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Q49 (IAS/2018) Economy › Growth, Development, Poverty & Employment › Human capital formation Official Key

Consider the following statements : Human capital formation as a concept is better explained in terms of a process which enables 1. individuals of a country to accumulate more capital. 2. increasing the knowledge, skill levels and capacities of the people of the country. 3. accumulation of tangible wealth. 4. accumulation of intangible wealth. Which of the statements given above is/are correct ?

Result
Your answer: —  ·  Correct: C
Explanation

The correct answer is option C (statements 2 and 4 only).

Human capital refers to increasing the knowledge, skill levels and capacities of the people of the country[1], making statement 2 correct. Additionally, it is termed as an intangible asset that plays a great role in the economic growth and development of a nation[1], which validates statement 4 about accumulation of intangible wealth.

Statement 1 is incorrect because human capital formation is not about individuals accumulating more financial or physical capital, but rather about the stock of skill and productive knowledge embodied in them[2]. Statement 3 is also incorrect because human capital considers education and health as a means to increase labour productivity and treats human beings as a means to an end; the end being the increase in productivity[3], not the accumulation of tangible wealth like machinery or buildings.

Human capital formation is fundamentally about enhancing human capabilities through investments in education, health, on-the-job training etc.[3], creating intangible assets in the form of skilled and knowledgeable people.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
  2. [2] Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
  3. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
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Out of everyone who attempted this question.
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. Consider the following statements : Human capital formation as a concept is better explained in terms of a process which enables 1. ind…
At a glance
Origin: Books + Current Affairs Fairness: Moderate fairness Books / CA: 5/10 · 5/10

This is a 'Definitional Purism' question. It doesn't ask for data or schemes, but for the precise economic character of a concept found in Class IX NCERT. The strategy is simple: When reading basic terms (Capital, Liberty, Rights), distinguish clearly between their physical/tangible forms and their abstract/intangible forms.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Does the concept of human capital formation refer to individuals of a country accumulating more capital?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"Investments in education convert human beings into human capital; human capital represents enhanced labour productivity, which is an acquired ability and an outcome of deliberate investment decisions with an expectation that it will increase future income sources."
Why this source?
  • Explicitly states that investments in education convert people into human capital, tying formation to deliberate investments in individuals.
  • Defines human capital as an acquired ability and outcome of investment decisions, which matches the idea of individuals accumulating capital (skills/abilities).
Web source
Presence: 5/5
"Investment in education is considered as one of the main sources of human capital. ... Investments in health, on- the-job training, migration and information are the other sources of human capital formation."
Why this source?
  • Identifies investment in education as a main source of human capital formation, linking the concept to accumulation through spending on people.
  • Lists other personal investments (health, on-the-job training, migration, information) as sources, reinforcing that individuals acquire capital via investment.
Web source
Presence: 5/5
"Investments in education, on-the-job training, health, migration and information are the sources of human capital formation. Ø The concept of physical capital is the base for conceptualising human capital."
Why this source?
  • Summarises the sources of human capital formation (education, training, health, migration, information), indicating accumulation of productive capacities in people.
  • Notes conceptual link to physical capital, implying human capital formation is analogous to accumulating capital, but in people.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > EXAMPLE Previous Years' Preliminary Examination Questions EXAMPLE PREVIOUS > p. 577
Strength: 4/5
“• 2020, 2019: o question • 1. Human capital formation as a concept is better explained in terms of a process which enables: • 1. Individuals of a country to accumulate more capital. • 2. Increasing the knowledge, skill levels and capacities of the people of the country. 2017 3. Accumulation of tangible wealth. a a 4. Accumulation of intangible wealth. Which of the statements given above is/are correct? • (a) 1 and 2 • (b) 2 only • (d) 1, 3 and 4 • (c) 2 and 4 • 2. Consider the following in respect of 'National Career Service' • 1.”
Why relevant

Contains a multiple‑choice framing that contrasts 'individuals ... accumulating more capital' with 'increasing knowledge, skill levels and capacities' — showing the common alternative interpretations of human capital formation.

