Social Infrastructure | NABARD Grade A & Grade B Preparation - Bank Exams PDF Download

 Page 1


84
Determinants of Growth
UNIT 5   SOCIAL INFRASTRUCTURE
Structure
5.0 Objectives
5.1 Introduction
5.2 Achievements of the Education Sector 
 5.2.1 Tertiary Education
 5.2.2  Primary Education
 5.2.3  Human Capital Formation
5.3 Weaknesses of the Education Sector
5.4 Public Expenditure on Education 
5.5 Educational Reforms in India
5.6  Health Sector in India
5.7 Issues in Healthcare 
5.8 Government Initiatives in Healthcare 
 5.8.1  National Health Policy
 5.8.2  Pro-active Healthcare 
 5.8.3  National Rural Health Mission
5.9 Let Us Sum Up
5.10 Key Words
5.11 Terminal Questions
5.0  OBJECTIVES 
After going through this unit, you will be able to: 
• Appreciate the role of social infrastructure in economic growth;
• Identify the constituents of the social infrastructure;
• Describe the progress in various heads of social infrastructure; and 
• Identify major shortcomings and limitations of the various social infrastructure 
sectors.
5.1  INTRODUCTION 
In the process of economic growth the functions performed by economic 
infrastructure (e.g., power, transport, communication, etc.) are complemented 
by the functions performed by social infrastructure (e.g., schools, hospitals, art 
and culture, etc.). Social infrastructure not only contributes to the production 
of goods and services, it also contributes to social welfare. Thus, viewed from 
the perspective of human development, social infrastructure deserves more 
attention. You should note that maximisation of social welfare is the ultimate 
objective of all activities, economic and non-economic. There is no dispute over 
this approach to development. Rather the importance of social infrastructure is 
further strengthened by the recent experiences in wake of Covid-19. Globally, 
countries having strong social infrastructure have been able to cope with the 
Covid-19 problem in a much better manner.
Page 2


84
Determinants of Growth
UNIT 5   SOCIAL INFRASTRUCTURE
Structure
5.0 Objectives
5.1 Introduction
5.2 Achievements of the Education Sector 
 5.2.1 Tertiary Education
 5.2.2  Primary Education
 5.2.3  Human Capital Formation
5.3 Weaknesses of the Education Sector
5.4 Public Expenditure on Education 
5.5 Educational Reforms in India
5.6  Health Sector in India
5.7 Issues in Healthcare 
5.8 Government Initiatives in Healthcare 
 5.8.1  National Health Policy
 5.8.2  Pro-active Healthcare 
 5.8.3  National Rural Health Mission
5.9 Let Us Sum Up
5.10 Key Words
5.11 Terminal Questions
5.0  OBJECTIVES 
After going through this unit, you will be able to: 
• Appreciate the role of social infrastructure in economic growth;
• Identify the constituents of the social infrastructure;
• Describe the progress in various heads of social infrastructure; and 
• Identify major shortcomings and limitations of the various social infrastructure 
sectors.
5.1  INTRODUCTION 
In the process of economic growth the functions performed by economic 
infrastructure (e.g., power, transport, communication, etc.) are complemented 
by the functions performed by social infrastructure (e.g., schools, hospitals, art 
and culture, etc.). Social infrastructure not only contributes to the production 
of goods and services, it also contributes to social welfare. Thus, viewed from 
the perspective of human development, social infrastructure deserves more 
attention. You should note that maximisation of social welfare is the ultimate 
objective of all activities, economic and non-economic. There is no dispute over 
this approach to development. Rather the importance of social infrastructure is 
further strengthened by the recent experiences in wake of Covid-19. Globally, 
countries having strong social infrastructure have been able to cope with the 
Covid-19 problem in a much better manner.
85
Social Infrastructure
Education is the process of acquiring knowledge, skill, values and personal 
development. It could be imparted through three channels, viz., formal, informal 
and non-formal. Formal education refers to various levels of studies imparted in 
schools, colleges, universities and other educational institutions. Such institutions 
could be in the public sector or in the private sector. Non-formal education refers 
to various structured educational programmes that take place outside the formal 
education system. Informal education refers to the learning acquired at home, work 
place, peer group, etc. Formal education comprises three segments: elementary 
education, secondary education and higher education. 
The healthcare system includes organisations, institutions and resources that 
produce actions whose primary purpose is to improve health. Thus, it is a vast 
network of hospitals, diagnostic centres, blood banks, healthcare professionals, 
etc. Also, there are laws, policies, plans and strategies to provide health facilities 
to people.  
All along the recorded history, India has sought to build infrastructure with 
sound foundations. Since independence these efforts have been further energised. 
