Chapter 2 People as Resource

1. What is meant by human capital? When does population become human

capital? Human capital is the stock of skill and productive knowledge embodied
in people of a country. Population becomes human capital when there is
investment made in the form of education, training and medical care. When the
existing 'human resource' is further developed by becoming more educated and
healthy, we call it 'human capital formation' that adds to the productive power of
the country just like 'physical capital formation'.

2. Give two examples to prove that investment in human capital yields a rich
return. Investment in human capital (through education, training, medical care)
yields a return just like investment in physical capital. This can be seen directly in
the form of higher incomes earned because of higher productivity of the more
educated or the better trained persons, as well as the higher productivity of
healthier people.

3. Prove by giving example that population is an asset for the economy rather
than a liability.
A large population need not be a liability. It can be turned into a productive asset
by investment in human capital (for example, by spending resources on education
and health for all, training of industrial and agricultural workers in the use of
modern technology, useful scientific researches and so on).

4. How does education create a virtuous cycle and a vicious cycle of development?

Virtuous cycle: Educated parents are found to invest more heavily on the
education of their child. This is because they have realised the importance of
education for themselves. They are also conscious of proper nutrition and
hygiene. They accordingly look after their children’s needs for education at
school and good health. A virtuous cycle is thus created in this case.
Vicious cycle: In contrast, a vicious cycle may be created by disadvantaged
parents who, themselves uneducated and lacking in hygiene, keep their children in
a similarly disadvantaged state.
5. How did Japan become a rich country in spite of shortage of natural resources?
Countries like Japan have invested in human resource. They did not have much
natural resource. They import the natural resource needed in their country. They
have invested on people especially in the field of education and health. These people
have made efficient use of other resource like land and capital. Efficiency and the
technology evolved by people have made these countries rich/developed.

6. What are the various activities undertaken in the primary sector, secondary
sector and tertiary sector?
Primary sector includes agriculture, forestry, animal husbandry, fishing, poultry
farming.
Mining. Quarrying and manufacturing is included in the secondary sector.
Textile industry is an example of secondary sector.
Trade, transport, communication, banking, education, health, tourism, services,
insurance etc. are included in the tertiary sector. The activities in this sector
result in the production of goods and services.
7. What are the two parts of economic activities? Or Distinguish between
marketed and non marketed activities.
Economic activities have two parts — market activities and non-market activities.
Market activities involve remuneration to any one who performs i.e., activity
performed for pay or profit. These include production of goods or services
including government service. Non-market activities are the production for self-
consumption. These can be consumption and processing of primary product and
own account production of fixed assets.

8. What is the difference between economic activities and non-economic

activities? All activities that generate income are called economic activities. All
activities in primary, secondary and tertiary activities are economic activities. These
are normally paid. Carpenters work, farmers work, teacher’s job etc are economic
activities. Noneconomic activities are those activities that do not generate any
income. Helping the poor people, charity activities, doing work freely are non
economic activities.

9. Why are women employed in low paid work?

A majority of the women have meager education and low skill formation. Women
are paid low compared to men.

10. How are women exploited in unorganized sector? Or What are the problems
faced by women in employment sector?
A majority of the women have meager education and low skill formation.
Women are paid low compared to men. Most women work where job security is
not there. Various activities relating to legal protection is meager. Employment in
unorganized sector is characterized by irregular and low income. In this sector
there is an absence of basic facilities like maternity leave, childcare and other
social security systems..
11. What determine the quality of population?
literacy rate, health of a person indicated by life expectancy and skill formation
acquired by the people of the country.
12. What are the various measures taken by the government to spread education in
India?
i) There is a provision made for providing universal access, retention and
quality in elementary education with a special emphasis on girls.
ii) There is also an establishment of pace setting of schools like Navodaya
Vidyalaya in each district. Vocational streams have been developed to equip
large number of high school students with occupations related to knowledge
and skills.
iii) The primary school system has expanded to over 5,00,000 villages in India.
Unfortunately, this huge expansion of schools has been diluted by the poor
quality of schooling and high dropout rates.
iv) ‘Sarva Siksha Abhiyan’ is a significant step towards providing elementary
education to all children in the age group of six to fourteen years by 2010.

v) Bridge courses and back-to-school camps have been initiated to increase the
enrollment in elementary education.
 vi) Mid-day meal scheme has been implemented to encourage attendance and
retention of children and improve their nutritional status. These policies
could add to the literate population of India.

13. What part does health play in the individual’s working life?
The health of a person helps him to realize his potential and the ability to fight
illness. It increases the longevity of life and increases self confidence. It also
reduces infant mortality rate.

14. What is the aim of India’s national health policy?

Our national policy, aimed at improving the accessibility of health care, family
welfare and nutritional service with special focus on underprivileged segment of
population.

15. What is the difference between disguised unemployment and seasonal

unemployment?
i) Seasonal unemployment happens when people are not able to find jobs
during some months of the year. People dependant upon agriculture usually
face such kind of problem. There are certain busy seasons when sowing,
harvesting, weeding, threshing is done. Certain months do not provide much
work to the people dependant on agriculture.
ii) In case of disguised unemployment people appear to be employed. They
have agricultural plot where they find work. This usually happens among
family members engaged in agricultural activity. The work requires the
service of five people but engages eight people. Three people are extra.
These three people also work in the same plot as five people. The
contribution made by the three extra people does not add to the contribution
made by the five people. If three people are removed the productivity of the
field will not decline.

16. Why is educated unemployed, a peculiar problem of India?

In case of urban areas educated unemployment has become a common
phenomenon. Literacy rate in India has increased. Many youth with
matriculation, graduation and post graduation degrees are not able to find job. A
study showed that unemployment of graduate and post-graduate has increased
faster than among matriculates.
17. What are the consequences of unemployment? (Important)
i) Unemployment leads to wastage of manpower resource. People who are an
asset for the economy turn into a liability.
ii) There is a feeling of hopelessness and despair among the youth. People do
not have enough money to support their family.
iii) Inability of educated people who are willing to work to find gainful
employment implies a great social waste.
iv) Unemployment tends to increase economic overload. The dependence of the
unemployed on the working population increases. The quality of life of an
individual as well as of society is adversely affected.
v) When a family has to live on a bare subsistence level there is a general
decline in its health status and rising withdrawal from the school system.
Hence, unemployment has detrimental impact on the overall growth of an
economy.
 vi) Increase in unemployment is an indicator of a depressed economy. It also
wastes the resource, which could have been gainfully employed. If people
cannot be used as a resource, they naturally appear as a liability to the
economy.
18. How is the hardship of unemployment in rural sector reduced?
i) Poor people cannot afford to sit idle. They tend to engage in any activity
irrespective of its earning potential. Their earning keeps them on a bare
subsistence level.
ii) Moreover, the employment structure is characterized by self-employment in
the primary sector.
iii) The concept of sharing of work in the field and the produce raised reduces
the hardship of unemployment in the rural sector.