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Human Capital has been identified in the economic literature as a stimulant for promoting economic growth and raising productivity over a long period of time. It is the outcome of stock of knowledge, skills, social and personality attributes including creativity, embodied in the ability to perform labor so as to produce economic value for sustained economic development. During sixties and early seventies, the economists linked human capital with economic growth but the emergence of endogenous growth theories, pioneered by Romer and Lucas in the late 1980s emphasized the role of human capital in stimulating long-term economic growth. They propounded the new growth theories in which sustained long-run growth of per capita income is established by the likelihood of investment in human capital producing constant or increasing returns. Thus, the future growth potential of a region/ nation is crucially linked with its ability to speedily form human capital. An increase in human capital leads to human development and thus to economic development. A positive relationship between human development and economic growth exists in both directions, implying that while higher growth path augments human development in a country, the latter also contributes positively in boosting the former (Srinivasan, 1994; Ghosh, 2006; Mukherjee and Chakraborty, 2011). The countries which spend more on human capital formation enjoy better economic position, for example Switzerland and Norway spend relatively more on education and health and thus enjoy higher rank in HDI and better economic status in terms of per capita income. The top five countries in the global HDI ranking in 2021 are Switzerland (0.962), Norway (0.961), Iceland (0.959), Hong Kong (0.952) and Australia (0.951). India spends very less in its human capital formation and stands at lower position in terms of HDI. India, with an HDI value of 0.633, ranks 132nd, thus falls under the category of medium human developed countries. The reason being that various States and UTs of India differ in their resources as well as approach towards human development so they have given prominence to human capital formation distinctly in this nation. In 1990, Human Development Index (HDI) was developed under the valuable assistance of the United Nations Development Programme (UNDP) by Mahbubul Haq in collaboration with Amartya Sen and Meghnad Desai. It is a composite index focusing on three basic dimensions of human development: the ability to lead a long and healthy life, measured by life expectancy at birth; the ability to acquire knowledge, measured by adult literacy rate and combined enrollment rate in primary, secondary and higher education and the ability to achieve a decent standard of living, measured by per capita gross national income in terms of Purchasing Power Parity (PPP). In the modern era, with the increasing pace of globalization and technological changes, health and education along with skill formation have become essential determinants of human development. These are considered as the driving forces of economic growth and social development of any country. For long, it is being realized that an all-round development of an individual can be accomplished by building strong foundations in education while the role of skill formation didn’t received much recognition. Skill development has emerged as a vital component of human capital formation recently. Skill is the ability, accumulated through one’s knowledge, aptitude, practice, etc., to do something well. Skill develops informally through apprenticeships and learning by doing but a system of skill development in a formal way through a country’s educational system (especially through tertiary, technical and vocational institutions) has also been evolved recently. Recognizing the importance of human development, most of the nations including India have started investing in the fields of education, health care and skill development. As India is in the youth bulge phase, human development assumes great economic significance as the demographic dividend can be reaped only if its young population is educated, healthy and skilled.

Gupta and Mitra (2004) used the panel data for the Indian states to analyze the links between economic growth, poverty and health. The study found that a positive and bi-directional relationship exists between economic growth and health status. It was further found that growth is enhanced by better health by improving productivity and there is better human capital formation with higher growth.

Mathur and Mamgain (2004) analyzed the human capital content of total population as well as of workforce component of population in terms of seventeen categories of human capital. They found a strong positive influence of primary level, secondary level and technically qualified human capital on per capita income.

Conrad (2011) highlighted that the supply of human capital in the economy’s production activities is a function of the quality and volume of education services provided at the secondary and tertiary levels in the education. By applying econometric techniques he found that in the countries with higher HDI rankings, human capital at the advanced level contributed positively to output in the manufacturing and service sectors as well as aggregate output.

Malick (2015) used co-integration and Granger Causality test to investigate the causality between the health indicator and per capita GDP and also between public health expenditure and per capital GDP for the time period 1960-2008. It is found in the study that there exist a significant and two way relationships between expenditure on health and economic growth in India as well as between other health indicators and economic growth.

Sanghi and Srija (2015) revealed that skill development helps in poverty reduction by improving productivity, employability and helping sustainable enterprise development and inclusive growth.

Ogundari and Awokuse (2018) investigated the possible impact of human capital on economic growth in Sub-Saharan Africa by considering two alternative measures of human capital: health and education. The study employs a dynamic model based on the system generalized method of moments and analyzed a balanced panel data covering 35 countries for the period 1980 to 2008. The empirical results show that both health and education have positive impact on economic growth, though the contribution of health is relatively larger than that of education.

