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The Economic Aim
“To improve the human condition, is only possible, if there were rigid links between economic production (measured by income per head) and human development (reflected by human indicators). But these two sets of indicators are not very closely related.”
-P.P. Streeten[1994]
As Streeten argues, the distorted relation between the macroeconomic factors of the economy which includes the total economic production of the country as measured by parameters such as GDP and GNP etc., and the developmental signboards formed by the state of human indicators such as life expectancy, rate of literacy, access to facilities playing a crucial role in living comfortable life, the economics, as a subject, then requires an overarching approach which not only focuses on improving the former criteria for a better general picture but also to improve and incorporate the idea of multidimensionality in the thought of policy-making. Economics as a discipline tries to uncover the just processes i.e. in accordance with the nation's foundational political system and jurisprudence, on a macro scale that positively influences the people's lives. Analysis of the situation followed by a policy prescription is something that is generated as a synthesis after long rounds of economic check-ups. With euphoria rising all over the globe in relation to terminologies such as economic growth, production, inflation rate, unemployment, investment, infrastructure, etc. – we, in order to fulfil the objective of discipline must delve deeper and study the implications of such measurable numbers on the masses and also try to understand the ultimate aim of all the fancy parameters.
DEBATES OVER GROWTH AND DEVELOPMENT
These two terms, in the economic sphere, are considered the most conflicting yet complementary terms when we are trying to propose a multidimensional economic suggestion. Initially, going by the layman's definition, growth refers to the progress of something from simple to advanced form.
When we are solely interested in the economic benefit of the state, growth implies the increase in the production capacity of goods and services which includes both the increasing stock of productive capital and developing growth-supporting services such as transport, roadways, railways infrastructure, etc. It is primarily measured by the increase in Gross Domestic/National Product or the per capita income growth of a country, whereas development means the betterment in a country's social and economic conditions which in turn enhances the quality of human lives and the scope of freedom. Generally, it can be understood as covering a larger number of people living a dignified life. The foundational requirement in embarking upon the idea of development is the availability of basic needs for a person followed by developing strong self-esteem arising through various subsets of social, economic, and human development.
While, prima facie, development appears to be a unilateral idea concerning the overall status of a human under its scope, social features also demand a look over. Socio-cultural traditions and values of a society also affect the theme of development which both, depending on the case, supports and opposes it. Considering women, society's intrinsic feminist values act as a support in the process of their development while cultures where norms like early girl-child marriages and female foeticide exist restrains it.
After reviewing the basic background of both growth and development, we are ready to resurface the attitude of our country's economic policymakers in context with the era of reforms (the 1990s). While the pre-90s period focused on the promotion of public goods production, favoring domestic production, etc. The period post-90s saw the opening of the economy for foreign players thereby removing the focus of the government on developing a better living state and instead channeling its resources in order to compete with the global economy.
DEVELOPMENT AS THE POLICIES’ TARGET AND TOTALITY
As previously discussed, development comprises the changing nature of resource supplies in broader terms. The very qualitative nature of development with the inclusion of wide-ranging parameters starting from the intricate indices of mortality rates and health to also measuring the final reality-check of the policies through the Human Development Index (HDI) and Happiness Index (HI). Also, talking with reference to developing countries (here especially ‘India’), it is a well-accepted thought that the upliftment of life quality indicators must take precedence over increasing the coarse output.
Development, in short, finds its place in the central stage mainly because of two reasons- first, development, in itself, is considered the basic right of humans irrespective of their contribution to the economy. Even a person with negligible levels of education is fully eligible for availing the fruits of an upliftment. And the other reason is that the results of long-term development provide a very strong impetus for growth. Hence, it can be concluded that it is the development that, at the same time promotes the formation of human resources followed by increased growth and compounds its value by laying the base for its steady rise by generating supporting facilities over time.
After sketching the spectrum of benefits that development for a nation produces, let us dive into the most important character in this process. The basic aim of this unit is to determine the one whose role is crucial in turning the dice of the economy. It is done whose efficiency, if nurtured, can be used to generate the vast periphery of human well-being. As formerly, around which the whole discussion of this article revolves, that unit is the “HUMAN” itself. The goal of all development, modernization, resource allocation, and theories supporting policies evaluating equity and social justice situations is to create a kind of currency whose value is unaffected by downturns in the global economy while also creating the most valuable resource a country can possess: human capital, also known as human resources. We will attempt to understand its significance and the formation process in the ensuing subheadings.
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HUMAN CAPITAL AND ITS FORMATION
For long, man has had an innate tendency to perceive, store, and transmit knowledge which today's majestic world of art and culture is the result of. Talking in economic terms, all it is done, including the creation of knowledge pools and transfer societies, is in order to equip a man with the required skills in order to attain an efficient work output. Here, to focus on a skill that ultimately generates better income contributing to the growth (in a generic sense) and is achieved primarily by industry-centric education/knowledge. To clarify here, the discrete meaning of human capital is the state of a person transformed in an environment of healthy developmental parameters emerging out of being just a resource. The striking feature of that human capital is its symbiotic support system which simply means that one's specific level of state is achieved as a worthy resource, it facilitates the formation of more of that kind. Moreover, not only education, investments in health, skill development, and regulating migratory movements, etc. also create an aware and knowledgeable society.
