UPSC Prelims 2018 · Question 49 of 99
UPSC Prelims 2018 question on Human Capital Formation
- ExamUPSC CSE
- Year2018
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicEconomic Growth
- DifficultyHard
- TypeStatement
Consider the following statements: Human capital formation as a concept is better explained in terms of a process which enables
1. individuals of a country to accumulate more capital.
2. increasing the knowledge, skill levels and capacities of the people of the country.
3. accumulation of tangible wealth.
4. accumulation of intangible wealth.
Which of the statements given above is/are correct?
Show answer
Answer: C. 2 and 4
Verdict
Statements 2 and 4 are correct, so the answer is (c) 2 and 4.
Statements 1 and 3 are INCORRECT. Both point at capital in the physical or financial sense, whereas the concept concerns capacities embodied in people rather than accumulation of tangible wealth.
Statement by statement
Statement 2 is CORRECT. Human capital formation is the process of acquiring and increasing the number of persons who have the skills, education and experience critical for a country's economic and political development. It is investment in people and their development as a creative and productive resource, which is exactly what this statement describes.
Statement 4 is CORRECT. Intangible wealth consists of factors such as trust among people, an efficient judicial system, clear property rights, effective government and a good education system, and human capital formation contributes to accumulating it.
Source
NCERT, Indian Economic Development, chapter on Human Capital Formation.
How to crack it
Statements 1 and 3 are near duplicates of one another, both asserting accumulation of ordinary capital, and paired statements that say the same thing usually stand or fall together. Since no option contains both 1 and 3 without also containing 4, testing the tangible against intangible distinction once resolves the question.