The World Economic Forum has released the Second Human Capital Report for 2015. It ranks countries according to five distinct age groups and categories of education, skill and employment conditions. Out of the 124 countries surveyed, India ranks at 100; Finland ranks first.
China is well ahead of us at 64th rank, and our neighbour Sri Lanka is at the 60th spot.
The report has also thrown
surprises, as the countries we consider weak in human capital like Cambodia and Egypt are ahead of us, including Bangladesh which has notched one rank above us at 99.
Why is India, claiming to be on the path of becoming an economic superpower, lagging behind in nurturing its human capital? We do not need an academic exercise to find the causes behind the erosion of human capital in India.
In order to achieve developmental goals, we need to strike a balance between natural, financial and human capital. However, with economists dominating the developmental process, a false impression is created where financial capital has been given priority over other forms of capital.
Education is one of the important components of human capital. Creating knowledge is the basic purpose of imparting education, with universal access and provision of quality education. Unfortunately, school education, the basic building block of human capital in India, is in deep crisis. The ASER (Annual State of Education Reports) reports brought out annually validate the abysmal learning conditions across the country.
School attendance has increased over the years; however, children have not been able to learn basics skills of reading, writing or mathematical logic. To resolve this crisis, our government has sought assistance from the Japan International Cooperation Agency (JICA) to improve the quality of mathematics and science education in India. Japanese teachers will teach these subjects to Indian teachers. Ironically, the country that invented the concept of ‘zero’ is not seeking help to learn mathematics!
The recently released Socio Economic Caste Census (2011) has found that 36 per cent of the rural population is illiterate, and even among the literate section only 4 per cent has graduate degree. This reflects the crumbling state of education in rural India with a population of 884 million. Adding to the woes, almost 48 per cent of children suffer from malnutrition and stunted growth, further lowering the chances of improving human capital in the country.
In addition to providing quality education, imparting skills helps in building human capital. Unfortunately the political leadership is inclined more towards establishing institutions like the IITs (Indian Institute of Technologies) rather than building the capacities of ITIs (Industrial Training Institutes). It is the latter that can create the blue-collar workforce to enable smooth functioning of the production sector of economy.
According to McKinsey & Company, India needs 500 million skilled people to meet the growing needs of economy by 2020, but it has the capacity to train only 50 million. The Government of India has accepted that only 2 per cent of the workforce has the required skill training. Obviously, this represent the wide gap between the demands for skilled personnel and its supply.
Failed initiative
In order to bridge to this gap in skill training, the UPA government had established the National Skill Development Corporation in 2010. The objective was “to build skills on a mission mode that will address the challenge of imparting skill required to build growing economy”. However, this initiative turned out to be a non-starter and it has since been unable to cater to the growing demands of the industry to equip them with diverse skills.
To harness the demographic dividend of youth population, Prime Minister Narendra Modi has given a call to the world to invest in India and deliver through its ‘Make in India’ programme. Sadly though, the emphasis is more on attracting financial capital, and not on inviting world-class companies to provide skills to train the human resources. Countries like Germany and Switzerland have a great potential to impart these high-level technological skills to lay the foundation for a skill-based economy.
The conditions of employm-ent in India are precarious with 92 per cent of the workforce is in the unorganised sector. Dilution of labour laws by the new government is bound to worsen their conditions further. With meager benefits from employment, in terms of skill development or assured security, there is very little chance to attain full efficiency of workforce.
The industrial sector in India is seeking workforce with readymade recruits instead of striving towards the enhancement and multiplication of talent. The corporate sector can play a pro-active role in bridging the skill gap by contributing towards quality education and building intellectual capital.
The country’s human capital endowment needs to be carefully nurtured to attain social and economic prosperity. According to Klaus Schwab, Chairman of the World Economic Forum, “Talent not capital, will be the key factor linking innovation, competitiveness and growth in the 21st century”. Are our leaders willing to take this advice and evolve policies towards creating a strong foundation to build the human capital?