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CBSE Notes | Class 9 | Social Science | Economics Chapter 2 - People as a Resource

The chapter notes demonstrate how population can be an asset rather than a liability for the economy.   Human capital refers to the stock of ability and productive knowledge possessed by individuals. We will learn how to achieve demographic dividend by providing quality education, training and healthcare to India's youth. 

What is the importance of population?

  • The term ‘People as Resources’ provides us with a view that population is an asset for the economy rather than a liability.

  • 'People as Resource' is a way of referring to a country’s working people in terms of their existing productive skills and abilities. Looking at the population from this productive aspect emphasises its ability to contribute to the creation of the Gross National Product.

  • Population becomes human capital when there is investment made in the form of education, training and medical care.

  • Human capital is the stock of skill and productive knowledge embodied in them.

Population as a Human Resource

The existing 'human resource' is further developed by becoming more educated and healthy, its called 'human capital formation' that adds to the productive power of the country just like 'physical capital formation'.

Investment in Human Capital

  • Investment in human capital (through education, training, medical care) yields a return just like investment in physical capital.

  • This can be seen directly in the form of higher incomes earned because of higher productivity of the more educated or the better trained persons, and the higher productivity of healthier people.

  • Society also gains in other indirect ways because the advantages of a more educated or a healthier population spreads to those also who themselves were not directly educated or given health care.

Why is human capital considered superior to other resources?

Human capital is in one way superior to other resources like land and physical capital: human resource can make use of land and capital.

Story of Sakal

  • Sakal is a 12 year old boy living in a village who helps his mother in various chores. He was forced to join the School. Later, his parents took a loan for his Vocational Computer Course.

  • He was meritorious and interested in studies from the beginning. With great vigour and enthusiasm he completed his course. After some time he got a job in a private firm as a software developer. Sakal’s great performance also got him promoted.

Story of Vilas

  • Vilas was an eleven-year old boy residing in the same village as Sakal. His father Mahesh was a fisherman, who passed away when he was only two years old. His mother Geeta sold fish to earn money to feed the family. Vilas’s mother was the only one earning in the family.

  • Vilas is a patient of arthritis. His mother could not afford to take him to the doctor. He could not go to school either as he was also not interested in studies. After his mother fell sick Vilas was forced to sell fishes and earned only a meager income.


In these stories it was seen Sakal went to school and Vilas did not go. Sakal was physically strong and healthy. There was no need for him to visit the doctor frequently. Vilas was a patient of arthritis. He lacked the means to visit the doctor. Sakal acquired a degree in computer programming. Sakal found a job in a private firm while Vilas continued with the same work as his mother.

As in the case of Sakal, several years of education added to the quality of labour and  enhanced his total productivity. Total productivity adds to the growth of the economy. In case of Vilas, there could not be any education or health care in the early part of his life, and he earned a meager income.

Investment in human resource (via education and medical care) can give high rates of return in future. It is the same as the investment in land and capital.

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How does education lead the development of human capital?

Education plays an important role in the development capital.

  • As Educated parents are found to invest more heavily on the education of their child. As they have realised the importance of education for themselves.

  • They are also conscious of proper nutrition and hygiene. They accordingly look after their children’s needs for education at school and good health.

  • But the section of disadvantaged parents, who themselves uneducated and lacking in hygiene, keep their children in a similarly disadvantaged state.

Economic Activities by Men and Women

In an actual world people are engaged in various activities that are classified into three parts:

  • Primary Sector: This sector includes agriculture, forestry, animal husbandry, fishing,   poultry farming, mining and quarrying.

  • Secondary Sector: It includes the Manufacturing of Goods.

  • Tertiary Sector: This sector includes Trade, transport, communication, banking, education, health, tourism, services, insurance, etc.

The activities in these sectors add up to the value of National Income, and are called Economic Activities.

They are classified into two parts:

  1. Market Activities: These involve remuneration to anyone who performs i.e., activity performed for pay or profit. These include production of goods or services, including government service.

  2. Non- Market Activities: These involve the production for self-consumption. These can be consumption and processing of primary product and own account production of fixed assets.

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Division of Labour

Due to historical and cultural reasons there is a division of labour between men and women in the family. Women generally look after domestic chores and men work in the fields. As male is used to work at fields, sell the produce in the market and earn for the family. Women are not paid for their service delivered in the family.

The household work done by women is not recognised in the National Income. Education and skill are the major determinants of the earning of any individual in the market. A majority of women have meagre education and low skill formation also they are paid low as compared to men.