How to extend

A student could note this contrast and check textbook definitions or examples to see which of the two alternatives (physical accumulation vs skills/knowledge) matches standard usage.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
Strength: 5/5
“Just as a country can turn physical resources like land into physical capital like factories, similarly, it can also turn human resources like students into human capital like engineers and doctors. Societies need sufficient human capital in the first place - in the form of competent people who have themselves been educated and trained as professors and other professionals. In other words, we need good human capital to produce other human capital. Sources of human capital formation is investments in education, health, on-the-job training etc. Human capital considers education and health as a means to increase labour productivity. Human capital treats human beings as a means to an end; the end being the increase in productivity”
Why relevant

Explicitly defines human capital formation as turning human resources (students) into human capital (engineers, doctors) via investments in education, health and training.

How to extend

Extend by comparing the listed activities (education, health, training) with what counts as 'accumulating capital' (physical assets) to judge whether the phrase means physical capital or skills/capacity.

Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
Strength: 5/5
“Like other resources population also is a resource — a 'human resource'. This is the positive side of a large population that is often overlooked when we look only at the negative side, considering only the problems of providing the population with food, education and access to health facilities. 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'. Investment in human capital (through education, training, medical care) yields a return just like investment in physical capital.”
Why relevant

States that human capital formation is developing people to be more educated and healthy and equates this to adding to the productive power of the country (analogous to physical capital formation).

How to extend

Use the analogy to physical capital formation: if human capital formation is described by investments in education/health (not buying machines), that suggests it means skills/health rather than individuals accumulating physical capital.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
Strength: 5/5
“Human capital refers to increasing the knowledge, skill levels and capacities of the people of the country. It is termed as an intangible asset that plays a great role in the economic growth and development of a nation. Hence, there is a need to transform the working age population into human capital in order to reap the benefits of demographic dividend in India. General education improves knowledge of the people while skill training enhances their employability and equips them to tackle the requirements of labour market. Persisting skill deficit among the working age is one of the important factors for dropping rates of employability.”
Why relevant

Defines human capital as increasing knowledge, skill levels and capacities and labels it an intangible asset crucial for growth.

How to extend

A student can contrast 'intangible asset (skills/knowledge)' with 'accumulation of capital' understood as tangible wealth to evaluate whether the statement matches the definition.

Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Let's Discuss > p. 17
Strength: 4/5
“• Looking at the photograph can you explain how a doctor, teacher, engineer and a tailor are an asset to the economy? Not only do the more educated and the healthier people gain through higher incomes, society also gains in other indirect ways because the advantages of a more educated or a healthier population spreads to those also who themselves were not directly educated or given health care. In fact, human capital is in one way superior to other resources like land and physical capital: human resource can make use of land and capital. Land and capital cannot become useful on its own!”
Why relevant

Explains how educated/healthy people benefit society and emphasises that human resource can make use of land and capital — implying human capital is about capabilities rather than ownership of physical capital.

How to extend

Combine this with basic understanding of 'capital' (physical vs human) to infer that human capital formation focuses on capabilities (skills, health) not on individuals acquiring more physical capital.

