India's poor state of human capital calls for urgent govt action

THE World Economic Forum (WEF) recently released its second Human Capital Report. The first was released in 2013. The report argues that "talent, not capital, will be a key factor linking innovation, competitiveness and growth in the 21st century". By this measure, India's prospects are not encouraging. The country's lagging performance is in part a product of poor strategy and ineffective leadership, leading to deterioration in the factors that improve human capital. Three of these - education, mobility and environment - need serious and pragmatic attention from the Indian policymakers.

Divided into five age groups (a departure from the 2013 index), the WEF 2015 index assesses human capital through education, skills and employment statistics across 124 countries. One Asian country ranks in the top 20 overall (Japan at 5), and only three in the top 40 (Singapore at 24 and Kazakhstan at 37). India ranks 100th, narrowly missing the bottom 20 per cent. It ranks 18th out of 22 Asia-Pacific countries, trailing Bangladesh (99th), Bhutan (87th) and Sri Lanka (60th). In South Asia, only Nepal (at 106) and Pakistan (at 113) fared worse.

When examining performance by age group, India seems poised for improvement. Its performance is skewed towards younger generations. In the under 15 age group, which represents nearly a third of the country's population, India is ranked 67. This is the only group for which India is above the worldwide average for its income group (lower-middle). However, India ranks near or worse than 100 in all other age groups (including 115 in the 55-64 age group, placing it in the bottom 10 worldwide). Further, India's overall performance is down 22 places from its 2013 ranking (78th), although a comparison of the two is difficult given the adjusted methodologies.