Consider the following statements:
Human capital formation as a concept is better explained in terms of a process which enables
- Individuals of a country to accumulate more capital.
- Increasing the knowledge, skill levels and capacities of the people of the country.
- Accumulation of tangible wealth.
- Accumulation of intangible wealth
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2018 Prelims]
(a) 1 and 2
(b) 2 only
(c) 2 and 4
(d) 1, 3 and 4
- Statement 2 is accurate as per the OECD’s definition of human capital, which encompasses the knowledge, skills, competencies, and attributes acquired by individuals or groups throughout their lives, utilized in the production of goods, services, or ideas within market conditions.
- Statement 4 is correct as intangible wealth of a nation includes elements such as a skilled population, human resource base, culture, arts, and other non-physical assets.
- Human capital formation is the result of investments made in education, health, on-the-job training, migration, and information, contributing to the development of individuals’ knowledge and skills.
- Statement 1 is incorrect according to the RBI’s definition. Gross capital formation, as defined by the RBI, refers to the overall additions to fixed assets, including changes in stocks during a specific period, rather than solely referring to fixed capital formation.
- Statement 3 is incorrect as tangible capital formation, predominantly involving infrastructure components, is not synonymous with gross capital formation (GCF).