Human Capital Index - India


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

What is Human capital ?
 
Human capital consists of the knowledge, skills, and health that people accumulate throughout their lives, enabling them to realize their potential as productive members of society. We can end extreme poverty and create more inclusive societies by developing human capital. This requires investing in people through nutrition, health care, quality education, jobs and skills.
 
Economic growth and development depend on both human capital and physical capital, and on the factors affecting their productivity. Investments in human and physical capital complement and reinforce each other. To be productive, a workforce requires physical capital, such as infrastructure, equipment, and a stable well-governed economy. In turn, a healthy, educated workforce can earn more and invest more in an economy’s physical capital.
 
The cost of inaction on human capital development is going up. Without human capital, countries cannot sustain economic growth, will not have a workforce that is prepared for the more highly-skilled jobs of the future, and will not compete effectively in the global economy.
 
The World Bank Group announced the Human Capital Project in 2017. The project has a new Human Capital Index launched in October 2018. The Human Capital Project is expected to help create the political space for national leaders to prioritize transformational human capital investments. The objective is rapid progress towards a world in which all children arrive in school well-nourished and ready to learn, can expect to attain real learning in the classroom, and are able to enter the job market as healthy, skilled, and productive adults.
 
The project has three pillars:
 
(i) The Human Capital Index will quantify the contribution of health and education to the productivity of the next generation of workers. Countries can use it to assess how much income they are foregoing because of human capital gaps, and how much faster they can turn these losses into gains if they act now.
 
(ii) To complement the Human Capital Index, and help countries take effective action, a robust measurement and research effort will be put in place. This help countries gain further insights into what works, and where to target resources. Last Updated: October 2, 2018
 
(iii) Country engagement based on a “whole of government” approach will help countries tackle the worst barriers to human capital development. Work has begun to support nearly 30 countries in developing strategic approaches to accelerating human capital outcomes. This effort will extend to more countries in the coming months.
 
Human Capital Index (HCI)
 
The index is a summary measure of the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and education that may exist in the country where she lives.
A significant innovation of the index is that it measures the contribution of health and education to the productivity of individuals and countries, anchored in rigorous micro-econometric studies.
Ranging between 0 and 1, the index takes the value 1 only if a child born today can expect to achieve full health (defined as no stunting and survival up to at least age 60) and complete her education potential (defined as 14 years of high-quality school by age 18).
A country’s score is its distance to the “frontier” of complete education and full health. If it scores 0.70 in the Human Capital Index, this indicates that the future earnings potential of children born today will be 30 percent below what they could have achieved with complete education and full health. The index can directly be linked to scenarios for the future income of countries as well as individuals.
If a country has a score of 0.50, then future GDP per worker could be twice as high if the country reached the benchmark of complete education and full health. The index will be presented as a country average and will also offer a breakdown by gender for countries where data is available.
The HCI can be calculated separately for boys and girls for 126 of the 157 countries included in the index.
The components of the index (survival, school, and health) have direct links with at least three of the global goals that countries around the world have set to achieve by 2030 under the Sustainable Development Goals (SDGs) .
Countries can use the index to assess how much income they are foregoing because of human capital gaps, and how much faster they can turn these losses into gains if they act now. 
 
HCI Vs Human Development Index

While both indices draw much-needed attention to human capabilities as central to national development, the Human Capital Index also strengthens the economic case for investing in people. The two are highly complementary but differ in the way they are formulated. UNDP’s pioneering Human Development Index is a summary measure of average achievement along key dimensions of human development—a long and healthy life, being knowledgeable, and having a decent standard of living. The World Bank Group’s Human Capital Index links selected human capital outcomes with productivity and income levels. It is a forward-looking measure of how current health and education outcomes Last Updated: October 2, 2018 (including a new measure of learning-adjusted years of school) will shape productivity for the next generation of workers.

India ranks 115 in World Bank human capital index

Published at the annual meetings of the International Monetary Fund and World Bank Group in Bali Nusa Dua, Indonesia, in October 2018, the Human Capital Index showed that for 56% of the world’s population HCI score is at or below 0.50; and for 92% it is at or below 0.75. This implies that only 8% of the global population can expect to be 75% as productive as they could be. 
Overall, India was ranked 115 among 157 countries. That’s much below its Asian peers, including China ranked 46, Indonesia (87), Malaysia (55). Singapore was ranked number one in the world followed by Japan, Hong Kong and Finland.
A child born in India today will be only 44% as productive when she grows up as she could be if she enjoyed complete education and full health, according to the report. Only 96% of the Indians born today will have the probability to survive to age five indicative of how India is still struggling to control infant mortality in a big way.
Poor investment in human capital puts a threat on productivity of the India’s future workforce, the World Bank said revealing that India’s human capital productivity will be half of what Singapore citizens will achieve.
The report, which took into account the human capital investments and outcomes, almost reiterated that Indian children are not learning enough in schools. Factoring in what children actually learn, expected years of school is only 5.8 years, effectively putting to question the impact of the Right to Education Act, 2009, that promises eight years of compulsory education to all Indians.
Across India, 83% of all 15-year-olds will survive until age 60, the World Bank said. Talking about the health parameters, it said only 62 out of 100 children are not stunted, putting 38% of kids at the risk of cognitive and physical limitations that can last a lifetime.

Government of India Expressed Reservation over the Report
 
The government has raised “serious reservations” over the first Human Capital Index (HCI) compiled by the World Bank as part of the World Development Report 2019. 
“There are major methodological weaknesses, besides substantial data gaps. For instance, for the schooling parameter, though quantity is assessed using enrolment rates reported by UNESCO, quality is gauged using harmonized test scores from major international student achievement testing programs,” the union government said in a statement.
“For India, the data for quality of education pertains to 2009 assessment by PISA, which was conducted for only two states, namely Himachal Pradesh and Tamil Nadu. The methodology for harmonization is hugely suspect, the data quite dated and, consequently, the results quite non-comparable,” the government added.



Monday, 15th Oct 2018, 08:36:48 AM

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