Chaurasia (2023) developed and used an alternative index of human development to analyze the level of human development across 707 districts of India by using the latest data available from the National Family Health Survey 2019-2021. The study reveals that human development is either average or below average in majority of the districts and is very poor in 115 districts of the country. The poorest human development in India is witnessed in district Bahraich of Uttar Pradesh while the most advanced in district Mahe of Pondicherry. The study suggests that a decentralized, district based approach should be adopted to accelerate human progress in India.

Human Capital Formation in Punjab

Punjab State for long enjoyed the leading position in per capita income ranking in Indian federation till 1991-92. But it has been losing its position and has fell down to 15^th position in 2017-18. In human development aspect, the State is not in very good position as it ranks 11^th with an HDI index of 0.694 in 2021. While having a look at three indicators individually, the state’s position is not gloomy. In education aspect, represented by literacy rate, its position is 21^st with a literacy rate of 75.8 per cent in 2011. Thus, a lower position of Punjab in this respect reveals that education is not on the high priority for human capital formation. The falling quality of school education from the last few years in Punjab can be judged from the latest report issued by NITI Aayog in 2019 which reveals that Punjab stands at 18^th position in terms of quality education at the school level. In the year 2021, with an education index of 0.598 and health index of 0.765, Punjab was behind 17 states in both the respects. In respect to skill development, Punjab presents a dismal picture as the share of expenditure on formal training by the State is only 1.57 percent (2017-18) in India.

Education Status of Punjab

The Right to Free and Compulsory Education Act, 2009 enacted at the national level which aims to provide universal access to education to all children between the age group of 6 to 14 years was adopted by the Punjab Government in 2011. The State Government has been making efforts in encouraging education by promoting the Right to Education Act and bringing a qualitative improvement in school education. With a score of 60 on SDG4 (Quality Education) of the Niti Ayog’s SDG Index 2020-21, Punjab is ahead of the national average score of 57 and has also shown considerable improvement over its score. Punjab ranks first out of eighteen big states, with a score of 0.7 on the Human Resource Development aspect of the Good Governance Index. This aspect of the index measures various dimensions of education outcome and gender parity indicators and skill development (Punjab Economic Survey, 2021-22).

Education status covering literacy rate and Gross Enrollment Ratio (GER) in the State is explored.

Literacy Rate: In India, a person in age limit of seven and above, who can both read and write with understanding in any language is regarded as literate. Literacy rate is the primary indicator of the education level and a basic step towards human capital formation in an economy. It is the best possible barometer to judge the level of educational awakening in a state, which leads to a minimum capacity for self-learning. Graph no.1 demonstrates literacy rate in India as well as Punjab and its rank in the nation. At the time of independence, literacy rate in India was very less, mere 12 percent. The rate increased to 28.3 percent in 1961 and after two decades it improved to 43.57 percent. As per Census 1991, India’s literacy rate was 52.2 percent and in the subsequent decade with an improvement of 12.6 percent points, it augmented to 64.8 percent. Further, with an improvement of 8.2 percent points, the literacy rate reached at 73 percent in 2011. The progress observed during 2001 to 2011 is slower than that from 1991 to 2001. Thus, a continuous improvement in literacy rate is quite evident and the schemes like National Literacy Mission (1988) and Sarva Shiksha Abhiyan (2001), to ensure universal elementary education among children aged 6 to 14 across the states have helped a lot in improving the literacy rate in the country. Although, India has raised its literacy rate but still one fourth of India’s population is illiterate. The literacy rate in the country is much less than the world’s average literacy rate of 84 percent.

Talking about Punjab, the State has made considerable advancement in improving its literacy rates over the years. In 1971, one third population of Punjab was literate. After two decades, the literacy rate improved to 58.5 percent and the State occupied 17^th position in India. Punjab maintained the spot in the subsequent decade as well with an improved literacy rate of 69.70 percent. At present, three-fourth populace in the State is literate. It is viewed that the literacy rate at the nation al level as well as in Punjab has been continuously improving. Also, literacy rate in Punjab has remained higher than that at the all India level since 1991. However, the performance of the State is less satisfactory with respect to its position amongst other states. Despite the improvement of literacy during the latest decade, Punjab’s rank slipped to 21^st position, signifying that other states have ascribed more significance to knowledge. Punjab, thus in order to improve on HDI, needs to catch up with the top ranking states like Kerala and Mizoram where literacy rate is above 90 percent.  

