NATIONAL LAW UNIVERSITY JODHPUR
ECONOMICS II : GENERAL PRINCIPLES OF MACROECONOMICS
OCTOBER 2024
EVALUATION TYPE- ASSIGNMENT SUBMISSION
TOPIC: BUILDING HUMAN CAPITAL THROUGH STRATEGIC INFRASTRUCTURAL
DEVELOPMENT IN EDUCATION AND HEALTHCARE
A Pathway to India's Viksit Bharat Vision
Submitted by: Submitted to:
Simran Kaur [2182] Dr. Chitra Saruparia
Semester V Faculty of Humanities
Section B NLUJ
BUILDING HUMAN CAPITAL THROUGH STRATEGIC INFRASTRUCTURAL DEVELOPMENT IN
EDUCATION AND HEALTHCARE
A Pathway to India's Viksit Bharat Vision
Economics Assignment
INTRODUCTION
Charting the Path to a Developed India
The ‘Viksit Bharat 2047’ Vision Document portrays a tangible roadmap to convert India into a
developed nation within the hundred years of its independence. Focus is laid down on the growth of
economy, social equity, sustainable development and effective governance. 1 The primary engine of
this transformative agenda is human capital, which is quite quintessential for long term growth. Being
more than 1.4 billion people in population with half, that is 30 years or less, the country evokes the
image of a demographic dividend and is considered one of the youngest countries in the world. This
youthful population is healthy and at the same time, is a great advantage. However, to harness the
potential, targeted investments to build two essential structures, which are Education and Healthcare,
are paramount.
In the present global environment, where talent has become a global commodity, there has to be
suitably designed infrastructure in these sectors so as to prepare a workforce that is equipped to
confront the 21st century and compete in an evolving economy. A population that is both educated and
healthy enhances productivity and creativity, whilst promoting social inclusiveness and combating
inequalities. This is particularly pertinent to the youth of India who need to be ready in skills that are
necessary for competition in the world, which is why there is a call for emphasis on quality education
in the country. In addition, an investment in high-quality education would give the country's younger
generation the ability that would be relevant for such a country that is aspiring to become global in
nature. In step with this, a better health system will generally stand for healthier as well as a more
productive people for the nation.
It will be the foundation on which human resources will start to develop. Through these, an impetus to
sustainable growth, the reduction of poverty, and better living conditions- investments flowing into
critical infrastructure sectors such as education and health. This further aligns with India's journey
toward realizing the Sustainable Development Goals, as education and health are the areas that have a
natural co-relation. This short report examines the possibility of realizing such a fulfilling vision of
1
Viksit Bharat@2047 transformation of society: Vision and accomplishments; Jayaprada Sahoo and Dr. Suresh
Vadranam, International Journal of Political Science and Governance 2024; 6(1) Pg. 79-83.
2
'Viksit Bharat' by 2047 in the form of an integrated, prosperous, and vibrant society through
improvements to these critical sectors of infrastructure.
Education and healthcare are not only for the immediate economic value — they contribute to the
long-term social values/ethos of a country. As the largest democracy, a lot relies on India's zeal in
these sectors which are not only important for economic development but also integral to ensuring
that people live happily with high well-being. For Viksit Bharat to become a reality, India would need
policies aimed at ensuring that its education and healthcare infrastructures are accessible enough;
inclusive in essence as well technology-equipped for future needs. This strategic approach will help
India harness its demographic dividend and ensure that the youth—its greatest asset—can lead the
nation into a prosperous future.
“Human capital is the most important investment we can make.”
-Hans-Helmut Kotz [Economist]
3
HUMAN CAPITAL: THE LIFEBLOOD OF ECONOMIC TRANSFORMATION
“Human capital is the skill the labour force possesses and is regarded as a resource or asset.” 2 It refers
to the idea that investing in human capital—through education, training, and healthcare—enhances
productivity in general. Various theoretical studies recognize human capital as the key promoter of
economic growth. New research keeps flooding into the market every year, which again proves that
human capital indeed contributes to economic development.3
The most fundamental ways that the World Bank will adopt in order to achieve its twofold objectives
of "ending extreme poverty by 2030" and "promoting shared prosperity" are safeguarding and
investment in human capital.4 The World Bank aims to boost human capital by making quality
education, healthcare, and social protection more accessible. Its goal is to help people and
communities escape poverty and engage in economic growth. Viksit Bharat’s emphasis on enhancing
human capital through infrastructure investments in education and healthcare fits perfectly with global
standards and the World Bank’s overall mission.
