Class 9 Economics Chapter 2 Notes - People as Resource

Introduction

The term "People as a Resource" highlights how the population, when provided with proper education, healthcare, and training, becomes an asset rather than a liability. Human beings are not just consumers of resources; they are creators and enhancers of them. This chapter explains the concept of viewing population as human capital – a vital contributor to national income and development.

Instead of focusing only on the problems caused by a large population, such as poverty and unemployment, the chapter encourages us to see people as producers, innovators, and skilled contributors to economic growth. When people are educated, skilled, and healthy, they contribute positively to the country's development. This transformation of human beings into productive resources through investment in health and education is called human capital formation.

What is Human Capital?

Human Capital is defined as the stock of skill, ability, and knowledge embodied in people. It is created through investments in education, training, and healthcare. Like physical capital (e.g., machinery and buildings), human capital also contributes to the production process and yields returns in the form of income.

Some key features of human capital:

• It helps to utilize other resources like land and physical capital effectively.

• Unlike land and capital, human capital is active and can transform other resources.

• The productivity of land and capital increases when used by skilled and knowledgeable people.

Investments in education and health:

• Increase productivity.

• Improve quality of labour.

• Enhance innovation.

• Contribute to economic growth.Investing in People Means Investing in Progress

Benefits of Human Capital Formation

1. Increased Productivity: Educated and skilled workers are more productive and efficient.
2. Better Use of Resources: Trained individuals can make better use of available resources, reducing wastage.
3. Employment Generation: Skilled people can create jobs for themselves and others.
4. Foreign Exchange Earnings: Through exporting services (e.g., IT professionals), countries earn foreign exchange.
5. National Growth: It helps increase Gross National Product (GNP) and improves the standard of living.

Examples:

• The Green Revolution in India demonstrated how scientific knowledge and training can improve agricultural productivity.

• The IT Revolution showcased the role of educated youth in placing India on the global map as a hub for software and technology services.

Case Studies: Sakal and Vilas

Sakal's Story

Sakal was a 12-year-old boy from Semapur village. His parents, though economically weak, ensured that he went to school. After completing his higher secondary education, he pursued a vocational course in computers with the help of a loan. Due to his knowledge and skills, he got a job in a private firm and even developed software that increased the company’s sales. Recognising his talent, the company promoted him.

Takeaway: Sakal’s life shows how education and training can transform an individual's life and make them a productive asset for society.

Stories of Vilas and Sakal

Vilas’s Story

Vilas, from the same village as Sakal, faced a different fate. His father died early, and his mother earned a meagre income by selling fish. Vilas was unhealthy and could not attend school due to financial and health issues. He eventually followed in his mother’s footsteps, selling fish, and earning a low income.

Takeaway: Lack of education and healthcare limited Vilas’s opportunities and kept him in the cycle of poverty.

Virtuous and Vicious Cycles

• A virtuous cycle is created when educated and healthy parents invest in their children’s education and well-being. This leads to better job prospects and higher incomes, continuing the cycle of improvement.

• A vicious cycle, on the other hand, occurs in families where parents are uneducated and unhealthy. Their children are less likely to receive quality education and healthcare, continuing the cycle of poverty.

Example of Japan:
Countries like Japan, which lack natural resources, have become economically developed due to heavy investments in education and health. These investments allowed them to use their limited resources efficiently, leading to technological advancements and economic prosperity.

Economic Activities by Men and Women

Classification of Economic Activities

1. Primary Sector

• Includes agriculture, forestry, fishing, poultry, animal husbandry, mining, and quarrying.
• These involve direct use of natural resources.

2. Secondary Sector

• Involves manufacturing and industrial production.
• Converts raw materials into finished products.

3. Tertiary Sector

• Includes services like trade, transport, banking, education, health, and tourism.
• Supports the primary and secondary sectors by providing essential services.

Market and Non-Market Activities

1. Market Activities: These involve the production of goods and services for income or profit. They are counted in the national income.

• Example: Sakal’s work in a private firm.

2. Non-Market Activities: These are performed for self-consumption or unpaid work.

• Example: Sakal’s mother doing household chores or Vilas cooking at home.

