Human Capital Formation (Ch-5) Important Questions || Class 12 Economics (Indian Economic Development) Book 2 Chapter 5 in English ||

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Chapter – 5

Human Capital Formation

In this post, we have given the Important Questions of Class 12 Economics Chapter 5 (Human Capital Formation) in English. These Important Questions are useful for the students who are going to appear in class 12 board exams.

BoardCBSE Board, UP Board, JAC Board, Bihar Board, HBSE Board, UBSE Board, PSEB Board, RBSE Board
ClassClass 12
Chapter no.Chapter 5
Chapter Name(Human Capital Formation)
CategoryClass 12 Economics Important Questions in English
Class 12 Economics Chapter 5 Human Capital Formation Important Questions in English

Chapter 5 Human Capital Formation

Question 1 Explain main determinants/sources of human capital formation .

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Answer –

  • Expenditure on education : expenditure on education is the most effective way of rising a productive workforce in the country . It is therefore a very important determinant of human capital formation . education enables individuals to make a good living throughout his life . His total earnings during his life Spain would far exceed his initial expenditure on education .
  • Expenditure on health : “ a sound mind in a sound body “ is an old saying . expenditure on health makes a man more efficient and therefore more productive. Is contribution to the production process tends to rise. He adds more to GDP of the nation then a sick person . Expenditure on health and therefore is an important determinant of human capital formation
  • On the job training : on the job training helps workers to hone/sharpen their specialised skills . It is enabled them to raise the level of their efficiency/productivity .
  • Study programs for adults : rather than formal education at the primary, secondary and university level the government and NGOs organise study programmes for adults to make them proficient in their work areas .
  • Migration : migration contributes to human capital formation as it facilitates and utilisation of inactive skills of the people or it facilitates fuller utilisation of the skills .
  • Expenditure on information : information relating to job markets and educational institutions offering specialised skills is an important determinant of skill formation . It enables people to actualize their productive potential .accordingly expenditure on information is another determinant of human capital formation .

Question 2 Distinguish between human capital and human development .

Answer: While human capital focuses on investment in education and health sector to increase productivity and efficiency of workforce on the other hand , human development focuses on investment in education and health sector to increase the general well-being and standard and quality of living of human capital .

Question 3 Explain the role of capital formation in economic growth .


  • Change in emotional and material environment of growth : human capital formation and generates a change in emotional and material environment of growth .
    • Emotional environment becomes conducive to growth as people tend to to acquire growth-oriented attitude and aspirations .
    • material environment becomes helpful to growth as the society now possesses higher number of skilled and trained workers to implement the plans and programmes of economic growth .
  • Higher productivity of physical capital : human capital formation increases productivity of physical capital . Specialised engineers skilled workers can certainly handle machines better than the others .
  • Innovative skills : human capital formation facilitates innovations the undercurrent of growth and development . Larger the number of skilled and trained personnel , greater the possibilities of innovations in the area of production and related activities . Innovation is the lifeline of growth.
  • Higher rate of participation and equality : by enhancing productive capacities the labour force, human capital formation induces greater employment . This increased the rate of participation .

Question 4 What are the main problems of human capital formation in India .

Answer :

  • rising population : rapidly rising population adversely affects the the quality of human capital . This is because it reduces per head availability of the existing facility related to housing, salutation, drainage, water system, hospitals, education, power supply etc . reduces availability of these facilities leads to a fall in the quality of life .
  • brain drain : migration of persons to develop countries is a serious threat to the process of human capital formation in the country . Those who decide to buy great or persons of high calibre such as scientist, administrators, executive’s, engineer, physicians, educationist etc .
  • deficient manpower planning : not enough efforts have been made to maintain the demand supply balance of the ever rising labour force in the country . AG result India is facing and explosive problems related to graduate unemployment. It is a bad reflection on the wastage of a human power and human skill .
  • insufficient on the job training in primary sector : primary sector is the backbone of Indian economy . Unfortunately it has not received due attention in the area of professional skills . The traditional wisdom predominants the primary sector, and that ‘ on the job training programmes ‘ are highly scant, if note listless .
  • low academic standards : in our enthusiasm to spread higher education , we have been opening many universities, unmindful of their academic standards . Consequently we have a large army of half-baked graduates and postgraduates deficit skills only lowers the level of efficiency .

Question 5 Explain the importance/ objective of education .

Answer :

  • Education produces responsible citizens .
  • It develops science and technology
  • It facilitates the use of natural and human resources of all regions of the country.
  • It explains mental horizon of the people.
  • It helps economic development through greater participation of the people in the process of growth and development .
  • It develops cultural standards of the citizens .
  • It develops human personality .

Question 6 Explain the role of government in education and health sector .

Answer :

  • These sectors need huge investment with a very high fixed expenditure .
  • It is difficult to extract private investors to invest in health and education unless they are allowed to recover their huge cost through high price of these services .
  • People in a poor country like ours cannot afford high price for education and health .

Question 7 Explain main problems related to development of education in India .

Answer :

  • Large number of illiterates : India harbours the largest number of electorates in the world . Presently nearly 36 crore people are estimated to be illiterate. The number exceeds even the total population of most countries in the world .
  • Inadequate vocationalisation : education continuees to be largely degree oriented throwing millions of educated youths down to the The corridors of employment exchanges .
  • Gender bias : there is still a significant bias in offering opportunities of education to male and female children . The enrollment ratio is relative leelo for the female candidates and their dropout ratio in considerably high. Education system in India thus needs a substantial change in the attitudes of the people .
  • Low rural access level : there is a high degree of disparity in in access to education. The access level is considerably low for the rural population compared to the urbans .
  • Privatisation : there is a growing trend towards privatisation of education. Being very expensive, private education has tended to to widen the gulf between access level for the rich and the poor .
  • Low government expenditure on education : the government has failed to fulfill its commitment of spending nearly 6% of GDP on education . Actual expenditure has been around 4% to 5 % only. This points to the gap between what is intended or desired and what is actually achieved .

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