In the Indian context, human capital investment has become a critical issue. Human capital investment challenges in India focuses on the Indian labour force and identifies why Government is finding it difficult to create human capital and is the investment in human capital adequate for Indian economy? There is a need to maintain a balance between the demand and supply of technical labour force. India has a very large population (over 1.39 billion) and the working age group (15-64) in the population has been increasing by seven million people each year in the country. India can take advantage of this demographic dividend by creating skilled manpower, employment opportunities and human capital investment. Overall investment in human capital has definitely long run impact on growth. Economists distinguish among three types of human capital investment: expenses for education and training; expenses for care of health; and expenses for mobility. Out of these investments, the investment on education and training has some peculiarities, which makes it different from other types of investment. The human capital investment plays crucial role in the economic development. Firstly, formation of human capital would tend to change the traditional society to modern society, which has higher scope for economic development. Secondly, human capital increases the productivity of the physical capital. Enhanced productivity would accelerate the growth. Thirdly, higher standard of life is possible only via development of human capital. Fourthly, human capital investment facilitates the use and growth of innovation. Innovation is the principal determinant of growth. Fifthly, human capital formation increases the rate of participation. Higher the rate of participation, greater is the degree of economic equality in the society. Finally, investment in human capital yields larger returns and the returns on this type of investment far outweigh its input costs.

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Keywords: Human Capital, Human Capital Investment, Demographic Dividend, Economic Development, Inclusive Growth, Youth Population, Education and Training.