Courses for Kids
Free study material
Offline Centres
Store Icon

Human Capital Formation in India Class 11 Notes CBSE Economics Chapter 5 (Free PDF Download)

Last updated date: 23rd May 2024
Total views: 637.8k
Views today: 11.37k

Revision Notes for Class 11 Indian Economic Development Chapter 5 - Free PDF Download

Human Capital Formation in India Class 11 is one of the major chapters as far as the Indian Economic Development is concerned. Vedantu provides Class 11 Economics Chapter 5 notes for the easy understanding of students. These notes will definitely help you to score good marks in the exam. Notes of Human Capital Formation in India is prepared by the subject experts at Vedantu to give students a better insight into the topics covered in this chapter. So download and refer to the Human Capital Formation in India Class 11 PDF for free from Vedantu for better exam preparation.

Download CBSE Class 11 Chapter-wise Economics Revision Notes 2023-24 PDF

Also, check CBSE Class 11 Economics revision notes for all chapters:

Popular Vedantu Learning Centres Near You
Mithanpura, Muzaffarpur
location-imgVedantu Learning Centre, 2nd Floor, Ugra Tara Complex, Club Rd, opposite Grand Mall, Mahammadpur Kazi, Mithanpura, Muzaffarpur, Bihar 842002
Visit Centre
Anna Nagar, Chennai
location-imgVedantu Learning Centre, Plot No. Y - 217, Plot No 4617, 2nd Ave, Y Block, Anna Nagar, Chennai, Tamil Nadu 600040
Visit Centre
Velachery, Chennai
location-imgVedantu Learning Centre, 3rd Floor, ASV Crown Plaza, No.391, Velachery - Tambaram Main Rd, Velachery, Chennai, Tamil Nadu 600042
Visit Centre
Tambaram, Chennai
location-imgShree Gugans School CBSE, 54/5, School road, Selaiyur, Tambaram, Chennai, Tamil Nadu 600073
Visit Centre
Avadi, Chennai
location-imgVedantu Learning Centre, Ayyappa Enterprises - No: 308 / A CTH Road Avadi, Chennai - 600054
Visit Centre
Deeksha Vidyanagar, Bangalore
location-imgSri Venkateshwara Pre-University College, NH 7, Vidyanagar, Bengaluru International Airport Road, Bengaluru, Karnataka 562157
Visit Centre
View More
Competitive Exams after 12th Science

Access Class 11 Economics Indian Economic Development Chapter 5 – Human Capital Formation in India Notes

Human Capital

It refers to a person's store of talent, aptitude, expertise, education, and knowledge that will contribute in enhancing labour productivity, and increased future income..

Major Sources of Human Capital in Country

  1. Expenditure on Education: It is one of the primary sources of human capital development. Investment in education is not only highly productive, but it also generates growing returns and promotes economic progress. Of all the resources, education receives the greatest attention because it contributes the most to the country's development.

  2. Expenditure on Health: Health is a crucial factor for the development of a nation. An ailing individual with insufficient health and medicare facilities is forced to stop working, resulting in a loss of output, also in case the said individual works despite poor health, then also there is a loss of productivity and output. The various forms of health expenditure are preventive medicine, curative medicine, social medicine, provision of clean drinking water, etc.

  3. On the job training: On and off campus training of employees, in terms of training by a supervisor in the firm itself, or training at an off campus location enhances the skill and productivity of an individual,  and makes him more accustomed to the work environment and work he is supposed to do.

  4. Migration: Migration to other locations within or outside the country either due to unemployment or better professional opportunities is also a source of human capital formation.

  5. Information: A person incurs expenses in terms of acquiring information about labour markets, product markets, capital markets, and education, health in order to ensure efficient utilisation of human stock and take better decisions regarding them. This is also a part of human capital formation.

Importance of Human Capital Formation

  1. Boosts productivity: Human capital development through investment in education boosts productivity and output by ensuring that workers are aware and skilled (use of the resources). Increased productivity and quality output are dependent on people's technical skills, which can only be acquired through the investment in education or training, as well as their overall health.

  2. Control of population growth: It has been noticed that educated people have smaller families than illiterate people, implying that education must be widely diffused to reduce population growth.