Besides the theoretical acknowledgement, in implementation also, our government has been swift in recognizing the changing needs of the future. The initial major effort includes the 7th Five-year plan which paved the way for the administrative structure imparting the required focus on Human Capital Development. The plan emphasized giving curated training and education to targeted sections in order to bring social change in the desired direction.
In an exercise to analyze separately, the components of human capital, we would be more clear about their role in consolidating the developmental strengths of a nation.
EDUCATION
In education, elementary teaching provides a solid foundational block which also enjoys a higher expenditure share in comparison to its higher counterpart. It is worth noting here that per-head expenditure on higher education is greater than elementary education with the presence of a steep pyramid in enrollment numbers where only a small percentage of students completing elementary and secondary education are in higher education. With reference to the (1964-66) Education Commission, the Tapas Majumdar committee (1998) talked of targeting substantial reforms in the sector by increasing GDP allocation to 6% while in the current scenario, it hovers around a meagre 2-3%. The education front also needs to address social barriers, especially in the case of women, in order to remove the predicament of gender, class, and caste in the field. Programs such as Mission Shakti, the Reservation of seats in private schools for students of disadvantaged sections, and the Digital India program are examples of the same.
Some obstacles such as the lower faculty-people ratio, huge gender disparity, digital divide, lack of basic numeracy skills in elementary-level students, and teacher absenteeism as highlighted in the recent ASER reports must be addressed to ensure the sufficient participatory role of the private sector to refine the quality of teaching.
SKILL DEVELOPMENT AND TALENT IDENTIFICATION-
The next component closely related to human capital formation is the skill development sector. Seeing the 2022-23 Periodic Labour Force Survey(PLFS) shows a worrying level of the unemployment rate at 3.2%, there is a dire need to complement education with skill training. With the launch of a Skill India program in 2015, schemes such as PMKVY are in the run to provide short-term training, bridge the skill gap and include industry professionals in the process in order to exploit the demographic dividend.
Another set of areas that needs attention is talent identification and promotion in the fields of extracurriculars, especially sports. Schemes such as the Khelo India Program, launched in (2017-18) with the aim of picking young talents through Talent Assessment Centers(TACs) at early ages in order to efficiently train them for international competition is truly a milestone. Similar subsidiary programs including youth games and university games besides the general initiative of the Fit India movement encouraging fitness and healthy lifestyle among the population are also introduced for the same. These all have proved to be very beneficial with the dedicated TOPS (Target Olympic Podium Scheme) in uplifting the track record of India at the Olympic games.
COMPOUNDING EFFECT OF HUMAN CAPITAL ON COUNTRIES’ OVERALL GROWTH
There is a simple analogy regarding the effect of human resource development on the overall growth of a country. More human capital results in increased income/high-quality jobs which directly favours economic growth. Human capital is directly linked with the procedure of innovation and absorbing technologies and hence with the changing face of the world’s tech-centric economy, its worth is unmatchable. There have been apprehensions regarding the nature of the relation between human capital and macroeconomic numbers but various reports suggest that due to the inherent measurement gap, we are not always getting its true picture relating to human capital factors. Coarse parameters such as literacy rate, infant mortality rate (IMR), and maternal mortality rate (MMR) may not be true reflections of actual conditions of education and health facilities simultaneously.
The case of Ireland deserves special study in the related case of forming the human capital as they strictly focused on forming a special economic structure termed a ‘Knowledge economy’ which focused on promoting education among people in order to make themselves self-sufficient thereby helping to boost growth numbers in the long term. India, post reforms, took gigantic leaps in the IT sector thereby connecting both urban and rural areas to the digital world which clearly has positively changed the living standards of people with more access to education and social safety benefits.
CHANGING DIMENSIONS OF HUMAN CAPITAL
These days, the phrase ‘Human Capital Formation’ has become cliched and is used more frequently in policy documents. This is evident in the finance minister's recent budget address and academic societies' discussions. As a result, it is critical to explain the evolving concept of human capital. The development of technological solutions either in the field of upturning the future of generative models using AI or the action related to the current global common problems such as climate change, digital intrusion practices under the subject of cybersecurity, etc., all are now being easily monitored through using these fruits of human capital. Enhanced surveying and impact assessment methods to ensure better decision-making in the area of climate protection, and the rising use of digital interface in schemes (e-governance) under the broader ambit of good governance in various nations, all are effectively contributing to the development of their societies in a holistic manner.
Hence to finally conclude, it can be noted that strong human capital not only empowers the building of a society in totality but also its different subsets, if given proper intent, are well sufficient to reform the living. It is no surprise that the whole integrated globe mutually working to solve transboundary issues, highlighted above, strictly needs the supporting shoulders of human capital.
By Atharv Tomar
The author, in third year, is pursuing Physics Honors from Hindu College, DU. He has a keen interest in political sciences and related fields, loves to spend time analyzing prevalent issues in society, and has a special love for debating.
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