Notwithstanding the fact that the education and health sectors of India suffer 
from limitations, we cannot ignore the fact that not many emerging economies 
have reached such a level. In this Unit, you will learn achievements, weaknesses, 
expenditure and reforms in India. Heath sector issues and initiatives in healthcare 
will be further discussed in detail.
5.2  ACHIEVEMENTS OF THE EDUCATION 
SECTOR 
During the past six decades, there has been substantial expansion of the 
educational sector in India. The education sector has the following positive 
achievements to its credit:
(i) Accessibility to education has improved over time. Education is no more 
elitist; it is somewhat ‘democratised’ with a large proportion of weaker 
sections participating in education at all levels, including higher education. 
(ii) There has been rapid growth in education sector in India over the years. 
Indian education system is now colossal, teeming with almost 100 million 
students and three million teachers, and costing billions of rupees each year. 
This colossus is the result of conscious public policy in independent India. 
Two basic features of this policy have been: (1) Access-based strategy, and 
(2) Incentive-based strategy. The main focus of educational policy has been 
to increase access to education at all levels. Now, almost everyone in rural 
areas (over 93 per cent) lives within 1 km of a primary school. Similarly, 
over 92 per cent of the population in rural areas have a middle school within 
about 5 km and 82 per cent of the rural population now lives within 8 km. 
of a high school. A district headquarter town without at least an arts college 
is now rare. Colleges have proliferated at even faster rate than schools. As 
of March 2022, there are 1027 universities in India, including 54 central 
universities, 444 state universities, 126 deemed to be universities, and 403 
private universities.
(iii) India has the second largest (next only to China) pool of educated and skilled 
men and women in the world.
(iv) Universalisation of elementary education has been a goal of the Indian 
government since commencement of the five year plans. It got a major 
Page 3


84
Determinants of Growth
UNIT 5   SOCIAL INFRASTRUCTURE
Structure
5.0 Objectives
5.1 Introduction
5.2 Achievements of the Education Sector 
 5.2.1 Tertiary Education
 5.2.2  Primary Education
 5.2.3  Human Capital Formation
5.3 Weaknesses of the Education Sector
5.4 Public Expenditure on Education 
5.5 Educational Reforms in India
5.6  Health Sector in India
5.7 Issues in Healthcare 
5.8 Government Initiatives in Healthcare 
 5.8.1  National Health Policy
 5.8.2  Pro-active Healthcare 
 5.8.3  National Rural Health Mission
5.9 Let Us Sum Up
5.10 Key Words
5.11 Terminal Questions
5.0  OBJECTIVES 
After going through this unit, you will be able to: 
• Appreciate the role of social infrastructure in economic growth;
• Identify the constituents of the social infrastructure;
• Describe the progress in various heads of social infrastructure; and 
• Identify major shortcomings and limitations of the various social infrastructure 
sectors.
5.1  INTRODUCTION 
In the process of economic growth the functions performed by economic 
infrastructure (e.g., power, transport, communication, etc.) are complemented 
by the functions performed by social infrastructure (e.g., schools, hospitals, art 
and culture, etc.). Social infrastructure not only contributes to the production 
of goods and services, it also contributes to social welfare. Thus, viewed from 
the perspective of human development, social infrastructure deserves more 
attention. You should note that maximisation of social welfare is the ultimate 
objective of all activities, economic and non-economic. There is no dispute over 
this approach to development. Rather the importance of social infrastructure is 
further strengthened by the recent experiences in wake of Covid-19. Globally, 
countries having strong social infrastructure have been able to cope with the 
Covid-19 problem in a much better manner.
85
Social Infrastructure
Education is the process of acquiring knowledge, skill, values and personal 
development. It could be imparted through three channels, viz., formal, informal 
and non-formal. Formal education refers to various levels of studies imparted in 
schools, colleges, universities and other educational institutions. Such institutions 
could be in the public sector or in the private sector. Non-formal education refers 
to various structured educational programmes that take place outside the formal 
education system. Informal education refers to the learning acquired at home, work 
place, peer group, etc. Formal education comprises three segments: elementary 
education, secondary education and higher education. 
The healthcare system includes organisations, institutions and resources that 
produce actions whose primary purpose is to improve health. Thus, it is a vast 
network of hospitals, diagnostic centres, blood banks, healthcare professionals, 
etc. Also, there are laws, policies, plans and strategies to provide health facilities 
to people.  
All along the recorded history, India has sought to build infrastructure with 
sound foundations. Since independence these efforts have been further energised. 
