From coal plants to classroom failures: The many places where India is losing human capital

A new World Bank flagship report reveals that human capital accumulation in India is being critically undermined by severe deficits in child health, home-based care, and educational quality, with stark disparities linked to gender, birth order, and environmental pollution. The report, Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces, argues that without urgent policy action targeting the home, neighborhood, and workplace, India risks perpetuating a cycle of low productivity and stagnating economic growth.

The report presents damning evidence on health inequities within Indian households. It notes that “the prevalence of stunting in India is less widespread among eldest sons, who typically care for parents when they are elderly, than among daughters and younger sons,” illustrating how birth order and gender bias directly affect childhood nutrition. Furthermore, the quality of care at home varies dramatically. 

Citing research from rural India, the report states that “parents spend much more time caring for infants who are boys than infants who are girls, devoting 60 fewer minutes a day if their youngest child is a girl.” Male infants also benefit from longer breastfeeding and greater access to vitamin supplements, creating lifelong health disadvantages for girls from the very start of life.

Environmental hazards in Indian neighborhoods are compounding these health deficits. The report quantifies the impact of industrial pollution, finding that “in India, children living near a coal plant are 0.1 standard deviations shorter than unexposed children, and, the closer they live to the coal plant, the larger is the observed effect.” Poor sanitation infrastructure also generates severe negative externalities. 

The report highlights that reducing diarrhea in a household requires community-wide action, noting that “reductions in diarrhea in households with improved sanitation are quite modest unless others in the village also have access to improved sanitation.”

The quality of health services, where they exist, is highly variable across villages. 

Analyzing data from 817 rural villages across 19 Indian states, the report found that “fewer than 50 percent of the health providers in the lowest-quality facilities could correctly diagnose tuberculosis, compared with 90 percent in the top 10 percent of villages.” This enormous gap in provider competence directly undermines efforts to build a healthy and productive workforce.

On education, the report shows that early cognitive deficits persist throughout schooling. Using longitudinal data from countries including India, the authors found that “the gaps in early vocabulary and mathematics among children whose mothers are at different levels of educational attainment are initially large (18-29 percentiles). They remain virtually constant throughout childhood and adolescence,” indicating that schools are not compensating for what children miss at home. 

Large-scale efforts to improve school quality through community oversight have often failed; the report notes that “in India, village education committees that sought to improve school quality through oversight had no impact on community involvement, teacher effort, or learning outcomes because the process was dominated by elites.”

India’s massive public early childhood program, the Integrated Child Development Services, operates through “more than 1.4 million community centers, making it the largest public early childhood program in the world.” Yet the report suggests that without a settings-based approach that also addresses workplace learning, even such scale may not reverse stagnation.

Finally, the workplace—where most adults in India spend their time—offers meager returns to experience. Using panel data, the report calculates that “the annualized returns to experience after 5 years are 6.5 percent” for wage workers. However, for the self-employed, who make up a large share of India’s workforce, “the experience premium is roughly half as large, a 3.8 percent annualized return.” 

Low-quality self-employment and work in microfirms thus trap workers in low-learning, low-wage cycles, preventing the accumulation of human capital that could drive intergenerational progress. The report concludes that without coordinated investment in the home, neighborhood, and workplace, India’s human capital will continue to stagnate.