Previous Year Question
Given below are two statements, one is labelled as Assertion (A) and the other as Reason (R).
Assertion (A): Investment in human capital yields returns in the future.
Reason (R): Education and health make people more productive.
Select the correct answer from the code given below:
Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(A) is false, but (R) is true
(A) is true, but (R) is false
Both (A) and (R) are true and (R) is the correct explanation of (A)
Correct Answer: D
Detailed Solution
Assertion (A) is correct. Human Capital refers to the knowledge, education, skills, health and working capacity embodied in individuals. Expenditure on education, health and skill development is not merely current consumption; it is also an investment that enhances productive capacity and can generate future returns through higher productivity, better employment opportunities and greater earning capacity.
Reason (R) is also correct. Education improves knowledge, technical skills, problem-solving ability and the capacity to adopt new technology. Similarly, better health enhances physical and mental working capacity and can reduce the loss of working days caused by illness.
Therefore, investment in education and health makes individuals more productive, and this increased productivity is an important basis for the future returns generated by investment in human capital. Recent official economic analysis also links sustained investment in education with higher productivity and improvements in health with stronger human capital and economic productivity.