  3. Improves Quality of life: The quality of a population is determined by a person's degree of education, health, and skill development. Human capital development not only makes people more productive and creative, but it also changes their lives.

  4. Increases life expectancy: Human capital development increases people's life expectancy. People can live a healthy and long life if they have access to health care and nutritious food. As a result, the quality of life improves.

  5. Effective use of physical capital: A person who is well trained, with appropriate skills will have a better understanding of the physical tools and equipment, as well as he will be able to find out the best possible ways to make the best use of them.

Reasons for Poor Human Capital Formation

  1. Insufficient Resources: The resources given to the development of human capital have been far less than those required to meet the country's educational and health demands. As a result, the facilities for developing human capital have remained woefully inadequate.

  2. Serious Inefficiencies: There are numerous wastes of society's resources because the capabilities of educated individuals are either not exploited or are underutilized while they are unemployed. Other inefficiencies that have not been promptly and appropriately addressed include widespread literacy, the non-education of children, especially in rural areas and slums, and poor health facilities.

  3. High Growth of population: The quality of human capital has deteriorated as the population continues to grow.

  4. Lack of proper manpower planning: There is a mismatch between demand and supply for numerous categories of human resources, particularly in the case of highly qualified employees. Waste of human resources has come from the lack of such balancing.

  5. High Poverty Levels: Majority of the population lives in poverty, and they don’t even have access to the three basic necessities of life, this ultimately impacts the building of human capital.

Physical Capital

It encompasses all the inputs required for further production, such as plant and machinery, factories, buildings, raw materials, and so on.

Difference Between Human Capital and Physical Capital


Human Capital

Physical Capital


Human capital is an intangible asset that cannot be purchased on the open market.

Physical capital is observable and can be easily traded.


Human capital depreciation can be reduced by continuing to invest in education, health, and education.

With the passage of time, it depreciates.


Human capital is less mobile between countries.

It is more movable across borders.


Human capital (such as a person's skills) cannot be divorced from one's own.

Separation of physical capital (such as machinery) from its owners.


Human capital formation is partly a social process and partly a voluntary decision of the human capital possessor.

Physical capital is the result of the owner's deliberate decision and is primarily an economic and technological process.


Human capital building should be accomplished by deliberate policy formulation.

It is simple to form with machines.

Difference between Human Capital and Human Development


Human Capital

Human Development


Human capital views education and health as ways to boost labour productivity.

Human development is based on the belief that education and health are essential components of human well-being.

Investment in education and health

Investment in education and health is considered unproductive in human capital if it does not boost output of commodities and services.

Investment in education and health are considered productive in the case of human development, even if they do not result in increased output.


Human capital views people to an end, with the goal of increasing production.

From the standpoint of human development, human welfare should be enhanced by investments in education and health, as every individual has the right to be literate and live a healthy life.


It refers to the process of teaching, training, and learning, which takes place mostly in schools and colleges, to increase their knowledge and skills.

  • Growth of Education Sector in India

In the sphere of education, there has been significant progress. From 1950 to 1951, the number of schools climbed from 230.7 thousand to 1,215.8 thousand (2005-06). During the same time, the number of teachers climbed from 751 thousand to 6010 thousand, while the number of pupils increased from 23,800 thousand to 2,22,700 thousand.

  • Gross Enrollment Ratio

The Gross Enrollment Ratio (GER) is the total number of students enrolled in a grade, cycle, or level of education, regardless of age, represented as a percentage of the population of the matching eligible official age group in a particular school year. From 82 percent in 1950-51 to 94.85 percent in 2005-06, GER in primary education has gradually increased.

Education Sector in India

  • Elementary Education: Elementary education in India entails eight years of learning beginning at the age of six, i.e., primary, and middle school education combined. As a result, elementary education is the bedrock upon which the development of all citizens and the nation is built. Elementary education has been made compulsory and free by the government. However, achieving the goal of universal primary education in India has proven to be a difficult task.

  • Secondary Education: Secondary education, which begins in grades IX and X and ends in grades XI and XII, strives to develop basic skills and analytical ability. It serves as a stepping- stone to more advanced professional and technical training.