Notwithstanding the fact that the education and health sectors of India suffer 
from limitations, we cannot ignore the fact that not many emerging economies 
have reached such a level. In this Unit, you will learn achievements, weaknesses, 
expenditure and reforms in India. Heath sector issues and initiatives in healthcare 
will be further discussed in detail.
5.2  ACHIEVEMENTS OF THE EDUCATION 
SECTOR 
During the past six decades, there has been substantial expansion of the 
educational sector in India. The education sector has the following positive 
achievements to its credit:
(i) Accessibility to education has improved over time. Education is no more 
elitist; it is somewhat ‘democratised’ with a large proportion of weaker 
sections participating in education at all levels, including higher education. 
(ii) There has been rapid growth in education sector in India over the years. 
Indian education system is now colossal, teeming with almost 100 million 
students and three million teachers, and costing billions of rupees each year. 
This colossus is the result of conscious public policy in independent India. 
Two basic features of this policy have been: (1) Access-based strategy, and 
(2) Incentive-based strategy. The main focus of educational policy has been 
to increase access to education at all levels. Now, almost everyone in rural 
areas (over 93 per cent) lives within 1 km of a primary school. Similarly, 
over 92 per cent of the population in rural areas have a middle school within 
about 5 km and 82 per cent of the rural population now lives within 8 km. 
of a high school. A district headquarter town without at least an arts college 
is now rare. Colleges have proliferated at even faster rate than schools. As 
of March 2022, there are 1027 universities in India, including 54 central 
universities, 444 state universities, 126 deemed to be universities, and 403 
private universities.
(iii) India has the second largest (next only to China) pool of educated and skilled 
men and women in the world.
(iv) Universalisation of elementary education has been a goal of the Indian 
government since commencement of the five year plans. It got a major 
86
Determinants of Growth
push in 1999 when the Sarva Shiksha Abhiyan (SSA) was implemented. 
Another landmark is the 86th constitutional amendment which made right 
to education a fundamental right for children in the age group of 6-14 years. 
This constitutional amendment was followed by the enactment of the ‘Right 
of Children to Free and Compulsory Education (RTE) Act, 2009’. 
The gross enrolment ratio (GER) in higher education (i.e., the proportion of 
graduates aged between 18 and 23 years entering college-level courses) at the 
national level rose from 12.5 per cent in 2007-08 to 27.1 per cent in 2019-20. 
The increase in GER implies a rise in the supply of skilled personnel in India. 
This would somewhat remove the supply constraint of skilled labour faced by 
the industrial and services sectors. There are a lot of companies ranging from 
retailers to information technology enabled services (ITES) which are finding a 
shortage of skilled and employable personnel in India.
5.2.1  Tertiary Education
The changing nature of work makes tertiary education more attractive in three 
ways. First, rapid expansion of the IT and ITES sectors have increased the demand 
for higher-order general cognitive skills such as complex problem-solving, critical 
thinking, and advanced communication. Such skills are transferable across jobs. 
Such skills can be acquired through tertiary education alone. The rising demand 
for these skills has enhanced the wage premiums of graduates, while reducing 
the demand for less educated workers. Second, tertiary education has increased 
the demand for lifelong learning (e.g., open and distance learning). Workers are 
expected to have multiple careers, not just multiple jobs over their lifetime. Third, 
tertiary education – especially universities – has become more attractive in the 
changing world of work by serving as a platform for innovation (hand-holding, 
start-ups, patents, etc).
India’s tertiary education system is the second largest in the world, after China. 
It is home to more than 35 million students and over 50, 000 institutions. The 
most prestigious institutions within this system have global standing and are 
responsible for making India a world leader in the high-tech sector. But for this 
success to be taken to the next level, India’s tertiary education system needs 
three sets of reforms. 
First, it requires more flexibility between the general and technical tracks. Second, 
Curriculum should focus more on building the skills. Third, Universities should 
become centres of innovation. As part of the Start-up India initiative, seven new 
research parks have been established in Indian Institute of Technology campuses 
to promote innovation through incubation and collaboration between universities 
and private sector firms. More initiatives like these are needed. The New Education 
Policy, 2020 is expected to address these issues.
5.2.2 Primary Education
Certain skills are much in demand these days. Some of these skills are: (i) 
complex problem-solving and analysis, (ii) social skills such as teamwork, and 
(iii) relationship management. Reasoning and self-efficacy are also important, 
particularly as they improve the adaptability of a person. In a survey of employers 
of engineers in India, socio-behavioural skills were ranked at par or above 
technical qualifications.  Building these skills requires strong foundations at the 
primary education level.
