Education is the investment in human capital. It can be of different forms including expenditure of education, on job training (the employer provides training to employees) and institutional training (as a part of formal education, there is usually a requirement for a long period of institutionalized training where aspiring professionals acquire specified practical experience in some sort of trainee role. eg. teacher training in schools), formally organized education (school, college, universities etc.) and adult education (eg. literacy programs).
This investment in human capital can overcome many characteristics of labour force that act as an impediment to greater productivity, such as illiteracy, unreceptiveness to new knowledge, fear of change, lack of incentives and immobility. Improvements in skill of labour through education can increase the productivity and earning capacity. It also leads to introduction of more sophisticated and advanced technology to the production process. Education also plays a key role in the reduction of crime, improved public health, and greater political and civic engagement.
Every Government invests a large amount in human capital in the form of providing educational facilities to its citizens. It includes the expenditure for planning, organizing and running the educational institutions. The free and compulsory education up to the age of 14 shows the importance given by the state for educational investment in human resource. As per the 12th Five Year Plan, the Indian government aims to spend ₹4.13 lakh crore on higher education about four times the amount allocated in the previous plan. From this it is clear that the Government shows high interest to invest in education.
The government’s investment on education is not profit oriented but it aims at welfare and upliftment of the society. The return from the investment in education is a long term return. The return from such investment are improvements in productive capacity and earning capacity of the people and thereby an improvement in total national output (GDP) and growth. Private individuals or organizations also invest in education but most of these are profit oriented and they aim at short term return. However it also creates the same positive effects as that of public investment. Thus investment in education results in billions of rupees of social and economic benefits for society at large.
Education: Philosophy, Sociology and Economics; Edited by Naseerali M.K.
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