The Human Capital Index
The Human Capital Index (HCI) is a composite measure that graphs the potential human capital
available to a child born today through till their age of 18 years, considering the country's present
5
woes in health and education. Importance is placed here on the crucial relationship between the
accumulation of human capital and both the educational and health structures concerned.
According to the data, under perfect education and health conditions, an Indian child has a prospective
productivity level of 49% when growing into adulthood. The rate is fixed at little higher than the
figures in Lower Middle-Income countries, which stand at 48%.6
This data suggests that India has the opportunity to further strengthen its infrastructure in these
sectors, which will help future generations boost their productivity and play a key role in the country's
growth.
2
Oxford English Dictionary. 6th ed., Oxford University Press, 2007.
3
Škare, M. and Lacmanović, S., 2015. Human capital and economic growth: a review essay. Amfiteatru
Economic, 17(39), pp. 735-760.
4
[Link]
questions#HCP1
5
World Bank. (2018). The Human Capital Project. Washington, DC: The World Bank.
[Link]
6
World Bank. Human Capital Index 2023: India. October 2023.
[Link]
[Link].
4
BRIDGING GAPS: STRATEGIC INFRASTRUCTURE AS THE BACKBONE OF PROGRESS
7
A venture to create human capital for any country requires support from institutions. Particularly
those in healthcare and education. These institutions work hand in hand to form a positive loop where
a healthy population can focus on education and training. This leads to improved job prospects,
increased productivity, and overall economic growth. The collaboration between healthcare and
education helps a country make the most of its demographic advantages, equipping its citizens to play
a significant role in national development, just like the goals set out in initiatives such as Viksit
Bharat.
Efficiency of the Human Capital
Labor productivity looks at how much work each employee gets done in a specific time period. For
example, picture a worker in India who can churn out 15 bags of rice in an hour, while a worker from
a different country manages to produce just 5 bags in that same hour.
In this scenario, the Indian worker is more productive. Greater productivity means accomplishing
more in the same time, allowing resources to be allocated elsewhere. Generally, the higher the average
education and health level within an economy, the greater the human capital, which in turn boosts
labour productivity.8
Figure (a). Impact of Efficient Human Capital on Economic Growth
Figure (a) shows how effective human capital boosts economic growth. It compares two growth paths:
one with inefficient human capital (red line) and another with strong human capital (green line). As
human capital becomes more efficient due to better education and healthcare, the economy
7
Claudia Goldin Springer-Verlag Berlin Heidelberg 2016, C. Diebolt, M. Haupert (eds.), Handbook of
Cliometrics.
8
Mincer J (1958) Investment in human capital and personal income distribution. J Polit Econ 66: Pg.281–302.
5
experiences a significant uptick in growth. This highlights the importance of investing in these areas
to improve productivity and support long-term economic development.
The PPF Curve and Development
Figure (b). Production Possibility Frontier
An increase in the Production Possibility Frontier reflects Economic growth in society. In figure (b),
the red PPF [inner curve] corresponds to maximum GDP obtainable with the given resources available
in a particular year, say 2024. The green PPF [outer curve] corresponds to maximum GDP obtainable
with the given resources in some other year, say 2029.
This indicates that if infrastructural developments with respect to Education and Healthcare are
promoted, through a span of 5 years, the ability of the nation to produce more will rise, eventually
leading to a sustainable Economic growth. This aligns with the core objectives outlined in the Viksit
Bharat vision.
Educating the Future: Building Pillars of Knowledge for Viksit Bharat
With the recent availability of data on education quality, several Economic studies have shifted their
focus to both quantity and quality of the educational system. 9 Specifically, skills—evaluated through
standardized international tests—are now seen as a crucial indicator of educational quality. The core
concept is that achievement-based skills serve as a direct measure of a country’s human capital.
The improvement in students' skills from an additional year of education can vary significantly based
on the quality of schooling they receive.10
9
Savvides, Andreas, and Thanasis Stengos. "Human Capital and Economic Growth: Evidence from the
European Union." In Advances in Economic Analysis and Policy, Vol. 9, 7-8. Berkeley Electronic Press, 2009.
10
Descy, P.; Tessaring, M. (eds) Impact of education and training; Third report on vocational training research in
Europe: background report; Luxembourg: Office for Official Publications of the European Communities, 2004.
(Cedefop Reference series, 54).
