Human capital refers to the stock of skill and expertise of a nation at a point of time.
The two major sources of human capital in a country are :
(i) Education, (ii) Health
Education and health are considered as an important input for the development of a nation. A better educated person has greater skills and knowledge and therefore greater opportunity to work and earn higher income. Similarly, a healthy person is an asset for the nation as he is more productive than a sick person, who is unable to work efficiently due to bad health. Hence, expenditure on education and health is an important source of human capital formation