

Having understood the importance of education, let us see how has India fared in terms
of education.

Over the years, there has been a tremendous improvement in the literacy levels. As per
the Census of India 2011, the literacy rate for males was 82.14% while that for females
was 65.46%.

During the period 1952 to 2002, there has been an increase in the education
expenditure by the government from 7.92% to13.17%. As percentage of GDP, the
education expenditure has increased from 0.64% to 4.02% during the same period.

The graph below depicts the level of growth in the literacy levels of India.

The graph above reflects a consistent rise in the overall literacy rates in India over the
last four census years starting from 1981. The increase in the literacy rate is depicted by
the upward sloping line in the above graph. Thus, this upward sloping line is a positive
sign of the literacy levels in India.

Education at Different Levels of Academics

Education in India is categorised in different levels. The status of education at different

levels of study is discussed below:

1. Primary and Middle Education

2. Secondary Education

3. Territory or Higher Education

Primary Education

Since the initiation of planning in 1950-51, there has been a commendable growth in the
number of primary and middle schools in India. The number of schools has increased
from 2.23 lakh in 1950-51 to 12.83 lakh in 2005-06. Similarly, the enrollment of students
upto 8th standard in primary schools has also increased from 19.15 lakh to 1770 lakh.

The Government of India has made free and compulsory access of elementary
education to all the children in the age group of 6-14 years. Attempts have been made
to improve the access to school. Resultant to this, in rural areas, 94% of students at
primary level have access to school within the distance of 1 Km. while at upper primary
level, 85% of students have access to school within the distance of 3 Km. Huge
expenditure is incurred by the government every year on primary education. In fact, a
major share of the total expenditure incurred by the government on education is taken
up by the primary education.

For Universalisation of education at primary level, the Government of India has

launched various schemes. Some of the important schemes for primary education are
as follows.

i. Sarva Shiksha Abhiyan (SSA): This scheme was launched by the Government of
India in the year 2001-02 to accomplish the target of universalisation of elementary
education within the age group of 6-14 years.

ii. National Programme for Education of Girls at Elementary Level: This programme
was started in July 2003 with the aim of providing support to the under-privileged girls of
educationally backward districts.

iii. Kasturba Gandhi Balika Vidhyalaya (KGBV): For establishing residential schools
for girls belonging to the minority communities, this scheme was initiated in July 2004.
However, in the later years, this scheme was merged with SSA.
iv. National Programme of Mid-day Meals in Schools: This scheme, popularly known
as mid-day meal scheme was launched on 15thAugust 1995. The aim of this programme
was to improve the nutritional status of students at primary level along with imparting
quality education.

Secondary Education

Secondary education is the second tier of education. Many efforts have been made by
the government for improving the education at secondary level. Some of the important
steps taken in this direction are as follows.

i. Vocationalisation of Education: To improve the level of secondary education in

India, the government has given priority to vocationalisation of education system in
India.

ii. Setting up of Navodaya Vidyalayas: Government of India started scheme in the

year 1985 for setting up of Navodaya Vidyalayas with the aim of providing quality
education to the talented students belonging to rural areas. At present, there are nearly
600 Navodaya Vidayalayas operating in India.

iii. Formation of Kendriya Vidyalaya Sangathan (KVS): With the aim of providing
education to the children of the Central Government employees who are in transferable
jobs, Kendriya Vidyalaya Sanghatan was formed in the year 1995. At present there are
1086 schools under KVS of which 3 are operating abroad.

iv. National Council of Education and Research and Training (NCERT): NCERT is
the apex organisation for school education that provides academic and technical
support for qualitative improvement in the education system in India.

Territory or Higher Education

Over the years, India has made remarkable progress in the field of higher education.
Some of the major achievements under higher education are discussed below.

i. Increase in the number of universities: In India, there has been a drastic increase
in the number of universities from a mere 27 in 1950-51 to 563 in 2010.

ii. Increase in the number of colleges: The number of colleges which were 578 in
1950-51 has increased to approximately 12,178 in 2005-06.

iii. Setting up of Indira Gandhi National Open University (IGNOU): IGNOU was set
up in 1985 for providing educational opportunities for school drop outs, working people
aspiring to study, housewives, etc. through distance education programs.
iv. Establishment of University Grants Commission (UGC): In the year1956,
University Grants Commission was set up by the Government of India, to regulate and
coordinate the workings of higher education institutes in India.

Indicators of Educational Achievement

We know that education forms an essential component of growth and development of a

nation. Every nation makes efforts towards improving the education status. The
education level of a nation can be judged with the help of various indicators. Some of
the important indicators of educational achievement are as follows.

1. Adult literacy rate: This rate indicates the percentage of literate adult population of
age 15 years and above. The word literacy in this context is confined only to the ability
to read and write. It provides a measure of the stock of literate persons within the adult
population expressed in terms of percentage. Higher the percentage of adult literacy
rate, higher the educational achievement in a country. This rate is the most important
indicator for a country as it indicates the percentage of the population that can
participate in the economic activity of the country.

2. Youth literacy rate: This rate indicates the percentage of literate people between the
age of 15-24 who can read and write. It denotes the stock of literate population within
the youth population. This is an important indicator of educational achievement in a
country. This is because of the fact that majority of a country’s population is not able to
continue their education till this age. Higher the youth literacy rate, higher will be the
achievement of a country in terms of education.

3. Primary education completion rate: This rate indicates the percentage of students
completing the last year of primary school. Primary education includes students of the
class group 1 to 8 in the age group of 6-14 years. It includes basic education in reading,
writing and mathematics along with an elementary understanding of other subjects such
as history, geography, natural sciences, social sciences, art and music. Lower primary
education completion rate leads to lower youth literacy rate and, hence, lower adult
literacy rate.