Source: Reserve Bank of India. "Handbook of statistics on Indian states." (2021-22).

Gross Enrolment Ratio (GER): According to UNESCO, Gross Enrolment Ratio refers to the total enrolment within a country in a specific level of education, regardless of age, expressed as a percentage of the eligible official school-age population corresponding to the same level of education in a given school year. It shows the overall coverage of an educational system in relation to the population eligible for participation in the particular level of education. High GER indicates high degree of participation, regardless of age. In assessing the knowledge component, a combined gross enrolment ratio (CGER) incorporating all three levels of education i.e. primary, secondary and tertiary was used to calculate HDI by giving one-third weight age to each. In view of the fact that GER is an essential factor of human development, efforts have been made to improve it. Increasing GER has been one of the main purposes while designing education policies. For example, the Mid Day Meal program launched in 1995 has been highly successful in raising GER. The Right to Education Act (2009) has resulted in the increase in enrollment at the primary and upper primary level of education. One of the key targets of National Education Policy, 2020 is to achieve 100 percent GER in pre-school to the secondary level by 2030 and 50 percent in the higher education by 2035.

Gross Enrolment Ratio at various levels of education in India and Punjab for the year 2011-12 and 2021-22 is examined and presented in Graph no.2. It is seen that in each higher level of education, the GER is lesser. In 2011-12, GER in India at the primary level was more than cent percent (106.5 %) and it declined to 82 percent at the upper primary level and further to 66.6 percent at the secondary level of education. The country’s GER was 45.9 percent at the higher secondary level of education and 15.8 percent at the higher education. The dropout rates after school education results in low enrollments in higher education. In the same time period, Punjab’s GER at the primary level was 106.6 percent and the rate diminished to 92.4 percent at the upper primary level, it diminished to 77.4 percent at the secondary level and to 50.9 percent at the higher secondary level. At the higher education, State’s GER was just 23 percent.

After a decade, India’s GER at the primary level is 103.4 percent and at the upper primary level it diminished to 94.7 percent and at the secondary level to 79.6 percent. At the higher secondary level, with a decline of 22 percent points it reduced to 57.6 percent. In higher education, GER is measured at 27.3 percent. No doubt, an improvement is there but it is marginally low as compared to global average of 29 percent. Nonetheless, it is considerably lower as compared to the developed countries like USA (88.2), Germany (70.3) and UK (60.0). The nation’s GER is even lesser in comparison with other emerging economies such as Brazil (51.3) and China (49.1) (Mittal, P. (2020, December, 28). Likewise, in the period 2021-22, Punjab has achieved 100 percent GER at the upper primary level along with the primary level of education. The State’s GER at the primary level is 111.37 percent, at the upper primary level is 106.75 percent and at the secondary level is 95.06 percent. At the higher secondary level, GER is 82.02 percent. But, in higher education, GER in the State is only 26.3 percent, somewhat lower than the national average figure (27.3). Thus, at both the national and State level, with each successive higher level of education, GER is comparatively lesser. It is witnessed that at all levels of education except higher education, GER in Punjab has remained higher than the national level in both the selected time periods.

Source: 1. Reserve Bank of India. "Handbook of statistics on Indian states." (2021-22).

2. Government of India. “All India survey on higher education.” Ministry of Education, Department of Higher Education, (2011-12).

3. Government of India. “Statistics of school education.” Ministry of Human Resource Development, Bureau of Planning, Monitoring & Statistics, (2011-12).

4. Government of India. “All India survey on higher education.” Ministry of Education, Department of Higher Education, (2020-21).

5. Government of Punjab. “Statistical abstract of Punjab.” Economic and Statistical Organization, (2022).

Health Status in Punjab

Health care is one of the most significant factors that directly impacts the quality of life and human development status of an economy. A healthier population is more productive, secures higher earnings, has higher learning abilities and enhances the efficiency of the economy’s human capital (Schultz, 1999). Through advancement of health infrastructure, the State has made significant progress in providing its residents with better health care facilities. It has been successful in raising life expectancy at birth, reducing infant mortality rate as well as crude death rate through improvement in its health care services.

The most important criterion to evaluate health is life expectancy at birth which is taken into consideration to study the health status in Punjab State in this paper.

