Chapter 2: People as Resource

Answer: ‘People as a resource’ means viewing the population of a country as an asset rather than a liability. When people are educated, skilled, trained and healthy, they become human capital and contribute to the production of goods and services. Human beings can use land, capital and technology productively, so investment in people through education, training and healthcare increases the productive power of the economy.

Answer: Human resource is different from land and physical capital because human beings can make use of other resources. Land and physical capital cannot become productive on their own. They need people with knowledge, skill and enterprise to use them properly.

Human resource can also be improved through education, training and healthcare. When people become more educated and healthy, their productivity increases. In this way, human resource is active and creative, while land and physical capital are passive resources.

Answer: Education plays a very important role in human capital formation. It improves the knowledge, skill and efficiency of people. Educated people are able to find better jobs, use modern technology, make better decisions and contribute more to the economy.

Education also increases the productivity of labour. When people acquire education and training, they can earn higher incomes and make a greater contribution to society. Therefore, expenditure on education is an investment in human capital.

Answer: Health has an important role in human capital formation because only a healthy person can work efficiently and realise his or her full potential. A healthy person is more regular at work, more productive and capable of earning better income.

Poor health reduces productivity and makes a person a liability for the family and the economy. Investment in healthcare, nutrition, sanitation and disease prevention improves the quality of human resource and contributes to economic development.

Answer: Health plays a very important part in an individual’s working life. A healthy person can work harder, remain regular at work and perform tasks efficiently. Good health increases productivity and earning capacity.

An unhealthy person cannot work properly and may lose working days because of illness. Therefore, health directly affects the quality of work, income and standard of living of an individual.

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Answer: Women are often employed in low paid work because many women have less access to education, training and skill formation. Their work is frequently concentrated in sectors where job security is low and wages are poor.

Social discrimination and unequal opportunities also affect women’s employment. Many women are engaged in unpaid domestic work, which is not recognised as economic activity. Even when women enter the labour market, their wages are often lower than men’s wages because of low skill formation and gender inequality.

Answer: Unemployment is a situation in which people who are willing and able to work at the existing wage rate do not get work. It means that the available human resource is not being used productively. Unemployment leads to wastage of manpower and can turn people from an asset into a liability for the economy.

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Answer: Educated unemployment is a peculiar problem of India because many educated young people with matriculation, graduation and post-graduation degrees are unable to find suitable jobs. At the same time, there is a shortage of people with the technical and vocational skills required for economic growth.

This creates a paradoxical manpower situation: surplus manpower in some categories and shortage of skilled manpower in others. Educated unemployment leads to frustration among the youth and wastage of human resource.

Answer: India can build maximum employment opportunities in the secondary and tertiary sectors. In the secondary sector, small-scale manufacturing can absorb a large number of workers. In the tertiary sector, services such as information technology, biotechnology, education, healthcare, tourism, banking, transport and communication can create many new jobs.

Agriculture is already overcrowded and has disguised unemployment, so surplus labour should be shifted towards industry and services.

Answer: The following measures can help reduce the problem of educated unemployment:

(i) Education should be made more job-oriented and practical.
(ii) Vocational education and skill training should be encouraged.
(iii) Students should be trained in technical skills, computer skills and entrepreneurship.
(iv) Career guidance and counselling should be provided in schools and colleges.
(v) More employment-oriented courses should be introduced in agriculture, industry and services.
(vi) Education should be linked with the needs of the labour market.

Answer: Yes. We can imagine a village that initially had very few job opportunities because most families only produced enough to feed themselves. Later, one boy from the village studied agriculture and became an agro-engineer. He designed an improved plough, which increased wheat production. This created a new job in the village.

Inspired by this, the village opened a school with government help. A teacher was appointed, and children started receiving education. Later, one girl received training in tailoring and began stitching clothes for the village. In this way, education and skill formation created new jobs such as teacher, tailor, agro-engineer and many other activities. The village became more prosperous because human capital improved.

Answer: Human capital is the best form of capital because it can make effective use of land, labour and physical capital. Land and machines cannot become productive on their own. They require educated, skilled and healthy people to use them properly.

Countries like Japan have become developed despite having limited natural resources because they invested in education and health. Skilled and educated people use technology and other resources efficiently. Therefore, human capital is the most important capital for economic development.