Based on the above mentioned indicators an assessment can be made for

the educational achievement of India.
i. The adult literacy rate among male is 68.4%, while for female it is 45.4%.

ii. The youth literacy rate among male is 85 %, while for female it is 69 %.

iii. Primary education completion rate among male is 79.7%, while for female it is 64.8
%.

Based on the above indicators it can be said that although over the years the
educational status of India has improved, still constant efforts are required to further
improve the status of education.

Reasons for Poor Educational Status in India

The Government of India has made sincere and constant efforts to enhance the literacy
rate in the country. However, the literacy rate in India is still at a low of 65%. Although
the literacy rate has increased substantially from 18% in 1950 to 65% in 2001, achieving
100% literacy rate is still a distant dream.

The failure in achieving cent percent literacy rate can be attributed to a variety of factors
including both structural and socio-economic conditions. The following are the important
reasons consequent to which India is suffering from a low literacy rate.
1. Extreme poverty and huge drop-out rates: India, like any other underdeveloped
country is featured by extreme poverty level. Poverty is the cause and derivative of low
literacy rate. That is, on one hand, it obstructs one to acquire education and on the
other hand, illiteracy pushes up the poverty level. There is still 22.15% of population
living below poverty line (as per 2004-05). In order to sustain livelihood, people often
engage themselves in marginal and low paid casual jobs. These jobs not only make
them more vulnerable but also impede them to be literate.

2. Gender biasness: In India, male literacy rate is relatively much better than that of the
female’s. The main reason for this difference is gender biasness. Female education is
accorded a secondary priority over the male education in the same family. Often, it can
be analysed that the male child is sent to school at the cost of the female child. This has
made women more vulnerable, thereby, undermining their social and economic status.

3. Lack of infrastructural development and facilities: India substantially lacks

significant infrastructural development and facilities. The student teacher ratio in primary
education is as low as 34:1. This implies availability of one teacher for 34 students.
Further, the lack of sufficient number of schools and colleges has further impeded the
development of higher education in India.

4. High population growth rate: India has been experiencing an annual average
population growth rate of 1.7%. This has not only resulted in shortage of existing
education facilities but also has simultaneously led to the rise in poverty rates. People,
being ignorant, regard an additional child as an additional income earning hand.
Further, the preference for male child has further added to high population growth rate.

5. Low women socio-economic status of women: The poor female literacy rate has
lowered the socio-economic status of the women in India. The role of a literate mother
cannot be neglected in the process of economic growth. A literate mother is more aware
and can well take care of education and health issues of her children.

6. Less educational provisions for underprivileged population: There is a

considerable portion of underprivileged population such as ST, SC, OBC and rural
population. Although the Government of India has made special provisions and policies
to provide education to them, this relatively falls short of the actual requirement.

7. Low government expenditure: According to the Education commission, atleast 6

percent of the GDP should be spent on education so as to improve the educational
status. However, at present only about 4 percent of the GDP is being spent on
education. Thus, the government expenditure falls short of what is actually required.

Future Prospects of Education in India

Although India has come a long way in terms of educational achievement, still a lot
needs to be achieved. The following are the areas that require attention for improving
the educational status of our country.
1. Universalisation of education: Although the literacy rate in India has significantly
increased, the absolute number of illiterates in India is still very high. In fact, the number
of illiterates today is equal to the total population of India at the time of independence.
There are many children who are either not enrolled in the school or even if enrolled,
they drop out after some years. Emphasis should be laid on the improving the access of
education for all. Various plans and policies focussing on education (such as free and
elementary education, implementation of 2% education cess on the union taxes) must
be formulated.

2. Improvement in gender equality: The access to education has always been

lopsided towards India’s male population. Women have always been neglected in the
field of education. The weaker and lower status of women in India can be attributed to
the negligence of their education. However, the role of women in the economic and
social spheres cannot be neglected in order to achieve overall economic development
and growth. Therefore, there arises a need to promote women’s education. The
following are the important points that advocate in favour of promoting women
education.

i. Women education is essential for improving their economic independence and

economic feasibility.

ii. Women education is important in order to raise the social and moral status of women.

iii. It plays a significant role in maintaining favourable fertility rate.

iv. Health care of women and children can be enhanced with education imparted to
women.

v. An educated woman can infuse good moral values and can impart quality education
to her children.

3. Few beneficiaries of higher education: The number of people attaining higher

education is very few. And even those who are having the access to higher education
are unable to get jobs. This has resulted in the situation of educated unemployment.
Unemployment among the educated population could be because of lack of quality of
educational institutes. There arises a need to impart more technical, vocational and job-
oriented education.

4. Regional differences in education: There exists a wide difference across different

states in terms of educational attainment. On one hand, we have Kerala with 100%
literacy rate, while on the other hand, we have Bihar with only 63.8% literacy rate. Even
the per capita expenditure on education differs from state to state. While for
Lakshadweep the per capita education expenditure is Rs 3,440, on the other hand for
Bihar it is just Rs 386. Efforts are required to reduce these regional differences and
make education accessible to all.
5. Regulation of fee structure: Nowadays, privatisation in education has increased. A
number of private schools, colleges and other educational institutes have opened up.
Private players, guided by the profit motive, render education services at a high price.
This has further widened the difference in the access to education by the rich and the
poor. Government interference, thus becomes necessary for regulating the fees
structure and operations of private institutions.

6. Spread of awareness: Efforts should be made to increase awareness among people

regarding the benefits of education. In addition to this, special programmes and projects
to check the growing difference between the Gross Enrolment Ratio and School Drop-
out Rate must be initiated.