HUMAN CAPITAL AND INDIA’S GROWTH STORY: A POLICY PERSPECTIVE OF SKILL FORMATION 0 0

Abstract

At present, economic growth is regulated by the forces of the global production system. The structure and pace of industrial production globally now is pushed by technological progress, economies of scale, and availability of skilled manpower. The experience of industrial development of the Western world attests to the inevitability of technological growth. However, the countries of the East Asian region could achieve industrial transition through human capital formation largely.

The policy makers of the region charted their growth stories along human resources only. Economic growth of countries like Japan, South Korea, Singapore, and China has come mainly from human capital augmenting technology. It was attributed to the endogenous growth strategy that they had adopted.

India’s achievement on human development has been quite abysmal not for its population size but for lack of political concern for inclusive growth. The very focus of political leaders across parties has concentrated on winning elections every five years with populist policies. The wastage of demographic dividend in absence of human capital formation policies is one such disaster.

India’s labour market informality does indicate that the economic situation of the masses is vulnerable and it is partly due to the shortage of skills that are relevant for the global production system. This is an alarming situation for when it comes to India’s macroeconomic performance. But what made it become so alarming? In this paper, we attempt to understand as to why the policy makers couldn’t give adequate priority to human capital formation for boosting economic growth.