India has been ranked at the 116th position in the latest edition of the World Bank’s annual Human Capital Index (HCI) that benchmarks key components of human capital across countries.

India’s score increased to 0.49 from 0.44 in 2018, as per the 2020 HCI  released by the World Bank. Last year, India had raised serious reservations over the HCI, wherein the country was ranked 115 out of 157 nations. 

Singapore tops the index with a score of 0.88, which is followed by Hong Kong and Japan.  

The HCI includes health and education data for 174 countries — covering 98 percent of the world’s population — up to March 2020, providing a pre-pandemic baseline on the health and education of children.

What is the significance of human capital index?

The Human Capital Index (HCI) measures the human capital that a child born today can expect to attain by her 18th birthday, given the risks of poor health and poor education prevailing in her country. 

The HCI was launched in 2018 as part of the Human Capital Project (HCP), a global effort to accelerate progress towards a world where all children can achieve their full potential.

It is an international metric that benchmarks key components of human capital across countries. The HCI highlights how current health and education outcomes shape the productivity of the next generation of workers. In this way, it underscores the importance for governments and societies of investing in the human capital of their citizens.

Human capital consists of the knowledge, skills and health that people accumulate over their lives. People’s health and education have undeniable intrinsic value and human capital also enables people to realize their potential as productive members of society. More human capital is associated with higher earnings for people, higher income for countries, and stronger cohesion in societies. 

Human capital is a central driver of sustainable growth and poverty reduction. However, even for governments that recognise the importance of investing in the human capital of their citizens, the process of designing policy and building institutions that foster human capital accumulation can be complex, with the full benefits taking years and even decades to materialise.

Differences in the quantity and quality of schooling account for the largest part of HCI differences across country-income groups. 

How the pandemic impacts human capital?

Pre-pandemic, most countries had made steady progress in building human capital of children, with the biggest strides made in low-income countries.

The HCI 2020 shows that, before the pandemic struck, a child could expect to attain an average of 56 percent of his/her potential productivity as a future worker. This global average masks considerable variation across regions and economies. For instance, a child born in a low-income country could expect to be 37 percent as productive as if he/she had full education and full health. For a child born in a high-income country, this figure is 70 percent. 

Due to the pandemic’s impact, most children – more than one billion – have been out of school and could lose out, on average, half a year of schooling, adjusted for learning, translating into considerable monetary losses. Data also shows significant disruptions to essential health services for women and children, with many children missing out on crucial vaccinations.

There has been a major decline in remittances and total income is going down by 11 or 12 per cent. 

Moreover, the pandemic is exacerbating risks of gender-based violence, child marriage and adolescent pregnancy, all of which further reduce opportunities for learning and empowerment for women and girls.

To protect and extend earlier human capital gains, countries need to expand health service coverage and quality among marginalised communities, boost learning outcomes together with school enrollments, and support vulnerable families with social protection measures.

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