[Answered] “There has to be a focus on human capital formation and demographic dividend in order to achieve $5 trillion economic objective.” Discuss.

India has one of the youngest populations in an aging world. Human capital is an important aspect of the demographic dividend while determining the economic growth. It is pointed out that there is huge shortfall of human capital in the country. Although there is swelling workforce in the country, this is a big challenge for India because there is a huge shortfall of educated, skilled and trained workforce.

Importance of human capital quality and demographic dividend to reach $5 trillion mark:

1. Although the accumulation of physical capital is quite important in the process of economic growth of a country but with the passage of time, it is being increasingly realised that the growth of tangible capital stock depends extensively on the human capital formation.
2. In the absence of adequate investment in human capital, utilisation of physical capital will be at low pace, leading to retardation of development.
3. One of the important factors responsible for the rapid growth of the economy is increasing allocation on education resulting significant improvement in the level of human capital formation.
4. Human capital lack critical skills which are very much needed for the industrial sector and again have a surplus labour force. Thus human capital formation should solve these problems by creating necessary skills and also by providing gainful employment.
5. As the poor health and undernourishment adversely affect the quality of manpower, it is important to improve the quality of manpower to positively contribute to economic growth target.
6. Organisations across the world have recognized the importance of skilled manpower and the value it can provide despite being a little costlier. Skilled human capital provide high value for money and initiate a ripple effect in the growth of a country’s economy.

Pathway to address the problem:

1. The skill development scheme needs to be well coordinated and properly dovetailed to have an effective and efficient mechanism to fulfill the requirement.
2. Vocational training should be imparted by ministries and department of government.
3. Upgrade skills to international standards through significant industry involvement and develop necessary frameworks for standards, curriculum and quality assurance.
4. Enhance, support and coordinate private sector initiatives for skill development through appropriate Public- Private Partnership (PPP) models; strive for significant operational and financial involvement from the private sector.
5. Focus on underprivileged sections of society and backward regions of the country thereby enabling to move out of poverty; similarly, focus significantly on the unorganised or informal sector workforce.

The government of India is taking initiative to fill the existing skill gap through skill development mission in order to leverage its position to fulfill domestic and global requirement and at the same time fulfilling its domestic requirement of the skilled labor force. Skilling would enhance human capital quality needed to reap the demographic dividend which might turn into demographic disaster.