Statement 2
Does the concept of human capital formation refer to increasing the knowledge, skill levels, and capacities of the people of the country?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
Presence: 5/5
“Human capital refers to increasing the knowledge, skill levels and capacities of the people of the country. It is termed as an intangible asset that plays a great role in the economic growth and development of a nation. Hence, there is a need to transform the working age population into human capital in order to reap the benefits of demographic dividend in India. General education improves knowledge of the people while skill training enhances their employability and equips them to tackle the requirements of labour market. Persisting skill deficit among the working age is one of the important factors for dropping rates of employability.”
Why this source?
  • Gives a direct definition: human capital refers to increasing knowledge, skill levels and capacities of the people.
  • Describes human capital as an intangible asset linked to education and skill training.
  • Connects formation of human capital to transforming the working-age population via education/training.
Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
Presence: 5/5
“2 2 Chapter The chapter 'People as Resource' is an effort to explain population as an asset for the economy rather than a liability. Population becomes human capital when there is investment made in the form of education, training and medical care. In fact, human capital is the stock of skill and productive knowledge embodied in them. 'People as Resource' is a way of referring to a country's working people in terms of their existing productive skills and abilities. Looking at the population from this productive aspect emphasises its ability to contribute to the creation of the Gross National Product.”
Why this source?
  • States population becomes human capital when investments are made in education, training and medical care.
  • Defines human capital as the stock of skill and productive knowledge embodied in people.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
Presence: 5/5
“Just as a country can turn physical resources like land into physical capital like factories, similarly, it can also turn human resources like students into human capital like engineers and doctors. Societies need sufficient human capital in the first place - in the form of competent people who have themselves been educated and trained as professors and other professionals. In other words, we need good human capital to produce other human capital. Sources of human capital formation is investments in education, health, on-the-job training etc. Human capital considers education and health as a means to increase labour productivity. Human capital treats human beings as a means to an end; the end being the increase in productivity”
Why this source?
  • Explains human capital formation via investments in education, health and on-the-job training.
  • Illustrates converting human resources (students) into human capital (engineers, doctors) to raise productivity.
Statement 3
Does the concept of human capital formation refer to accumulation of tangible wealth?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"Investments in education convert human beings into human capital; human capital represents enhanced labour productivity, which is an acquired ability and an outcome of deliberate investment decisions with an expectation that it will increase future income sources."
Why this source?
  • Defines human capital as the outcome of investments in education, implying it is an acquired ability rather than a tangible asset.
  • Makes explicit that human capital represents enhanced labour productivity — an intangible skill/ability produced by investment.
Web source
Presence: 4/5
"Investments in education, on-the-job training, health, migration and information are the sources of human capital formation."
Why this source?
  • Lists education, training, health, migration and information as sources of human capital formation — all investments in people, not physical/tangible wealth.
  • Notes that physical capital is a separate concept used to conceptualise human capital, implying differences between tangible physical capital and human capital.
Web source
Presence: 4/5
"we need good human capital to produce other human capital (say, nurses, farmers, teachers, doctors, engineers...). This means that we need investment in human capital to produce more human capital out of human resources."
Why this source?
  • Describes human capital formation as investment in people to produce other skilled people (teachers, doctors, engineers), emphasizing human skills rather than tangible wealth.
  • Frames human capital as an outcome of education and training processes, reinforcing its intangible, ability-based nature.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > EXAMPLE Previous Years' Preliminary Examination Questions EXAMPLE PREVIOUS > p. 577
Strength: 4/5
“• 2020, 2019: o question • 1. Human capital formation as a concept is better explained in terms of a process which enables: • 1. Individuals of a country to accumulate more capital. • 2. Increasing the knowledge, skill levels and capacities of the people of the country. 2017 3. Accumulation of tangible wealth. a a 4. Accumulation of intangible wealth. Which of the statements given above is/are correct? • (a) 1 and 2 • (b) 2 only • (d) 1, 3 and 4 • (c) 2 and 4 • 2. Consider the following in respect of 'National Career Service' • 1.”
Why relevant

Exam question lists 'accumulation of tangible wealth' and 'accumulation of intangible wealth' as separate options when defining human capital formation, implying a distinction between the two.

How to extend

A student could use this categorical distinction to test whether human capital better fits 'intangible' (skills/knowledge) than 'tangible' (physical assets) by comparing textbook definitions.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
Strength: 5/5
“Just as a country can turn physical resources like land into physical capital like factories, similarly, it can also turn human resources like students into human capital like engineers and doctors. Societies need sufficient human capital in the first place - in the form of competent people who have themselves been educated and trained as professors and other professionals. In other words, we need good human capital to produce other human capital. Sources of human capital formation is investments in education, health, on-the-job training etc. Human capital considers education and health as a means to increase labour productivity. Human capital treats human beings as a means to an end; the end being the increase in productivity”
Why relevant

Defines human capital formation as investment in education, health and training that turns human resources into skilled professionals, emphasizing non-physical inputs.

How to extend

Extend by contrasting these human-capital investments with examples of tangible wealth (factories, machines) to judge whether human capital is 'tangible'.

Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
Strength: 5/5
“Like other resources population also is a resource — a 'human resource'. This is the positive side of a large population that is often overlooked when we look only at the negative side, considering only the problems of providing the population with food, education and access to health facilities. 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'. Investment in human capital (through education, training, medical care) yields a return just like investment in physical capital.”
Why relevant

Explicitly compares human capital formation to physical capital formation, calling human-capital investment (education, training, medical care) analogous to but distinct from physical capital.

How to extend

A student can use the analogy to map 'physical capital = tangible wealth' and infer human capital is the non-tangible counterpart.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
Strength: 5/5
“Human capital refers to increasing the knowledge, skill levels and capacities of the people of the country. It is termed as an intangible asset that plays a great role in the economic growth and development of a nation. Hence, there is a need to transform the working age population into human capital in order to reap the benefits of demographic dividend in India. General education improves knowledge of the people while skill training enhances their employability and equips them to tackle the requirements of labour market. Persisting skill deficit among the working age is one of the important factors for dropping rates of employability.”
Why relevant

States directly that human capital is termed an 'intangible asset' tied to knowledge, skills and capacities of people.

How to extend

Combine this label with a standard definition of 'tangible wealth' (physical assets) to argue human capital is not tangible wealth.

Exploring Society:India and Beyond ,Social Science, Class VIII . NCERT(Revised ed 2025) > Chapter 7: Factors of Production > People as a resource > p. 167
Strength: 4/5
“Fig. 7.5. Carpenter Fig. 7.6. Software developer a good job. The word labour refers to the physical and mental effort used in production. However, human capital refers to the specialised skills, knowledge, abilities and expertise required to perform that labour. Thus, human capital is not just the basic efforts of labour but also the quality and efficiency of that labour.”
Why relevant

Clarifies that human capital refers to specialised skills, knowledge and efficiency rather than basic physical labour, reinforcing its non-physical character.

How to extend

Use this to distinguish human-capital components (skills/knowledge) from physical machines or land when judging 'tangible' status.

Statement 4
Does the concept of human capital formation refer to accumulation of intangible wealth?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
Presence: 5/5
“Human capital refers to increasing the knowledge, skill levels and capacities of the people of the country. It is termed as an intangible asset that plays a great role in the economic growth and development of a nation. Hence, there is a need to transform the working age population into human capital in order to reap the benefits of demographic dividend in India. General education improves knowledge of the people while skill training enhances their employability and equips them to tackle the requirements of labour market. Persisting skill deficit among the working age is one of the important factors for dropping rates of employability.”
Why this source?
  • Explicitly calls human capital an 'intangible asset'.
  • Links human capital to knowledge, skills and capacities — non‑physical attributes.
Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
Presence: 5/5
“Like other resources population also is a resource — a 'human resource'. This is the positive side of a large population that is often overlooked when we look only at the negative side, considering only the problems of providing the population with food, education and access to health facilities. 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'. Investment in human capital (through education, training, medical care) yields a return just like investment in physical capital.”
Why this source?
  • Describes human capital formation as developing people (education, health) that adds to productive power like physical capital.
  • Frames investment in education/health as yielding returns analogous to capital formation, implying intangible wealth accumulation.
Exploring Society:India and Beyond ,Social Science, Class VIII . NCERT(Revised ed 2025) > Chapter 7: Factors of Production > People as a resource > p. 167
Presence: 4/5
“Fig. 7.5. Carpenter Fig. 7.6. Software developer a good job. The word labour refers to the physical and mental effort used in production. However, human capital refers to the specialised skills, knowledge, abilities and expertise required to perform that labour. Thus, human capital is not just the basic efforts of labour but also the quality and efficiency of that labour.”
Why this source?
  • Defines human capital in terms of specialised skills, knowledge and abilities rather than mere labour — emphasises non‑physical nature.
  • Distinguishes quality/efficiency of labour (intangible) from basic physical effort.
Pattern takeaway: UPSC consistently tests 'First Principles' of Economics. They strip away the jargon and ask what a concept *actually* means in plain English. If a statement sounds like a financial accounting term (accumulating capital/tangible wealth) applied to a social concept, it is likely a trap.
How you should have studied
  1. [THE VERDICT]: Sitter. Direct lift from NCERT Class IX (People as Resource) and Class XI (Indian Economic Development).
  2. [THE CONCEPTUAL TRIGGER]: Factors of Production → Capital → The distinction between Physical Capital (machines) and Human Capital (skills).
  3. [THE HORIZONTAL EXPANSION]: Memorize the 5 sources of Human Capital (NCERT): Education, Health, On-the-job training, Migration, Information. Contrast 'Human Capital' (productivity view) with 'Human Development' (welfare view). Understand related terms: Social Overhead Capital, Gross Fixed Capital Formation (GFCF), and Incremental Capital Output Ratio (ICOR).
  4. [THE STRATEGIC METACOGNITION]: Don't just memorize definitions; categorize them. Ask: Is this concept a 'Stock' or a 'Flow'? Is it 'Tangible' or 'Intangible'? UPSC traps you by swapping these adjectives.
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Definition of Human Capital Formation
💡 The insight