Gender Roles and Economic Activities

Historical Division of Labour

• The traditional division between men and women in economic activities is due to historical and cultural reasons.
• Women are often responsible for domestic chores, while men engage in fieldwork.

Unpaid Contributions

• Women's domestic work is not recognized in the National Income.
• Example: Sakal's mother, Sheela, handles household duties without salary.

Market Entry

• Women are paid when they enter the labour market, with earnings determined by education and skills.
• Disparities exist; women with lower education often earn less and face job insecurity.

Challenges in Women's Employment:

• Employment sectors lack legal protection, maternity leave, childcare, and social security.
• High education and skill formation enable women to achieve pay parity with men, especially in fields like teaching and medicine.

Primary Sector (Activities that involve the use of natural resources):

• Farming (shown by the tractor working in the field at the top)

Secondary Sector (Activities that involve manufacturing or processing):

• Industrial work or factory production (shown in the middle part with factories and chimneys)

Tertiary Sector (Activities that provide services):

• Transport and trade (shown by the cargo ship, airplane, and port at the bottom)

Quality of Population

The quality of a country’s population depends on:

• Literacy Rate
• Life Expectancy
• Health Status
• Skill Formation

A high-quality population is considered an asset. A literate, skilled, and healthy population contributes positively to society and the economy.

Education

Education enhances national income, cultural richness, and governance efficiency.

• Efforts include universal access, retention, and quality in elementary education, with special emphasis on girls.
• Establishment of pace-setting schools like Navodaya Vidyalaya in each district.
• Development of vocational streams for high school students.

Budgetary Allocations and Expenditure

• Plan outlay on education increased from Rs 151 crore in the first plan to Rs 99,300 crore in 2020–21.
• Expenditure on education as a percentage of GDP rose from 0.64% in 1951–52 to 3.1% in 2019–20 (B.E.).
• However, there is a decline to 2.8% in 2020–21 (B.E.), as per the Budget Documents of Union State Governments and the Reserve Bank of India.Trends in Literacy Rates In Post - Independent India

Literacy Rates and Disparities

• Over the years, literacy rates have shown a commendable upward trend, reaching 85% in 2018. 
• Literacy is acknowledged not just as a fundamental right but also as a prerequisite for citizens to effectively fulfil their duties and enjoy their rights. 
• However, gender and regional disparities persist, with males exhibiting a 16.1% higher literacy rate than females. 
• Urban areas also show a 14.2% advantage over rural areas, emphasizing the need for targeted interventions to bridge these gaps.

Challenges in Primary Education

• While the expansion of the primary school system to over 7,78,842 lakh in 2019–20 reflects a positive stride, concerns arise over the dilution of educational quality and high dropout rates. 
• The implementation of initiatives like Sarva Siksha Abhiyan, with elements such as bridge courses, back-to-school camps, and the mid-day meal scheme, aims to counter these challenges, striving for universal elementary education.

Higher Education Scenario

• In the realm of higher education, the Gross Enrolment Ratio (GER) for the age group of 18 to 23 years reached 27% in 2019–20, aligning broadly with the world average. 
• The strategic focus revolves around increasing access, ensuring quality, modifying curricula to suit state-specific needs, encouraging vocationalization, and embracing information technology. 
• Noteworthy is the emphasis on distance education and the convergence of various education formats, encompassing formal, non-formal, distance, and IT education institutions.

Health

• In the pursuit of profit maximization, firms place a significant emphasis on workforce efficiency. 
• The selection of employees with optimal health is crucial for ensuring productivity and achieving organizational goals. 
• The premise is that individuals in good health are better positioned to contribute effectively to the overall growth and success of the organization.

Significance of Health

• Good health enables individuals to realize their potential and effectively contribute to organizational growth.
• Healthy individuals can maximize their output, positively impacting overall organizational performance.Children standing in queue for health check-up

Health Infrastructure in India

• National Policy Focus: The national policy emphasizes improving healthcare access and services, focusing on the underprivileged.
• Infrastructure Development: Over the last five decades, India has built extensive health infrastructure in the government and private sectors. Manpower development spans primary, secondary, and tertiary sectors.