In fact, most of these traits are learnt by infants up to the age of 5-6. If children 
miss out during this period in life, it is hard to catch up. These foundations can be 
Page 4


84
Determinants of Growth
UNIT 5   SOCIAL INFRASTRUCTURE
Structure
5.0 Objectives
5.1 Introduction
5.2 Achievements of the Education Sector 
 5.2.1 Tertiary Education
 5.2.2  Primary Education
 5.2.3  Human Capital Formation
5.3 Weaknesses of the Education Sector
5.4 Public Expenditure on Education 
5.5 Educational Reforms in India
5.6  Health Sector in India
5.7 Issues in Healthcare 
5.8 Government Initiatives in Healthcare 
 5.8.1  National Health Policy
 5.8.2  Pro-active Healthcare 
 5.8.3  National Rural Health Mission
5.9 Let Us Sum Up
5.10 Key Words
5.11 Terminal Questions
5.0  OBJECTIVES 
After going through this unit, you will be able to: 
• Appreciate the role of social infrastructure in economic growth;
• Identify the constituents of the social infrastructure;
• Describe the progress in various heads of social infrastructure; and 
• Identify major shortcomings and limitations of the various social infrastructure 
sectors.
5.1  INTRODUCTION 
In the process of economic growth the functions performed by economic 
infrastructure (e.g., power, transport, communication, etc.) are complemented 
by the functions performed by social infrastructure (e.g., schools, hospitals, art 
and culture, etc.). Social infrastructure not only contributes to the production 
of goods and services, it also contributes to social welfare. Thus, viewed from 
the perspective of human development, social infrastructure deserves more 
attention. You should note that maximisation of social welfare is the ultimate 
objective of all activities, economic and non-economic. There is no dispute over 
this approach to development. Rather the importance of social infrastructure is 
further strengthened by the recent experiences in wake of Covid-19. Globally, 
countries having strong social infrastructure have been able to cope with the 
Covid-19 problem in a much better manner.
85
Social Infrastructure
Education is the process of acquiring knowledge, skill, values and personal 
development. It could be imparted through three channels, viz., formal, informal 
and non-formal. Formal education refers to various levels of studies imparted in 
schools, colleges, universities and other educational institutions. Such institutions 
could be in the public sector or in the private sector. Non-formal education refers 
to various structured educational programmes that take place outside the formal 
education system. Informal education refers to the learning acquired at home, work 
place, peer group, etc. Formal education comprises three segments: elementary 
education, secondary education and higher education. 
The healthcare system includes organisations, institutions and resources that 
produce actions whose primary purpose is to improve health. Thus, it is a vast 
network of hospitals, diagnostic centres, blood banks, healthcare professionals, 
etc. Also, there are laws, policies, plans and strategies to provide health facilities 
to people.  
All along the recorded history, India has sought to build infrastructure with 
sound foundations. Since independence these efforts have been further energised. 
Notwithstanding the fact that the education and health sectors of India suffer 
from limitations, we cannot ignore the fact that not many emerging economies 
have reached such a level. In this Unit, you will learn achievements, weaknesses, 
expenditure and reforms in India. Heath sector issues and initiatives in healthcare 
will be further discussed in detail.
5.2  ACHIEVEMENTS OF THE EDUCATION 
SECTOR 
During the past six decades, there has been substantial expansion of the 
educational sector in India. The education sector has the following positive 
achievements to its credit:
(i) Accessibility to education has improved over time. Education is no more 
elitist; it is somewhat ‘democratised’ with a large proportion of weaker 
sections participating in education at all levels, including higher education. 
(ii) There has been rapid growth in education sector in India over the years. 
Indian education system is now colossal, teeming with almost 100 million 
students and three million teachers, and costing billions of rupees each year. 
This colossus is the result of conscious public policy in independent India. 
Two basic features of this policy have been: (1) Access-based strategy, and 
(2) Incentive-based strategy. The main focus of educational policy has been 
to increase access to education at all levels. Now, almost everyone in rural 
areas (over 93 per cent) lives within 1 km of a primary school. Similarly, 
over 92 per cent of the population in rural areas have a middle school within 
about 5 km and 82 per cent of the rural population now lives within 8 km. 
of a high school. A district headquarter town without at least an arts college 
is now rare. Colleges have proliferated at even faster rate than schools. As 
of March 2022, there are 1027 universities in India, including 54 central 
universities, 444 state universities, 126 deemed to be universities, and 403 
private universities.
(iii) India has the second largest (next only to China) pool of educated and skilled 
men and women in the world.
(iv) Universalisation of elementary education has been a goal of the Indian 
government since commencement of the five year plans. It got a major 
86
Determinants of Growth
push in 1999 when the Sarva Shiksha Abhiyan (SSA) was implemented. 
