Human Capital Is Not A Freebie, It Is India's Greatest Investment

An economy can accumulate factories, highways, ports, technology and financial capital. But none of these can substitute for the most important productive asset of all: people. A healthy child is more likely to attend school. A well-nourished student is better able to learn. A person who receives timely healthcare is more likely to remain economically productive. A worker with quality education and skills is better equipped to adapt to technological change. And a society in which people are healthier and better educated is better prepared to withstand economic shocks. This is why human capital is not merely a social-sector concern. It is an economic strategy. The World Bank's latest human-capital framework explicitly treats health, education and employment as determinants of lifetime productivity. Its 2026 research estimates that deficits in nutrition, learning and workplace skill development can cost low- and middle-income countries 51 per cent of future labour earnings. That should fundamentally change the way India discusses public expenditure on people. For too long, spending on health, education, food, nutrition and other basic services has been vulnerable to a peculiar political vocabulary. Depending on who announces it and when, the same expenditure can be described as welfare, subsidy, populism, entitlement or 'revdi'. The problem is not that governments should never question subsidies. They should. Public money must be used responsibly, programmes must have measurable outcomes and governments must remain fiscally sustainable. But there is a world of difference between an economically unproductive giveaway and an investment that expands the productive capacity of citizens. A hospital is not a freebie. A functioning government school is not a freebie. Nutrition for a child is not a freebie. Preventive healthcare is not a freebie. These are investments in the capabilities that an economy eventually depends upon. India's Spending Record Tells A Complicated Story India has made considerable progress. The latest Economic Survey notes that general government social-services expenditure has risen substantially in recent years. Between FY2022 and FY2026, expenditure on education grew at a compound annual rate of 11 per cent and expenditure on health at 8 per cent. But the more revealing question is where India stands relative to its own ambitions. Ministry of Education data show that combined expenditure by the Centre and states on education by all departments was equivalent to 4.06 per cent of GDP in FY2022-23. That was actually lower than the 4.18 per cent recorded in the revised estimates for FY2021-22. The proportion has also remained well below the long-standing national aspiration of 6 per cent of GDP. The National Education Policy 2020 itself recognises the gap. It calls for public investment in education by the Centre and states to reach 6 per cent of GDP at the earliest, describing this as critical for a high-quality and equitable education system. Health tells a similar story. India's latest National Health Accounts estimates put government health expenditure at 1.84 per cent of GDP in 2021-22, while the National Health Policy's target has been 2.5 per cent. Out-of-pocket expenditure had fallen significantly, from 64.2 per cent of total health expenditure in 2013-14 to 39.4 per cent in 2021-22, representing important progress. But households still carry a substantial burden. WHO similarly notes that greater public financing is important for universal health coverage and financial protection, while pointing out that India's public health allocation remains below the 2.5 per cent target. So the argument cannot simply be that India spends nothing on human development. It does. The stronger argument is that the scale, quality, distribution and efficiency of that spending have not yet matched the country's economic ambitions. The Constitutional Question There is also a deeper issue. Are health and education merely benevolent gifts that governments may choose to provide? The constitutional answer is more complicated than the language of 'freebies' suggests. Article 21A makes free and compulsory education a fundamental right for children between six and fourteen years of age. Health has also acquired a constitutional dimension through judicial interpretation. The Supreme Court has reiterated that the right to health is an inalienable aspect of the right to life and personal liberty under Article 21. Article 47 goes further in defining the state's responsibility, directing it to regard raising nutrition, improving living standards and improving public health as among its primary duties. This does not mean that every government scheme becomes an enforceable fundamental right merely because it is labelled welfare. Nor does the Constitution provide an unlimited licence for governments to spend without regard to fiscal capacity. It does mean, however, that the starting point should not be that the citizen is receiving charity. The citizen is participating in a social contract in which taxation, public institutions and public services are supposed to translate economic growth into human capability. The Real Freebie Is Wasted Human Potential There is another reason to reject the simplistic framing. The cost of under-investment in people is rarely visible in a single budget. It appears years later as a child dropping out of school, a worker with inadequate skills, a family pushed into debt by medical expenses, a malnourished child failing to reach her learning potential or an economy unable to fill sophisticated jobs despite having a large working-age population. These are not welfare costs alone. They are economic losses. The World Bank's latest human-capital research emphasises precisely this long-term relationship between health, learning, employment and productivity. The returns from human-capital investment often take years to materialise, which creates a political problem: governments operate on electoral and budgetary cycles, while human capital develops over decades. That is why democratic governments need to think beyond the next election and invest in the next generation. Welfare And Fiscal Responsibility Are Not Opposites The strongest case for public spending on people does not require abandoning fiscal prudence. In fact, it requires better fiscal discipline. Governments should distinguish between consumption that creates little lasting value and expenditure that expands capabilities. They should publish outcome indicators, evaluate schemes, eliminate leakages, target genuinely vulnerable populations where appropriate and ensure that money allocated for schools and hospitals actually reaches classrooms, clinics and communities. The World Bank's assessment of India makes an important point here: there is significant scope to improve the efficiency of health and education expenditure, including by learning from differences in outcomes across states. The choice, therefore, is not between 'freebies' and development. The real choice is between poorly designed spending and intelligent investment. India wants to become a high-income economy. The World Bank estimates that reaching that ambition by 2047 would require average growth of around 7.8 per cent for the next two decades. Such growth cannot rest indefinitely on physical infrastructure and capital formation alone. It requires workers who can learn, innovate, adapt and remain productive. That means classrooms, teachers, nutrition, primary healthcare, preventive medicine, universities, vocational training and social protection must be viewed as part of the country's economic infrastructure. The roads of the future will be built not only with concrete and steel. They will be built with knowledge, health and human capability. So, are health and education freebies? No, not when they are designed as universal public goods, constitutional commitments and investments in human capability. The better question is a much more demanding one: Are we investing enough in our people to build the economy we say we want? India's future resilience may depend on how honestly we answer it.