Multiple references define human capital formation as developing people's knowledge, skills and capacities rather than individuals simply 'accumulating capital'.

High-yield for UPSC: understanding the precise definition avoids confusion with physical capital/wealth. It connects to questions on demographic dividend, development theory and policy priorities (education, health). Master by memorising core definition and citing examples of investments that create human capital.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
🔗 Anchor: "Does the concept of human capital formation refer to individuals of a country ac..."
📌 Adjacent topic to master
S1
👉 Investments that Build Human Capital (education, health, training)
💡 The insight

Sources repeatedly list education, health and training as the means of human capital formation.

Important for policy and welfare questions: knowing specific channels (education, healthcare, on‑the‑job training) lets aspirants evaluate government schemes and argue policy trade-offs. It supports essay and mains answers on human development and demographic dividend.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
🔗 Anchor: "Does the concept of human capital formation refer to individuals of a country ac..."
📌 Adjacent topic to master
S1
👉 Human Capital vs Physical Capital (distinction)
💡 The insight

References contrast human capital with physical capital and highlight that human capital is an intangible asset that enables use of other resources.

Useful across GS papers: explains why investment priorities may shift from infrastructure to human development; helps answer questions on growth drivers, structural transformation and inclusive development. Practice by comparing examples and policy implications.

📚 Reading List :
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 1: The Story of Village Palampur > Organisation of Production > p. 2
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Let's Discuss > p. 17
🔗 Anchor: "Does the concept of human capital formation refer to individuals of a country ac..."
📌 Adjacent topic to master
S2
👉 Core definition of human capital
💡 The insight

The statement is essentially definitional; references explicitly describe human capital as knowledge, skills and capacities of people.

High-yield for UPSC economy and social development topics — knowing the precise definition helps in MCQs and short-answer questions. Links to population, labour quality and productivity debates; enables answering questions about 'people as resources' and basic concept distinctions.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
  • Exploring Society:India and Beyond ,Social Science, Class VIII . NCERT(Revised ed 2025) > Chapter 7: Factors of Production > People as a resource > p. 167
🔗 Anchor: "Does the concept of human capital formation refer to increasing the knowledge, s..."
📌 Adjacent topic to master
S2
👉 Human capital formation = targeted investments (education, health, training)
💡 The insight

Multiple references emphasise that formation occurs through investments in education, health and on-the-job training.

Essential for essays and mains answers on human development, demographic dividend and policy prescriptions. Helps frame answers on why governments must invest in schooling, healthcare and skill development; useful for policy-evaluation and scheme-based questions.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
🔗 Anchor: "Does the concept of human capital formation refer to increasing the knowledge, s..."
📌 Adjacent topic to master
S2
👉 Human capital and economic outcomes (productivity, employability, demographic dividend)
💡 The insight

References link human capital to labour productivity, employability and reaping demographic dividend benefits.

