Societies need sufficient human capital in the first place—in the form of competent people who have themselves been educated and trained as professors and other professionals. In other words, we need good human capital to produce other human capital (say, nurses, farmers, teachers, doctors, engineers...). This means that we need investment in human capital to produce more human capital out of human resources.

Investment in education is considered as one of the main sources of human capital. There are several other sources as well. Investments in health, on-the job training, migration and information are the other sources of human capital formation. People migrate in search of jobs that fetch them higher salaries than what they may get in their native places. Unemployment is the reason for the rural-urban migration in India. Technically qualified persons, like engineers and doctors, migrate to other countries because of higher salaries that they may get in such countries.

India recognised the importance of human capital in economic growth long ago. The Seventh Five Year Plan says, “Human resources development (read human capital) has necessarily to be assigned a key role in any development strategy, particularly in a country with a large population. The National Education Policy 2020 states that the world is undergoing rapid changes in the knowledge landscape.