What is Quality of Population?

  • The quality of population depends upon the literacy rate, health of a person indicated by life expectancy and skill formation acquired by the people of the country.

  • The quality of the population ultimately decides the growth rate of the country.

  • Literate and healthy population are an asset.

Class 9 French Reolution - A Society of Estates.jpg
Class 9 French Reolution - A Society of Estates.jpg


Education is an important input for the growth of an individual. It openes new horizons, provided new aspiration and developed values of life. Education contributes towards the growth of society also. It enhances the national income, cultural richness and increases the efficiency of governance.

There are provisions for the Elementary Education for all with a special emphasis on girls.

Expenditure on Education

The setting up of schools like Navodaya Vidyalaya in each district and Vocational streams have been developed to equip large number of high school students with occupations related to knowledge and skills. The plan outlay on education has increased from Rs 151 crore in the first plan to Rs 3766.90 crore in the eleventh plan.

The expenditure on education as a percentage of GDP rose from 0.64% in 1951–52 to 3.0% in 2015–16 (B.E.) and has remained stagnant around 3% from past few years.

Literacy Rate

  • Literacy is not only a right, it is also needed if the citizens are to perform their duties and enjoy their rights properly.

  • A vast difference is noticed as Literacy among males is nearly 16.6% higher than females and it is about 16.1% higher in urban areas as compared to rural areas.

  • The primary school system has expanded to over 8.58 lakh in 2013–14.

  • This huge expansion of schools has been diluted by the poor quality of schooling and high dropout rates.

Various Plans to Improve the Education System

Sarva Shiksha Abhiyan

“Sarva Shiksha Abhiyan is a significant step towards providing elementary education to all children in the age group of 6–14 years by 2010

  • It is a time-bound initiative of the Central government, in partnership with the States, the local government and the community for achieving the goal of universalisation of elementary education.”

Mid-day meal scheme 

It has been implemented to encourage attendance and retention of children and improve their nutritional status.

12th Five Year Plan - Increasing Gross Enrollment Ratio

The 12th plan endeavoured to raise the country's Gross Enrolment Ratio (GER) in higher education in the age group of 18 to 23 years to 25.2% by 2017–18 and to reach the target of 30% by 2020–2.

The plan also focuses on distance education, convergence of formal, non-formal, distance and IT education institutions.

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Improvement in the health status of the population has been the priority of the country. National policy, aims at improving the accessibility of healthcare, family welfare and nutritional service with a special focus on the underprivileged segment of the population.

India has built a vast health infrastructure and has also developed the manpower required at primary, secondary and tertiary sector in government, and in the private sector.

These measures, have increased the life expectancy to over 68.3 years in 2014.

  • Infant mortality rate (IMR) has come down from 147 in 1951 to 34 in 2016.

  • Crude birth rates have dropped to 20.4

  • Death rates to 6.4 within the same duration of time.

Increase in life expectancy and improvement in childcare are useful in assessing the future progress of the country. Reduction in infant mortality involves the protection of children from infection, ensuring the nutrition of both the mother and the child, and childcare.

There are only 381 medical colleges in the country and 301 dental colleges. Just four states, like Andhra Pradesh, Karnataka, Maharastra and Tamil Nadu have the maximum number of colleges.


Unemployment is said to exist when people who are willing to work at the going wages cannot find jobs. The nature of unemployment differs in rural and urban areas. In case of rural areas, there is seasonal and disguised unemployment. Urban areas have mostly educated unemployment.

  • Seasonal Unemployment: when people are not able to find jobs during some months of the year. People dependant upon agriculture usually face such kind of problem (Sowing and Harvesting season)

  • Disguised Unemployment: When the workforce on any employment sector is reduced, and productivity is sustained. This reduced workforce is reffered to as Disguised Unemployment.

  • Unemployment leads to wastage of manpower resource. People who are an asset for the economy turn into a liability.

Unemployment has detrimental impact on the overall growth of an economy. Increase in unemployment is an indicator of a depressed economy.

Employment in the different sectors of economy

  • Agriculture, is the most labour absorbing sector of the economy. There has been a decline in the dependence of population on agriculture partly because of disguised unemployment in recent years. Many labour had moved to the others sectors.

  • In the secondary sector, small scale manufacturing is the most labour absorbing.

  • In the tertiary sector, various new services are now appearing like biotechnology, information technology

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