Useful for linking micro definitions to macro effects in prelims and mains (growth, employment, demographic dividend). Enables argumentation in development-policy questions and interlinks with topics like labour market skills and human development indicators.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 29
🔗 Anchor: "Does the concept of human capital formation refer to increasing the knowledge, s..."
📌 Adjacent topic to master
S3
👉 Human capital vs physical (tangible) capital
💡 The insight

Several references contrast human capital (skills, knowledge, capacities) with physical capital or tangible wealth, which clarifies that human capital is not tangible accumulation.

High-yield for UPSC: distinguishing types of capital is frequently tested in economy and development questions; it links to topics like factors of production, capital formation, and policy on education/industry. Master by comparing definitions and examples of human vs physical capital and practising application-based questions.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Human Capital: > p. 28
  • Economics, Class IX . NCERT(Revised ed 2025) > Chapter 2: People as Resource > Overview > p. 16
🔗 Anchor: "Does the concept of human capital formation refer to accumulation of tangible we..."
🌑 The Hidden Trap

The 'Human Development' vs 'Human Capital' trap. NCERT Class XI explicitly states: Human Capital treats human beings as a means to an end (productivity), whereas Human Development treats human beings as ends in themselves. Expect a statement swapping these two perspectives.

⚡ Elimination Cheat Code

Use the 'Category Match' technique. 'Human' implies biological/intellectual traits. 'Tangible' implies touchable physical objects (machines, gold). Therefore, 'Human Capital' cannot be 'Tangible Wealth' (Statement 3). Eliminate options with 3. You are left with A, B, C. Statement 1 implies financial accumulation (money), which is a *result* of human capital, not the *concept* itself. Statement 4 (Intangible) matches the nature of skills/knowledge. Thus, 2 and 4.

🔗 Mains Connection

Links to GS-3 (Inclusive Growth) and GS-2 (Social Sector). Human Capital Formation is the technical prerequisite for the 'Demographic Dividend'. Without it, the youth bulge becomes a 'Demographic Disaster' or security threat (Left Wing Extremism).

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SIMILAR QUESTIONS

CDS-I · 2013 · Q89 Relevance score: -1.28

Consider the following state- ments : 1. In any nation, human deve- lopment outcomes are a function of economic growth, social policy and poverty reduction measures at the macro-level 2. The expansion of human development in terms of health and education attain- ment, reduction of income poverty and economic growth is linked in a syner- gistic manner. 3. Investment in health and education can enhance human functioning which can eventually alleviate income poverty by improv- ing employability. 4. Resources generated through income poverty reduction and economic growth can be used to en- hance human development. Which of the statements given above are logical and correct ?

IAS · 1999 · Q43 Relevance score: -1.78

Consider the following statements : Small-scale industries are, in most cases, not as efficient and competitive as the large-scale ones. Yet the Government provides preferential treatment and reservations in a range of products to the small firms because small-scale industries I. provide higher employment on a per unit capital deployment basis. II. promote a regional dispersion of industries and economic activities. III. have performed better in export of manufactured products than the large scale ones. IV. provide jobs to low-skill workers, who otherwise may not find employment avenues elsewhere. Which of the above statements are correct ?

IAS · 2023 · Q89 Relevance score: -2.09

Consider the following statements : The 'Stability and Growth Pact' of the European Union is a treaty that 1. limits the levels of the budgetary deficit of the countries of the European Union 2. makes the countries of the European Union to share their infrastructure facilities 3. enables the countries of the European Union to share their technologies How many of the above statements are correct?

IAS · 2022 · Q31 Relevance score: -2.15

Consider the following statements: 1. Tight monetary policy of US Federal Reserve could lead to capital flight. 2. Capital flight may increase the interest cost of firms with existing External Commercial Borrowings (ECBs). 3. Devaluation of domestic currency decreases the currency risk associated with ECBs. Which of the statements given above are correct?

IAS · 2023 · Q87 Relevance score: -2.39

Consider the following statements : Statement-I : Recently, the United States of America (USA) and the European Union (EU) have launched the Trade and Technology Council'. Statement-II : The USA and the EU claim that through this they are trying to bring technological progress and physical productivity under their control. Which one of the following is correct in respect of the above statements?