Another landmark is the 86th constitutional amendment which made right 
to education a fundamental right for children in the age group of 6-14 years. 
This constitutional amendment was followed by the enactment of the ‘Right 
of Children to Free and Compulsory Education (RTE) Act, 2009’. 
The gross enrolment ratio (GER) in higher education (i.e., the proportion of 
graduates aged between 18 and 23 years entering college-level courses) at the 
national level rose from 12.5 per cent in 2007-08 to 27.1 per cent in 2019-20. 
The increase in GER implies a rise in the supply of skilled personnel in India. 
This would somewhat remove the supply constraint of skilled labour faced by 
the industrial and services sectors. There are a lot of companies ranging from 
retailers to information technology enabled services (ITES) which are finding a 
shortage of skilled and employable personnel in India.
5.2.1  Tertiary Education
The changing nature of work makes tertiary education more attractive in three 
ways. First, rapid expansion of the IT and ITES sectors have increased the demand 
for higher-order general cognitive skills such as complex problem-solving, critical 
thinking, and advanced communication. Such skills are transferable across jobs. 
Such skills can be acquired through tertiary education alone. The rising demand 
for these skills has enhanced the wage premiums of graduates, while reducing 
the demand for less educated workers. Second, tertiary education has increased 
the demand for lifelong learning (e.g., open and distance learning). Workers are 
expected to have multiple careers, not just multiple jobs over their lifetime. Third, 
tertiary education – especially universities – has become more attractive in the 
changing world of work by serving as a platform for innovation (hand-holding, 
start-ups, patents, etc).
India’s tertiary education system is the second largest in the world, after China. 
It is home to more than 35 million students and over 50, 000 institutions. The 
most prestigious institutions within this system have global standing and are 
responsible for making India a world leader in the high-tech sector. But for this 
success to be taken to the next level, India’s tertiary education system needs 
three sets of reforms. 
First, it requires more flexibility between the general and technical tracks. Second, 
Curriculum should focus more on building the skills. Third, Universities should 
become centres of innovation. As part of the Start-up India initiative, seven new 
research parks have been established in Indian Institute of Technology campuses 
to promote innovation through incubation and collaboration between universities 
and private sector firms. More initiatives like these are needed. The New Education 
Policy, 2020 is expected to address these issues.
5.2.2 Primary Education
Certain skills are much in demand these days. Some of these skills are: (i) 
complex problem-solving and analysis, (ii) social skills such as teamwork, and 
(iii) relationship management. Reasoning and self-efficacy are also important, 
particularly as they improve the adaptability of a person. In a survey of employers 
of engineers in India, socio-behavioural skills were ranked at par or above 
technical qualifications.  Building these skills requires strong foundations at the 
primary education level.
In fact, most of these traits are learnt by infants up to the age of 5-6. If children 
miss out during this period in life, it is hard to catch up. These foundations can be 87
Social Infrastructure
established through effective early childhood development programmes and basic 
education. Investments in nutrition, health and stimulation in the first thousand 
days of life build stronger brains.
As the World Development Report 2019 argues, India needs to focus more on the 
quality of education it offers to its greatest asset – its citizens. In economics we 
call it human capital formation. For most children, skill foundations are formed 
through primary and secondary education. Yet, the acquisition of foundational 
skills that one would expect to happen in schools is not occurring.
5.2.3 Human Capital Formation
Investment in education leads to human capital formation. When we invest in 
education, it brings qualitative changes in labour – there is an improvement in 
productivity of labour. Improvement in productivity leads to higher output. India 
can prepare its people for the coming shifts in jobs, skills and market structures 
through higher investments in education. Lack of investment in education 
will leave the future generations, particularly the poorest segment, at a severe 
disadvantage, amplifying inequalities that already exist. In the worst scenario, 
inadequate investment on human capital may create instability in the economy. 
A lot of investments in human capital have already begun in India and are likely 
to have a positive impact in the coming years. The shift in the education sector 
towards more competitive federalism and results-based financing is expected to 
improve accountability and learning outcomes. India’s agreement to participate in 
Programme for International Student assessment (PISA) is a major step forward in 
its policy landscape. It will help rank India with global peers based on education 
outcomes. India also needs to think about its current stock of adolescents and 
working adults. Every year, 12 million youth enter the labour market in India. By 
2030, the country will have 123 million 25- to 29-year-old citizens. And, bolstered 
by social media, their aspirations will be high. For these young people, many of 
whom did not graduate with a high-school diploma, adult learning programmes 
and forms of tertiary education are the only remaining path to adequate skills 
development. According to some estimates, only 24 per cent of the 18 to 37-year-
olds who dropped out of school before completing the primary level can read.