Life Expectancy at Birth: Life expectancy at birth is the most significant yardstick to judge the quality and well-being of the people. It refers to the average number of years a newborn is expected to live if mortality patterns at the time of its birth remain constant in the future. Increase in life expectancy at birth can be attributed to number of factors, including innovations in medical technologies, greater access to quality health services, improved nutrition, better sanitation, better education and improved lifestyle. The relative contribution of these factors depends on the level of economic development. With higher life expectancy, individuals earn and save more, which adds to capital accumulation and therefore Gross Domestic Product (GDP). Graph no. 3 presents Life Expectancy at Birth in India and Punjab. The life expectancy at birth for India has been estimated at 61.1 years for the period 1993-97, which increased to 64.3 years in 2001-05 and to 67.9 years in 2010-14. After five years, the expectancy of life at birth enhanced to 69.4 years. Thus, an increase of 8.3 years in the last two decades has been witnessed. Though, the life expectancy at birth at the national level has been improving, still the country lags behind from global average life expectancy by 3.2 years (72.6 years in 2018). In Punjab, a child was born on an average with a life expectancy of around 68 years during 1993-97. There was a gradual increase in life expectancy at birth from 68.8 years in 2001-05 to 71.6 years in 2010-14. In the period 2014-18, the expectancy of life at birth improved to 72.7 years, registering a modest progress of 4.9 years in the State. Nevertheless, the rank of Punjab in this respect fell down from 2^nd in 1993-97 to 5^th in 2014-18 as Himachal Pradesh, Jammu & Kashmir and NCT Delhi have shown larger improvement. It is seen that the life expectancy at birth in India and Punjab has been continuously improving and the improvement seen in Punjab State is less than that at the national level. Nonetheless, life expectancy at birth in Punjab has always remained higher than that at the all India level.

 

Source:  Reserve Bank of India. "Handbook of statistics on Indian states." (2021-22).

Skill Development in Punjab

The social and demographic profile of Punjab presents a unique human resource development specifically manpower skilling opportunity for the rapid economic growth. Due to rising working age population, Punjab can reap the demographic dividend by making its youth more educated and skilled. Accordingly, efforts are being made by the State Government for skill development. It has invested in promoting skill development and technical education, making it one of the priorities of the 12^th Five Year Plan (2012-17). In 2014, the Government established Punjab Skill Development Mission, to skill the youth of Punjab for Employability and Entrepreneurship. It is a major initiative in the State to accomplish the target of providing skill t to one lakh youth every year. Before discussing the details about the skilled workers and skill development efforts in Punjab, the employment position is portrayed.

Work Participation Rate (WPR)

Work Participation Rate is a significant indicator of development, defined as the percentage of total workers (main and marginal) to total population. It signifies the proportion of working population in an economy. Work Participation Rate is an important indicator to determine the size and composition of a nation’s human resources and in making projections of the future supply of labour. Work Participation Rate in India and Punjab is presented in Graph no. 4. According to Census 1991, slightly more than one third of India’s population (37.5 percent was working and after a decade, the rate rose to 39.1 percent. During 2001 to 2011, the participation rate augmented by only 0.7 percent points. The main reason behind India’s low WPR is the abysmally low participation of women in economic activities. As far as Punjab is concerned, less than one third of its population (30.9 percent) was employed in 1991 and the rate improved by 6.6 percent points in the subsequent decade. Consequently, this State improved its position from 32^nd to 24^th. However, in the next Census 2011, the participation rate diminished to 35.67 percent, thereby the position of Punjab fell to 27^th. It is disheartening to notice that the work participation rate in Punjab has been lower than that at the national level.

Source: 1. Government of Punjab. “Punjab human development report”. (2004).

2. Government of India. “Women and men in India.” National Statistical Office. Ministry of Statistics and Programme Implementation, (2016).

Educational Status of Literate workers in Punjab

Level of skill and training determines employment and income. Nevertheless, quantification of skill level is not easy since formal training and informal learning contribute in skill formation of the workers. Thus, the educational status of literate workers is taken into consideration to examine the quality of workforce. However, with segregation of level of education, the extent of formally skilled workers in Punjab State is also adjudged. The educational attainment of literate workers in Punjab for the period 1991, 2001 and 2011 is illustrated in the Graph no.5. The graph shows that around one fifth of the workforce was literate without education level in 1991 but after two decades a huge improvement is noticed as such workers comprised only 3 percent signifying that more literate workers with some kind of education are part of the job market now. Further in 1991, the highest proportion of literates were primary level educated, followed by secondary level, middle level, graduates and above, higher secondary level, technical diploma or certificate not equal to degree and the least proportion of non technical diploma or certificate not equal to degree. Nonetheless, in the subsequent decade, the pattern had changed as the proportion of higher secondary level workers enhanced in comparison to graduates and above. It is noticed that literate workers who have attained primary level of education, middle level of education and non technical diploma or certificate holders not equal to degree have shown a diminishing trend over the period of time. On the contrary, workers who have attained secondary level of education, higher secondary level, technical diploma or certificate holders not equal to degree as well as graduates and above have displayed an increasing trend. It can be concluded that the share of literate workers without education level and less educated has declined. In contrast, the share of workers having secondary and other higher levels of education have increased. This indicates that quality of workforce has improved in Punjab over the period of time.