6
Input-oriented indicators of quality, like how much is spent on each student, the number of students
per teacher, and the salaries of teachers, play a critical role in developing human capital. 11 Increasing
investment per student is essential for enhancing educational resources, infrastructure, and teaching
materials. This investment directly contributes to creating a better learning environment, allowing
students to acquire skills more effectively.
Furthermore, for instance, offering competitive salaries to teachers is really important for bringing in
and keeping talented educators. Paying teachers a fair wage will be more interested in the education of
their students, meaning educational output in terms of better output. Such factors can truly make the
most of the educational frameworks and result in a better labour force. This boost in human capital
not only helps individuals but also enhances overall productivity, supporting sustainable economic
growth and prosperity for everyone in society.
Health for All: Strengthening the Foundations of Well-being
Good health and nutrition play a significant role in improving workers' productivity. Healthier people
who tend to live longer are more inclined to put their time and energy into developing their skills,
since they expect to reap the rewards of those efforts for a longer stretch of time. 12 Additionally, better
health also boosts productivity at work by reducing problems like incapacity, disability, and sick days
leaves. Furthermore, maintaining good health also supports higher educational attainment by
enhancing both the duration of schooling and academic performance.13
The World Bank and other development agencies push for different policies that focus on enhancing
health and nutrition to help build human capital. 14 A healthy worker is capable of producing more
output than an unhealthy one due to greater physical and mental abilities, increased energy, and
improved stamina. Similarly, when considering all other factors, an economy can achieve higher
overall output with a larger proportion of healthy workers.
As health improves, a nation can generate greater output with the existing combination of skills,
technological know-how, and physical capital. Additionally, higher life expectancy directly influences
the average skill level of the population in a steady state by impacting the skill-adjusted death rate,
which serves as the effective “depreciation rate” for overall skills. This, in turn, affects the long-term
level of skills per active worker.15
11
Škare, M. and Lacmanović, S., 2015. Human capital and economic growth: a review essay. Amfiteatru
Economic, 17(39), pp. 735-760
12
Ibid.
13
Schultz, Theodore W. Investment in Human Capital. Chicago: University of Chicago Press, 1997.
14
World Bank. (2006). "World Development Report 2007: Development and the Next Generation." The World
Bank.
15
Cutler D, Miller G (2005) The role of public health improvements in health advances: The twentieth-century
United States. Demography 42:1–22.
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The Viksit Bharat blueprint highlights the importance of education and skill development to make the
most of our demographic advantage.16
It suggests for a school within 1 km, a college within 10 km, and a university within 25 km in the next
five years. It also discusses stronger partnerships between industries and universities to boost the
prospects of jobs for youths across the nation.
On top of that, there’s wide discussion for well-equipped primary healthcare and government
hospitals at each and every nook and corner of the country, especially at the Tehsil or Block level. It
is further suggested that health centres should be accessible within 1 km and hospitals within 10 km
so everyone could access quality healthcare.
Therefore, India can have far greater human capital by promoting the establishment of well-equipped
primary healthcare centres, alongside government hospitals at the Tehsil and Block level, and by
ensuring that educational institutions are at accessible distances. This strategic approach improves
better health outcomes and easier access to education besides inducing employment growth, which
makes the country efficiently utilize its demographic dividend.
16
Viksit Bharat@47: A Blueprint of Micro and Macro Economic Dynamics, April 2024; PHD Chamber of
Commerce and Industry.
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CONCLUSION
In the context of economic growth, education and health mutually reinforce each other; “good health
is just as crucial for economic growth as education is.” 17 To realize a Viksit Bharat by 2047, India
requires strategic investments into both educational and health systems. These include investments
which are relevant not only towards increasing productivity at an individual level but also towards
building a productive, skilled, and healthier workforce to spur long-term economic growth.
India can make good use of the demographic dividend it boasts in its youth by readying them for the
challenges of the 21st century and making the process all-inclusive by integrating high-quality
education systems with comprehensive health care facilities. This strategy will focus on becoming
more inclusive for all, reduce differences, and improve the overall lifestyle of every citizen. Such
interrelation between health and education will form a firm foundation for a healthy thriving and just
society bringing India closer to the vision of developing the nation. Endeavours by determined
persons, through collaboration on the part of policy makers, educators, and providers of healthcare,
will enable India to produce the environment in which human capital can be developed. Thus, the
future of generations is possible.
17
Taniguchi, T., & Wang, F. (2003). In Qadri, F., & Waheed, A. (2011) (p. 818).