5.3    WEAKNESSES OF THE EDUCATION SECTOR 
The education sector of the economy has demonstrated a number of weaknesses, 
among which the more important are as follows:
1.  Narrow Coverage: Tertiary education has a very narrow coverage of the 
population. Only 2.5 per cent of the Indian population in the relevant age 
group attend colleges and universities, compared with 66 per cent in the US 
and Canada, 47 per cent in the OECD countries, 37.7 per cent in South Korea 
and over 20 per cent in countries such as Cuba, Costa Rica and Venezuela. 
Moreover, there is a very high dropout rate in India. Of 100 children entering 
class I, only 60 make it to the end of primary school (class V). In contrast, 
68 per cent of world’s children complete primary education. Further, less 
than 3 per cent children complete class XII. The poor retention rate at the 
primary level has been traced to the general neglect of the education sector. 
There has been a significant improvement in retention rate during the past 
few decades. The dropout ratio in primary schools has decreased sharply 
from 70 per cent in 1950s to 40 per cent at present. 
Page 5


84
Determinants of Growth
UNIT 5   SOCIAL INFRASTRUCTURE
Structure
5.0 Objectives
5.1 Introduction
5.2 Achievements of the Education Sector 
 5.2.1 Tertiary Education
 5.2.2  Primary Education
 5.2.3  Human Capital Formation
5.3 Weaknesses of the Education Sector
5.4 Public Expenditure on Education 
5.5 Educational Reforms in India
5.6  Health Sector in India
5.7 Issues in Healthcare 
5.8 Government Initiatives in Healthcare 
 5.8.1  National Health Policy
 5.8.2  Pro-active Healthcare 
 5.8.3  National Rural Health Mission
5.9 Let Us Sum Up
5.10 Key Words
5.11 Terminal Questions
5.0  OBJECTIVES 
After going through this unit, you will be able to: 
• Appreciate the role of social infrastructure in economic growth;
• Identify the constituents of the social infrastructure;
• Describe the progress in various heads of social infrastructure; and 
• Identify major shortcomings and limitations of the various social infrastructure 
sectors.
5.1  INTRODUCTION 
In the process of economic growth the functions performed by economic 
infrastructure (e.g., power, transport, communication, etc.) are complemented 
by the functions performed by social infrastructure (e.g., schools, hospitals, art 
and culture, etc.). Social infrastructure not only contributes to the production 
of goods and services, it also contributes to social welfare. Thus, viewed from 
the perspective of human development, social infrastructure deserves more 
attention. You should note that maximisation of social welfare is the ultimate 
objective of all activities, economic and non-economic. There is no dispute over 
this approach to development. Rather the importance of social infrastructure is 
further strengthened by the recent experiences in wake of Covid-19. Globally, 
countries having strong social infrastructure have been able to cope with the 
Covid-19 problem in a much better manner.
85
Social Infrastructure
Education is the process of acquiring knowledge, skill, values and personal 
development. It could be imparted through three channels, viz., formal, informal 
and non-formal. Formal education refers to various levels of studies imparted in 
schools, colleges, universities and other educational institutions. Such institutions 
could be in the public sector or in the private sector. Non-formal education refers 
to various structured educational programmes that take place outside the formal 
education system. Informal education refers to the learning acquired at home, work 
place, peer group, etc. Formal education comprises three segments: elementary 
education, secondary education and higher education. 
The healthcare system includes organisations, institutions and resources that 
produce actions whose primary purpose is to improve health. Thus, it is a vast 
network of hospitals, diagnostic centres, blood banks, healthcare professionals, 
etc. Also, there are laws, policies, plans and strategies to provide health facilities 
to people.  
All along the recorded history, India has sought to build infrastructure with 
sound foundations. Since independence these efforts have been further energised. 
Notwithstanding the fact that the education and health sectors of India suffer 
from limitations, we cannot ignore the fact that not many emerging economies 
have reached such a level. In this Unit, you will learn achievements, weaknesses, 
expenditure and reforms in India. Heath sector issues and initiatives in healthcare 
will be further discussed in detail.
5.2  ACHIEVEMENTS OF THE EDUCATION 
SECTOR 
During the past six decades, there has been substantial expansion of the 
educational sector in India. The education sector has the following positive 
achievements to its credit:
(i) Accessibility to education has improved over time. Education is no more 
elitist; it is somewhat ‘democratised’ with a large proportion of weaker 
sections participating in education at all levels, including higher education. 
(ii) There has been rapid growth in education sector in India over the years. 
