Human capital is a stock of skill and expertise of a nation at a particular point of time. Quality enriched human capital raises individual efficiency and productivity thereby raising the aggregate production and economic well being of a country. Thus, the importance of investment in enriching human capital is immense and long lasting. The following are the two prime ways to develop human capital qualitatively:
(i) Investment in Educational Sector: Education not only raises the standard and quality of living but also encourages modern attitude of the people. Moreover, education increases the productive capacity and productivity of a nation's workforce. Further, education increases the acceptability of modern techniques and also facilitates a primitive economy to break the shackles of tradition and backwardness. An investment in educational sector has two fold benefits. The importance of education is not only limited to making people educated. but also in facilitating an underdeveloped economy to solve different but interrelated macro economic problems like, poverty, income inequality, population, investments, under utilization of resources. Therefore, investment in education must be accorded high priority in an underdeveloped country as it leads to the enhancement of human capital qualitatively.
(ii) Investment in Health Sector: There is a saying “The greatest wealth is health”. The wealth of a country can be increased with the efforts of healthy workforce. Investment in health care sector increases efficiency, efficacy and productivity of a nation's workforce. Good health and medical facilities not only increase life expectancy but also improves quality and standard of life. Investment in health sector ensures the perennial supply of healthy workforce. Some of the common expenditures incurred in the health sector are on providing better medical facilities, easy availability of life saving drugs, common vaccination, spread of medical knowledge, provision of proper sanitation and clean drinking water, etc. Thus, the expenditure incurred on health is important in building and maintaining a productive work force that in turn leads to the development of quality human capital in a country.