  • Higher Education: Both general and technical education are part of the higher education system. Since independence, higher education has grown in leaps and bounds. The country's university population has grown from 27 in 1950-51 to 350 in 2005-06. 

The University Funding Commission (UGC) is responsible for promoting and coordinating university education, as well as determining and maintaining standards in teaching, assessment, and research, as well as allocating and disbursing grants to universities.

Problems/ Weakness in Education Sector

  1. High Illiteracy: According to the 2001 census, the literacy rate was 64.8 percent, which is still considerably below the national average of 100 percent.

  2. Gender Bias: In India, education is skewed toward women. The number of girls enrolled in basic and upper primary levels is significantly lower than that of boys.

  3. Low Quality Education: The educational system is of poor quality, with major focus on theory and learning, and less consideration to practical learning. Though the new education policy has a number of positive aspects that may contribute to the betterment of the education sector in India.

  4. Lack of Vocational and Technical Training: There is an overabundance of emphasis on general education, which neglects vocational and technical education.

  5. Low Level of Government Expenditure: The actual amount of spending is far less than the desired level of expenditure which should be made.

Primary Education Schemes

  1. Sarva Shiksha Abhiyan (SSA)

It was founded in 2001 with the goal of universalizing and improving the quality of elementary education in India through community ownership. The SSA is being implemented in collaboration with governments to meet the needs of children aged 6 to 14.

  1. National Programme for Education of Girls at Elementary Education (NPEGEL)

The goal of the initiative is to improve girls' education by giving additional support for the construction of a model girl-friendly school. In every cluster, there is a greater emphasis on community mobilisation and monitoring of girls' school enrollment. 35,252 model schools have been established under NPEGEL.

  1. Kasturba Gandhi Balika Vidyalaya (KGBV)

The Kasturba Gandhi Balika Vidyalaya (KGBV) scheme was inaugurated in July 2004 with the goal of establishing residential schools for girls from the SC, ST, OBC, and minority communities at the upper elementary level. The scheme ran for two years before being integrated into the Sarva Siksha Abhiyan on April 1, 2007.

Human Capital Formation In India Class 11 Notes PDF Free Download

Notes on Human Capital Formation Class 11: What is Human Capital?

The first and foremost thing in the Human Capital Formation in India Class 11 notes PDF is the definition of Human Capital. The stock of ability, expertise, education, and acquaintance of the people is termed as the Human Capital. According to Human Capital Formation Class 11, there are two significant sources of human capital namely expenditure on education and expenditure on health.

Significance of Human Capital Formation: Class 11 Chapter 5 Notes

If you follow the notes of Human Capital Formation in India minutely you can understand the significances of Human Capital Formation which are as follows.

  • The optimum resources are facilitated by the education system of a particular country.

  • The population growth is restricted by the proper formation of Human Capital.

  • Appropriate formation of Human Capital increases life expectancy.

  • The growth and productivity of Physical Capital are derived by the Human Capital Formation.

Causes Behind the Poor Human Capital Formation

Notes on Human Capital Formation Class 11 will help you know that there are several reasons behind the poor human capital formation. The reasons are as follows.

a) The allocated resources for the formation of human capital are very much inadequate.

b) Level of inefficiency in the educated level as well as in the uneducated level looms large in every sector. Due to this, the unemployment problem is one of the grave matters of concern of India.

  • One of the major obstacles in the formation of human capital is the high growth of the population.

  • Lack of planning for utilizing the proper manpower is another problem in the formation of human capital.

  • The rising level of poverty is last but not the least problem regarding the formation of human capital.

Physical Capital

As per Human Capital Formation Class 11 notes, the inputs that are needed for future production, like plant and machinery, factory, raw materials, etc. are termed as Physical Capital.

What is Education?

In Class 11 Chapter 5 notes, education means the method of teaching, training, and learning with special reference to schools, colleges to develop the knowledge. 

Expansion of the Education Sector in India

There is definitely a significant growth in the education sector in India. The number of schools has increased almost 6 times in the period of 2005-06 over the period of 1950-51. The number of teachers has also increased over the period by leaps and bounds. 