Indian education system is now colossal, teeming with almost 100 million 
students and three million teachers, and costing billions of rupees each year. 
This colossus is the result of conscious public policy in independent India. 
Two basic features of this policy have been: (1) Access-based strategy, and 
(2) Incentive-based strategy. The main focus of educational policy has been 
to increase access to education at all levels. Now, almost everyone in rural 
areas (over 93 per cent) lives within 1 km of a primary school. Similarly, 
over 92 per cent of the population in rural areas have a middle school within 
about 5 km and 82 per cent of the rural population now lives within 8 km. 
of a high school. A district headquarter town without at least an arts college 
is now rare. Colleges have proliferated at even faster rate than schools. As 
of March 2022, there are 1027 universities in India, including 54 central 
universities, 444 state universities, 126 deemed to be universities, and 403 
private universities.
(iii) India has the second largest (next only to China) pool of educated and skilled 
men and women in the world.
(iv) Universalisation of elementary education has been a goal of the Indian 
government since commencement of the five year plans. It got a major 
86
Determinants of Growth
push in 1999 when the Sarva Shiksha Abhiyan (SSA) was implemented. 
Another landmark is the 86th constitutional amendment which made right 
to education a fundamental right for children in the age group of 6-14 years. 
This constitutional amendment was followed by the enactment of the ‘Right 
of Children to Free and Compulsory Education (RTE) Act, 2009’. 
The gross enrolment ratio (GER) in higher education (i.e., the proportion of 
graduates aged between 18 and 23 years entering college-level courses) at the 
national level rose from 12.5 per cent in 2007-08 to 27.1 per cent in 2019-20. 
The increase in GER implies a rise in the supply of skilled personnel in India. 
This would somewhat remove the supply constraint of skilled labour faced by 
the industrial and services sectors. There are a lot of companies ranging from 
retailers to information technology enabled services (ITES) which are finding a 
shortage of skilled and employable personnel in India.
5.2.1  Tertiary Education
The changing nature of work makes tertiary education more attractive in three 
ways. First, rapid expansion of the IT and ITES sectors have increased the demand 
for higher-order general cognitive skills such as complex problem-solving, critical 
thinking, and advanced communication. Such skills are transferable across jobs. 
Such skills can be acquired through tertiary education alone. The rising demand 
for these skills has enhanced the wage premiums of graduates, while reducing 
the demand for less educated workers. Second, tertiary education has increased 
the demand for lifelong learning (e.g., open and distance learning). Workers are 
expected to have multiple careers, not just multiple jobs over their lifetime. Third, 
tertiary education – especially universities – has become more attractive in the 
changing world of work by serving as a platform for innovation (hand-holding, 
start-ups, patents, etc).
India’s tertiary education system is the second largest in the world, after China. 
It is home to more than 35 million students and over 50, 000 institutions. The 
most prestigious institutions within this system have global standing and are 
responsible for making India a world leader in the high-tech sector. But for this 
success to be taken to the next level, India’s tertiary education system needs 
three sets of reforms. 
First, it requires more flexibility between the general and technical tracks. Second, 
Curriculum should focus more on building the skills. Third, Universities should 
become centres of innovation. As part of the Start-up India initiative, seven new 
research parks have been established in Indian Institute of Technology campuses 
to promote innovation through incubation and collaboration between universities 
and private sector firms. More initiatives like these are needed. The New Education 
Policy, 2020 is expected to address these issues.
5.2.2 Primary Education
Certain skills are much in demand these days. Some of these skills are: (i) 
complex problem-solving and analysis, (ii) social skills such as teamwork, and 
(iii) relationship management. Reasoning and self-efficacy are also important, 
particularly as they improve the adaptability of a person. In a survey of employers 
of engineers in India, socio-behavioural skills were ranked at par or above 
technical qualifications.  Building these skills requires strong foundations at the 
primary education level.
In fact, most of these traits are learnt by infants up to the age of 5-6. If children 
miss out during this period in life, it is hard to catch up. These foundations can be 87
Social Infrastructure
established through effective early childhood development programmes and basic 
education. Investments in nutrition, health and stimulation in the first thousand 
days of life build stronger brains.
As the World Development Report 2019 argues, India needs to focus more on the 
quality of education it offers to its greatest asset – its citizens. In economics we 
call it human capital formation. For most children, skill foundations are formed 
through primary and secondary education. Yet, the acquisition of foundational 
skills that one would expect to happen in schools is not occurring.
