Building India’s human capital

Earlier this month, the Indian government responded with hurt and anger when the World Bank released the first-ever report on its innovative

human

capital index (HCI), which measures factors like infant mortality, schooling and health. Of 157 countries, India was ranked just at 115, which is lower than neighbouring

Bangladesh

, Sri Lanka and

Nepal

. Almost immediately afterwards, the irate finance ministry under Arun Jaitley issued a belligerent statement that rejected the new findings outright, saying it “has decided to ignore the HCI and will continue to undertake its path-breaking programme for human capital development, aiming to rapidly transform quality and ease of life for all its children”.

Human capital is an offshoot of development economics, and embodies the idea that health, knowledge, training and judgment all combine to give people the ability to provide and create economic value. This year, Paul Romer won the Nobel prize in Economics in large part for his work describing how important human capital (which is the basis of innovation) is to economic growth. The concept is particularly useful to track how simple inputs like quality education, affordable healthcare and some universal motivational values can easily transform raw human resources into highly productive labour forces. But the opposite also applies, which is why India’s government is so embarrassed by the World Bank’s report. It demonstrates that misplaced priorities keep condemning generations of Indians to live unfulfilled lives.

Adding insult is the fact that other Asian countries dominate the top ranks of the World Bank HCI, with the the very first four consisting of Singapore, South Korea, Japan and Hong Kong. Regional rival, China, managed a respectable 46, Malaysia was at 55, and even Indonesia ranked high above India at 87. Looking further into the numbers makes for shameful reading. The average Indian child will only be 44% as productive as she would have been with good health care and education. A staggering 38% of Indian children are nutritionally stunted, which seriously compromises their cognitive and physical abilities. From birth, the odds are stacked against these kids to merely survive till school-going age, and then matters get worse because the standard of education renders them woefully uncompetitive to flourish in the globalised 21st century.

For generations, the standard excuse for poor Indian performance has been poverty. But look how South Korea leapfrogged India in just 50 years. That country’s own Jim Yong Kim happens to be the current president of the World Bank, and it’s no doubt he spoke from personal experience when he said, “For the poorest people, human capital is often the only capital they have. It is a key driver of sustainable, inclusive economic growth, but investing in health and education has not gotten the attention it deserves…This index creates a direct line between improving outcomes in health and education, productivity, and economic growth. I hope that it drives countries to take urgent action and invest more – and more effectively – in their people.”

Jaitley’s finance ministry insists a laundry list of schemes will improve the situation, like the Samagra Shikhsa Abhiyan (that focuses on access to education), Ayushman Bharat programme (touted to be the world’s largest health insurance initiative) and Pradhan Mantri Jandhan Yojana (providing banking services). The problem is that these come like band-aids to festering wounds, and fail to address the structural imbalances of India’s fundamental economic choices, which favour a highly destructive economic model that does nothing to improve life possibilities for hundreds of millions of citizens.

Following the release of his important new report, the World Bank’s Kim joined a host of other “human capital champions” to address an “open letter to the world”. It pointed to success stories such as Vietnam, where “learning outcomes have skyrocketed in reading, math and science” and Malawi, which dramatically reduced stunting in a matter of a few years.

But there was also a stern warning that India ignores to its own immense peril. “Our fear is that a whole generation will not be equipped to reach its full potential and compete in the

economy

of the future. The nature of work is changing rapidly across the globe, as are demands for higher order skills…If young people don’t have the opportunities to realize their aspirations, we risk more fragility and conflict across the globe — with incalculable economic costs.”

The writer is a photographer and widely published columnist. Views expressed are personal.