In defence of human capital

Last December, amidst the outpouring of grief over the demise of Manmohan Singh – India’s former Prime Minister and the key architect of country’s economic reforms in 1991- Singh’s last address to the nation as the PM on May 17, 2014, stood out. In his trademark simplicity, Singh credited the nation for his rise from a homeless child forced by the partition to the highest executive position saying that he will never be able to repay this debt.

Photo credit: PTI photo

In many ways, this was an ode to the two defining features in the journey of an independent nation. First, defying the doomsday prophecies, introduction of universal adult suffrage in a country with low levels of literacy and income was one of the boldest experiments in modern India without parallels anywhere in the world. Despite its limitations and given the fact that democracies are no-where perfect, India’s democracy, through a significant socio-political mobilization, led to an unprecedented political participation and gave rise to a vibrant civil society, also earning in the process for its people an epithet of the argumentative Indian.

Photo credit: AI-generated

Secondly, Singh’s stellar rise also bore testimony to the power of education in improving the life chances of an average citizen and providing them with a tool for upward social mobility. In the post-independence India, historical disadvantages were sought to be compensated through positive discrimination for socially and educationally backward classes in the society. In a milieu unrecognizable for the post-liberalization generation, where the public sector was the predominant employer, countless parents sacrificed their own comfort to educate their children so that they could find a meaningful place amidst cut-throat competition for gainful employment. The middle class which came into being through the economic reforms found their share in the increased size of the cake, facilitated by the private sector, rather than jostling for jobs in an already crowded space.

In a remarkable turn of events, 2024 saw more than 60 countries around the world going for elections and about 85% of incumbents unable to return to power. Surveys conducted by Pew Research Centre showed that while economic hardship occupied the centerstage among the concerns expressed by the voters in 2024, a bigger worry over the years has been people’s dissatisfaction with their life chances. In fact, the economic underpinnings of a functioning democracy can provide a safety valve only so long as the citizens have faith in the ability of their government to address concerns on inequality and provide a decent quality of life. The growing clamor for jobs and protectionism, in countries rich and poor, is a deeper concern which presents new challenges for the shared vision of a globalized world.

A large number of countries in Asia and elsewhere gained independence in the aftermath of the Second World War. While they strived to pursue a growth path following their dominant ideological narrative, the ones who complemented these efforts through building human capital benefited in more ways than one. More than seven decades later, the prevailing international order is struggling to find an equilibrium amidst geo-political headwinds. While countries rebound from the shocks of the Covid-19 pandemic and manage their debt burden, resources required for improving infrastructure remain scarce. Under these circumstances, national spending on education and health often becomes challenging.

Data suggests that in 2024, about 700 million people worldwide lived in extreme poverty getting less than $2.15 a day, while 3.5 billion people earned less than $6.85. The demographic dividend will start dwindling unless the developing countries make human capital the fulcrum of their development discourse. Sadly, education and health gain little traction in the electoral arena. Even though an increasingly apolitical middle class turns cynical, democracy still provides the most effective medium for informed negotiation on interests and ideas. The dream of achieving the goal of inclusive societies hinges on laying a solid foundation for public education and health care services. The shift from gross enrolment to quality of education needs a leapfrog rather than baby steps. Skilling the youth entering the work force and finding them job opportunities is even harder in an AI-driven manufacturing space or services but it is necessary to move people from farms to factories. Keeping people healthy is as important as educating them. Early childhood care to prevent stunting and malnutrition will produce confident adolescents, while improved universal health services backed up by affordable insurance against unforeseen illnesses would strengthen inclusion.

With the rising oceans and melting glaciers putting more pressure on available resources to address climate change, the task of building human capital is getting more daunting. But the state needs to bite the bullet sooner than later. And while devising a growth strategy, the world should remember what Manmohan Singh said: that there are real people behind these numbers!