Human Capital Formation in India
Class 12 Indian Economic Development — Government Role, Regulatory Bodies, Education Spending, and Educational Achievements
Need for Government Intervention
Education and health create both private and social benefits, and both private and public institutions exist. Government intervention is necessary for three reasons:
Long-term Impacts
Expenditures on education and health have substantial long-term impacts and cannot be easily reversed — poor service delivery can cause irreversible damage
Incomplete Information
Consumers lack complete information about quality and cost of education and health services
Monopoly Power
Private providers may exploit consumers — government ensures adherence to standards and fair pricing
Case in Point — Polio Free India
Government Expenditure on Education
7.92%
% of Total Govt Expenditure (1952)
15.7%
% of Total Govt Expenditure (2014)
0.64%
% of GDP (1952)
4.13%
% of GDP (2014)
Education Commission (1964-66) recommended at least 6% of GDP on education. Current level is little over 4% — quite inadequate, with irregular rises and falls.
Inter-State Disparity
Provision of Free and Compulsory Education
Key Policy Measures
- Tapas Majumdar Committee (1999): Estimated ₹1.37 lakh crore over 10 years to bring all children aged 6-14 under school education.
- Right to Education Act, 2009: Made free education a fundamental right for all children aged 6-14.
- Education Cess: 2% cess on all Union taxes, earmarked for elementary education, plus large outlays for higher education and student loan schemes.
Educational Attainments in India
| Particulars | 1990 | 2000 | 2011 | 2017-18 |
|---|---|---|---|---|
| Adult Literacy Rate (Male) — % of people aged 15+ | 61.9 | 68.4 | 79 | 82 |
| Adult Literacy Rate (Female) | 37.9 | 45.4 | 59 | 66 |
| Primary Completion Rate (Male) — % of relevant age group | 78 | 85 | 92 | 93 |
| Primary Completion Rate (Female) | 61 | 69 | 94 | 96 |
| Youth Literacy Rate (Male) — % of people aged 15-24 | 76.6 | 79.7 | 90 | 93 |
| Youth Literacy Rate (Female) | 54.2 | 64.8 | 82 | 90 |
Key Observations
- Adult literacy: Male 61.9% to 82% — Female 37.9% to 66% (still far below satisfaction)
- Primary completion: Females (61% to 96%) have surpassed males (78% to 93%)
- Youth literacy: Gender gap narrowing significantly — Female 54.2% to 90%
Key Takeaways
Key Takeaways
- Government intervention in education and health is necessary due to long-term impacts, incomplete consumer information, and risk of monopoly power by private providers
- Key regulatory bodies: NCERT (school curriculum), UGC (university standards), AICTE (technical education), and ICMR (biomedical research)
- Education expenditure as % of GDP has risen from 0.64% (1952) to 4.13% (2014) — still below the 6% recommended by the Education Commission (1964-66)
- The Right to Education Act, 2009 made free education a fundamental right for children aged 6-14, funded partly through a 2% education cess on Union taxes
- India has made remarkable progress in literacy, primary completion, and youth literacy — with the female primary completion rate (96%) now surpassing males (93%)