INVESTMENT IN HUMAN CAPITAL

  INVESTMENT IN HUMAN CAPITAL 

MUST REQUIRED

AS STATED BY Adam Smith “A man educated at the expense of labour  and time …. May be compared to one expensive machine ….the work he learns to perform ever and again the usual wages of common labour will replace the whole expense of his education .the most valuable of all investments is the one invested in human capital”. India one of the hot spot of investment needs to consider the above statement more seriously than most of her neighbours.

A glimpse at the economic theories and models given in the first of the 20^th century reveal that rising stature of infrastructure and market investments with the objective of profit maximization had overshadowed the emphasis on human capital investments unlike 17^th18^th and 19^th century. The struggle for dominance and the geopolitics too had an hypnotic effect on investment policies .the fact is that an investment in education gives much higher return . An additional year of schooling increases 0.44%of GDP  and a has a social return of about 7%.(Barro2001) The estimate has come when planners need to  increase the share of education in GDP and consider it as an investment rather than an expenditure . it will not only increase the social security but also ensure a perpetual growth in economy.

A picture of higher education and corresponding unemployment is very bleak . Out of 100 top universities very few Indian universities figure out . According to world development indicators 42% of population with secondary education and 23% of population with tertiary education is unemployed. The ratio is surprisingly lesser at 12% for primary education  . It shows the demand for the unskilled labour is higher and the job creation policy needs to be looked at . The accomplishment of this task is well within the reach of policy makers .

Some significant points need to considered firstly there must there must be an enhanced investment in public and private investment in primary secondary and tertiary .now the fact 65%of Indian population is within the age group of 15-64whcih is higher than china will definitely increase and should provide required incentive to attract private and foreign investor . Secondly emphasis on science and technical education must be laid so as to transform nation.

As  new government will be seated in the parliament within few weeks . we have high hopes from the new finance minster  to increase education funds  from prevailing 4.1 % to 6% and make the current decade as THE DECADE OF HIGHER EDUCATION . which was neglected in 1980s and 1990s .