Health Progress Indicators

• Life Expectancy: Increased life expectancy to over 67.2 years in 2021.
• Infant Mortality Rate (IMR): IMR reduced from 147 in 1951 to 28 in 2020.
• Crude Birth Rates: Dropped to 20.0 (2018).
• Death Rates: Reduced to 6 (2020).

Healthcare Disparities and Infrastructure Gaps

• Despite progress, healthcare disparities persist in various regions of India. Many areas lack even basic healthcare facilities. 
• The availability of medical and dental colleges is unevenly distributed, with only 542 medical colleges and 313 dental colleges nationwide. 
• States such as Andhra Pradesh, Karnataka, Maharashtra, and Tamil Nadu host a concentration of medical colleges, revealing regional imbalances in healthcare infrastructure.

Unemployment

Unemployment is characterized by the inability of willing individuals to secure jobs at prevailing wages. It is crucial to differentiate between those not seeking employment and those facing challenges in finding suitable opportunities. In India, both rural and city areas face unemployment, but the reasons differ. 

Impact of Unemployment

• Wastage of Manpower Resource: Converts potential assets into liabilities for the economy. Creates a feeling of hopelessness and despair among the youth.
• Economic Overload: Increases dependence on the working population. Adversely affects the quality of life for individuals and society.
• Social Consequences: Decline in health status, withdrawal from the school system, and general despair.
• Indicator of a Depressed Economy: An increase in unemployment signals economic challenges.

Types of Unemployment

• Seasonal Unemployment: In rural areas, seasonal unemployment is prevalent, particularly among those dependent on agriculture. Certain months witness reduced agricultural activities, leading to temporary job scarcity for these individuals. 
• Disguised Unemployment: Disguised unemployment, common in family-based agricultural settings, gives the appearance of employment. However, surplus workers engage in activities that do not significantly contribute to productivity, highlighting the inefficiencies in resource utilization. 
• Educated Unemployment (Urban): Urban areas witness a paradoxical situation where educated individuals, even with matriculation, graduation, or post-graduate degrees, struggle to find suitable employment. This creates a coexistence of surplus manpower in certain categories and a shortage in others.

Statistical Perspective

• While official statistics may indicate low unemployment rates, many individuals with low income and productivity are considered employed. 
• Forced work for subsistence rather than by choice is prevalent, contributing to the statistical landscape.

Disguised Unemployment in Agriculture

• The agriculture sector in India experiences disguised unemployment, with self-employment characterized by surplus labour. 
• Despite shared work and produce among family members, surplus labour eventually migrates from villages in search of alternative job opportunities.

Sectoral Employment Trends

• Agriculture: Most labor-absorbing; recent decline due to migration to secondary and tertiary sectors.
• Secondary Sector: Small-scale manufacturing as labor-absorbing.
• Tertiary Sector: Growth in new services like biotechnology and IT.

Story of a Village

• Self-Sufficient Village: Families produced food, made clothes, and taught children independently.
  Education & Innovation: One family sent their son to agriculture college. The son became an agro-engineer, designed an improved plough, increasing wheat yield. New job of agro-engineer was created.
• Economic Growth: Family sold surplus wheat in a neighboring village, earned profit. Success inspired other families to seek better futures for their children.
• Establishment of School: Families requested the panchayat to open a school. A teacher was recruited; all village children began attending school.
• Creation of Tailoring Job: A daughter trained in tailoring, started stitching clothes for villagers. New job of tailor was created, saving farmers' time and increasing farm yield.
• Village Prosperity: Farmers sold surplus produce in village markets. Village, initially with no job opportunities, now had multiple jobs (teacher, tailor, agro-engineer). Rising human capital led to complex and modern economic activities.

In conclusion, The chapter “People as a Resource” demonstrates that education and health are crucial in transforming a population into an asset. By investing in human capital, a nation can ensure sustainable development, improve living standards, and reduce poverty and unemployment. The focus should not only be on increasing the number of people employed, but also on improving the quality of employment and the quality of the population.

Key Terms