5.2.3 Human Capital Formation
Investment in education leads to human capital formation. When we invest in 
education, it brings qualitative changes in labour – there is an improvement in 
productivity of labour. Improvement in productivity leads to higher output. India 
can prepare its people for the coming shifts in jobs, skills and market structures 
through higher investments in education. Lack of investment in education 
will leave the future generations, particularly the poorest segment, at a severe 
disadvantage, amplifying inequalities that already exist. In the worst scenario, 
inadequate investment on human capital may create instability in the economy. 
A lot of investments in human capital have already begun in India and are likely 
to have a positive impact in the coming years. The shift in the education sector 
towards more competitive federalism and results-based financing is expected to 
improve accountability and learning outcomes. India’s agreement to participate in 
Programme for International Student assessment (PISA) is a major step forward in 
its policy landscape. It will help rank India with global peers based on education 
outcomes. India also needs to think about its current stock of adolescents and 
working adults. Every year, 12 million youth enter the labour market in India. By 
2030, the country will have 123 million 25- to 29-year-old citizens. And, bolstered 
by social media, their aspirations will be high. For these young people, many of 
whom did not graduate with a high-school diploma, adult learning programmes 
and forms of tertiary education are the only remaining path to adequate skills 
development. According to some estimates, only 24 per cent of the 18 to 37-year-
olds who dropped out of school before completing the primary level can read.
5.3    WEAKNESSES OF THE EDUCATION SECTOR 
The education sector of the economy has demonstrated a number of weaknesses, 
among which the more important are as follows:
1.  Narrow Coverage: Tertiary education has a very narrow coverage of the 
population. Only 2.5 per cent of the Indian population in the relevant age 
group attend colleges and universities, compared with 66 per cent in the US 
and Canada, 47 per cent in the OECD countries, 37.7 per cent in South Korea 
and over 20 per cent in countries such as Cuba, Costa Rica and Venezuela. 
Moreover, there is a very high dropout rate in India. Of 100 children entering 
class I, only 60 make it to the end of primary school (class V). In contrast, 
68 per cent of world’s children complete primary education. Further, less 
than 3 per cent children complete class XII. The poor retention rate at the 
primary level has been traced to the general neglect of the education sector. 
There has been a significant improvement in retention rate during the past 
few decades. The dropout ratio in primary schools has decreased sharply 
from 70 per cent in 1950s to 40 per cent at present. 
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Determinants of Growth
2.  Low Access to Education: Access to education has been highly skewed. 
Some segments of society do not have access to quality education. A recent 
World Bank study on the subject has established that 10 per cent of the best 
educated Indians received 61 per cent of the total resources, as against 36 per 
cent across Asia, reflecting a very high degree of inequality in the system. 
The Gini coefficient for India (on a scale of 0 to 1 representing a progressive 
inequity) is 0.66, against the regional average of 0.43. 
3.  High Cost of Education: The cost of education, particularly higher education, 
has been relatively high. Unit cost, defined as the percentage of per capita 
GNP spent on each pupil, ranges from 6 for primary education to 231 for 
higher education. Though it is obvious that higher education would have 
much larger unit costs, cross country comparisons show that India’s outlays 
on higher education is much above the average. Spending on higher education 
is 1.55 times the Asian average; whereas it is only 0.61 times for primary 
education. An implication of the above is that given the overall adequacy 
of funds invested in the education sector, expenditure on higher education 
has left very little resources for primary and secondary education. 
4.  Low Quality Education: Notwithstanding the presence of regulatory bodies 
such as UGC, AICTE, NCTE, etc., the quality of higher education in India 
is fairly low. As per Quacquarelli Symonds (QS) World University Ranking 
2022, only three institutions from India find a place in the top 200 universities 
in the world. The low quality of education has more recently been confirmed 
in an international test, PISA-2013 (Programme for International Student 
Assessment, conducted by OECD annually to evaluate education systems 
world-wide) in which India ranked second-last in a group of 73 countries, 
beating only Kyrgyzstan. 
The educational system suffers from what has been called ‘diploma disease’, 
i.e., it does not aim at conveying knowledge and skills at all, but is more 
concerned with certification. As such, its contribution to the growth of 
human capital is minimal; it is unable to meet the emerging demand for 
skilled professionals.
5.  Gender Bias: Spread of education has been biased more towards boys than 
girls. The dropout rate is higher in the case of girls compared to boys. Girls’ 
education is accorded lower priority in traditional households in India. Girls 
are required to assist other women in the family in household work. Boys on 
the other hand, are encouraged to study. Such traditional view however is fast 
changing in India. The performance of girls in senior secondary education is 
much better compared to that of boys. Even in higher education institutions, 
there are more girls than boys in many  educational programmes.
Check Y our Progress A
1) Explain why capital formation in the education sector is important for India. 
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2) What do you mean by quality education ? 
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