Notes on Human Capital Formation Class 11: Education Sector in India

The Education Sector in India is classified into three parts namely Elementary Education, Secondary Education and Higher Education.

  • Elementary Education: The children belonging to 6 years to 14 years are entitled to Elementary or Primary Education in India. It is the building block of the education system of India.

  • Secondary Education: The education of class IX to XII is regarded as Secondary Education. 

  • Higher Education: Higher Education refers to both the general and technical education.

Why Choose Vedantu?

There are several advantages of studying the Human Capital Formation in India Class 11 notes on Vedantu. Those are described as follows.

  • You can access all the Human Capital Formation in India Class 11 notes PDF easily from the official website or the mobile app of Vedantu.

  • Class 11 Economics Chapter 5 notes PDF is available entirely free of cost.

  • Notes of Human Capital Formation in India are prepared by the experienced teachers at Vedantu.

  • At the end of Class 11 Chapter 5 notes, there are various questions and their answers which will help you a lot to understand the basics of the chapter and secure good marks in the exam.

  • Notes on Human Capital Formation Class 11 are designed entirely as per the CBSE guidelines.

  • Class 11 Economics Chapter 5 notes also comprise the last 5 years CBSE Board question answers which will definitely help you to understand the pattern of the question.  

FAQs on Human Capital Formation in India Class 11 Notes CBSE Economics Chapter 5 (Free PDF Download)

1. What are the problems in Education Sector in India?

In the Human Capital Formation in India Class 11, Education Sector is the most crucial sector. The problems in this sector are as follows:

  • a) High level of illiteracy
  • b) Biasness with respect to gender
  • c) Poor quality of education
  • d) Inadequate level of vocational and technical training
  • e) Lack of government expenditure

2. Name a few primary education schemes in India.

Name of the Primary Education Schemes in India are:

  • Sarva Shiksha Abhiyan (SSA)

  • Kasturba Gandhi Balika Vidyalaya (KGBV)

  • National Programme for Education of Girls at Elementary Education (NPEGEL)

3. What is human capital formation Class 11 Economics?

Human Capital Formation is increasing the quantity and the quality of human capital of a country. Increasing the stock of human capital takes the nation to a higher level of welfare and prosperity.  Human capital formation is done by investing in the education sector and the health sector. It also includes providing sufficient employment opportunities to the youth of the country to allow them to live the life they want. A significant part in the process is played by the government of the country.

4. What is human capital class 11?

Human capital is the wealth of a nation. When a country invests in the social sector, it enables the citizens of the country to fulfill their aspirations. Human capital is the existence of educated, healthy and aspiring individuals who participate in and promote the overall development of the country. An educated, skilled workforce can work on tasks and activities effectively. A healthy individual can complete an activity faster and in relatively less time than a weak and unhealthy individual. To know more about it, students can download the vedantu app.

5. What is the importance of human capital formation in India?

Human capital formation leads to an increase in the production capacity and productivity. It also helps firms to increase their profitability and citizens by improving their skills and their earning capacity. In a country like India, where youth account for a large percentage of the population, investing in the education and health sector is of utmost importance. Regular investments by the public and private sector are needed in the social sectors to equip children with necessary skills and opportunities.

6. What is the role of human capital formation?

Human capital formation provides the kids necessary education. It protects them from preventable diseases and caters to them when they fall sick. It provides them with the latest skills and re-skills them when the market demands. It trains them to be market-ready. It provides them with sufficient livelihood opportunities and enables them to step up the ladder of success. It helps them to live a life of their choice and regularly allows them to have a better way of life. To revise the chapter students can download the NCERT Notes for Class 11 Economics Chapter 5 free of cost from the vedantu website (

7. How did globalisation help India?

Globalisation was a part of the reforms that were introduced in India in 1991 when the Indian economy was struggling. It led to further integration of the Indian market with the rest of the world. It helped in the easy movement of goods, capital and people beyond the international borders. The Indian service sector grew tremendously and the Indian GDP grew at an unprecedented pace. It led to the creation of various direct and indirect jobs, reduction in the poverty rate and a general improvement in the standard of living.