Human Capital in India: Strengths and Challenges

Like China, the foundation of India’s rise to economic promise has been its human resources; however, Grainger and Chatterjee point out that the crucial difference between the countries is that India’s human resources advantage at the moment is based on its “intellectual capital”, including the impressive annual output of engineers, physicians and business school graduates.  Drucker commented on the contrast between India and China as follows: “. . . The greatest weakness of China is its incredibly small proportion of educated people . . . and there is the enormous manufacturing potential.  In China, however the likelihood of the absorption of rural workers into the cities without upheaval seems very dubious.  You don’t have the problem in India because they have already done an amazing job of absorbing excess rural population into the cities . . . “.   In light of the celebrated “education advantage”, it is not surprising that India’s accession has been fueled by its success in the information technology sector; however, critics argue that while the credentialing figures for India are impressive the quality of the services and the communications skills of the workers are often quite poor and only a small percentage of the output provided by Indian firms meets or exceeds “world class” standards.  This report discusses some of the strengths and challenges relating to human capital in India.

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