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 ?
- (a) 1 and 2
- (b) 2 only
- (c) 2 and 4 ✓ UPSC's answer
- (d) 1, 3 and 4
Why the answer is (c)
• Human capital formation is the process of raising the productive capacity of people through education, training, health and skills (statement 2).
• These capacities are intangible assets embodied in people, so it amounts to accumulation of intangible wealth (statement 4).
• Statements 1 and 3 describe physical capital formation — accumulation of financial or tangible assets — not human capital.
• Hence 2 and 4, option (c).
Why the other options are wrong
- (a) 1 and 2
- Statement 1 describes physical/financial capital accumulation.
- (b) 2 only
- Statement 4 (intangible wealth) also applies.
- (d) 1, 3 and 4
- Statements 1 and 3 concern tangible capital, not human capital.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2018, held on 3 June 2018. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.