Human capital

Subject – Economy

Context – At the height of the Covid-19 pandemic, the World Bank released the 2020 report of the Human Capital Index (HCI

Concept –

The HCI is an attempt to measure investments and improvements required in health, schooling, and nutrition around the world.
Human Capital is the productive capacity generated by an individual due to better education and health.
- Better productive capacity results in higher earning potential for individuals and also higher earnings for the nation.
- The HCI therefore measures the average shortfall in human capital for an individual worker in a country if they were exposed to full (i.e., optimal) education and health.
The HCI has three components:
- Survival (a probability estimate that a child will survive up to age 5);
- Schooling (derived from the expected years of schooling and a
- harmonised test score from India’s National Achievement Survey, or NAS by the NCERT);
- Health (a composite of the fraction of children under five that are not stunted and the fraction of 15-year olds expected to survive till age 60).
There is a positive correlation between HCI and per capita income, which signifies that higher per capita income is associated with higher HCI value.
The human capital index is a measure of the aggregate or average shortfall for a particular State in terms of human capital if it is subjected to full capacity in education and health.