On human capital, our worst failure

India’s poor global ranking in human capital, as revealed in a recent study, should be a matter of shame and serious concern. Human capital is measured by investments in health and education, and India is ranked 158th among 195 countries, behind Sudan and just ahead of Namibia. Among South Asian countries, Sri Lanka and Nepal score better than India, and it can only be poor consolation that Pakistan and Bangladesh have a lower ranking. The study, based on data from government sources, schools and health institutions, was sponsored by the World Bank and has been published in the journal Lancet. It is the first study of its kind to measure and compare the strength of countries in human capital. It has also taken a historical view of their performance. Considering the important role human capital has in the general welfare of people and in the economic development of countries, the findings of the study are of special interest.

The study not only shows that India’s ranking is very low but that it has not improved over the years. Its position went up just by a few notches from 162 in 1990 to 158 in 2016, during a period of mostly high economic growth and even as large numbers of people were lifted out of poverty. The human capital figures have to be read with the Human Development Index (HDI), which showed a fairly good improvement during the period. But the performance in terms of HDI, which is a composite of income, health and education, loses its sheen if its income component is taken away. What the study shows is that though India may have made some strides in health and education, as shown by indicators like longevity, maternal and infant mortality, school-going years etc., the progress is still very slow.

India’s health expenditure of just over 1% of its GDP is among the lowest in the world. The per capita health expenditure is $63, much less than the spending of most other countries in the neighbourhood. China’s per capita spending is $426. The spending on education is 3% of the GDP, which is again very low. The study has pointed out that India’s poor human capital will have long-term negative effects on its economy. It has also been noted that countries like China, Singapore and Vietnam, which had made notable improvement in human capital, were also those which had faster economic development than others. India’s failure in this respect also accounts for its slow progress in achieving the UN’s Millennium Development Goals. But human capital development should be seen more as a basic right of the people than merely as a tool of economic growth.