Human capital consumption of households in a generational economy: evidence and implications for India

Using the National Transfer Accounts (NTA) methodology, this study calculates the cost of human capital consumption by children, youth, adults and elderly in India’s generational economy. Age-specific and lifetime cost of human capital consumption of these generations are measured in terms of per capita household consumption expenditure and distinguished by public and private consumption of education, health and others. The relative costs of children, youth and the elderly are determined with respect to the cost of adults, and the uniqueness and similarities of cost components are compared across the generations. Variations in the generational costs over time are distinguished between inflation and resource allocation effects. A medium term forecasting model is developed for assessment of the aggregate investment requirements for public education and health consumption needs. These analyses are useful for forward-looking macroeconomic policy interventions, such as projecting resource requirements for implementation of National Education Policy 2020 for school education, financing UN-SDGs as they are related to human development and for strategizing human capital investment for India’s generational economy. The approach and implications are of general relevance to other generational economies subject to the comparability of socio-economic and demographic structures.