Source: 1. Government of India. “Census of India.” Office of the Registrar General & Census Commissioner, Ministry of Home Affairs, (1991).

2. Government of India. “Census of India.” Office of the Registrar General & Census Commissioner, Ministry of Home Affairs, (2001).

3. Government of India. “Census of India.” Office of the Registrar General & Census Commissioner, Ministry of Home Affairs, (2011).

Gaps in Demand and Supply of Skills in Punjab

The mismatch between skill/ talent requirements of employment and the skill base of the unemployed is one of the reasons for unemployment amongst skilled labour force. This tends to become more severe in the process of rapid structural changes in the economy. Thus, skill development efforts aim at the removal of disconnect between demand and supply of skilled manpower, skill up-gradation, building vocational and technical training framework, building new skills, innovative thinking, for existing as well as future jobs. Graph no.6 shows the estimates projected by National Skill Development Corporation pertaining to the gap between supply of and demand for skilled, semi-skilled and minimally skilled personnel in Punjab during XII plan (2012-17) and XIII plan (2017-22) periods. The district wise skill gap study for the State of Punjab measured the demand-supply gap of 3.54 lakh labourers in 2012-17 and of 4.27 lakh labourers in 2017-22. Hence, an excess demand over supply of 72,348 labourers was projected in the State during this time period. The graph shows the gap in demand for and supply of skills in Punjab, was higher in category of semi-skilled labour in comparison to skilled and minimally skilled labour. In the period 2012-17, the proportion of skilled was 6.7 percent, semi-skilled labour was 89.2 percent and minimally skilled labour was 4.14 percent. During 2017-22, the proportion of skilled labour increased slightly to 7.1 percent and minimally skilled labour to 28.6 percent. However, the proportion of semi-skilled labour declined to 64.3 percent. Thus, in both the time periods, the proportion of semi-skilled labour is higher in comparison to skilled and minimally skilled labour.

Source: National Skill Development Corporation. “District wise skill gap study for the State of Punjab”. (2012-17, 2017-22).

Improvement in Education, Health and Skill Development in Punjab

To determine the human capital formation in Punjab during the selected period of time i.e. 1991 to 2011, the improvement in education, health and skill development indicators i.e. literacy rate, life expectancy at birth and literate workers who are graduate and above is evaluated and presented in Graph no.7. It is viewed that over the time period, literacy rate improved by 17.3 percent points, life expectancy at birth by 4.9 years and proportion of literate workers who are graduate and above by 3.47 percent points. It can thus be said that the human capital formation in the State has primarily been the result of progress in the education dimension while the improvement in dimension of health and skill has been gradual.

Source: Author’s calculation from data in Graph no. 1, 3 and 5

As far as Human Development Index (HDI) is concerned, it is useful in understanding the level of human development occurred overtime and for comparing variations in human development in different countries and regions. Human Development Index in India as well as in Punjab has shown an increasing trend over the period of time. Graph no.8 shows that the nation’s Human Development Index was 0.437 in 1991 which improved to 0.496 in 2001 and 0.588 in 2011. After a decade, India’s HDI reached to 0.633. Thus, during this time period India has progressed from low human developed country to medium human developed country. Talking about Punjab, its HDI was 0.505 in 1991 and it augmented to 0.577 in the following decade. In 2011, the State’s HDI improved to 0.665 and further to 0.694 in the subsequent decade. Hence, like national level improvement, Punjab too has advanced from low human developed category to medium human developed category. Accordingly, the rank of Punjab State in India has improved from 17^th in 1991 to 13^th in 2001. After a decade, even though the State’s HDI augmented but its rank remained the same. In 2021, Punjab has improved its position in comparison to two more states and it stands at 11^th position amongst all the States and UTs of India. Punjab thus has been gradually improving the quality of its human resources is not in a very good position. Nevertheless, HDI in Punjab is slightly higher than that at the all India level.

Source: Smits, J. GDL Area Database. Sub-national development indicators for research and policy making. GDL Working Paper 16-101 (2016). 

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