CBSE 2025, Compartment, Set 1

Question

"Both physical capital and human capital depreciate with time, but the nature of depreciation differs between the two."
Do you agree with the given statement? State and discuss valid reasons in support of your answer.

Edvaya · Accepted Answer

The correct answer is Subjective. Yes, I completely agree with the statement. While both forms of capital depreciate over time, the fundamental nature of this depreciation is entirely different. **Physical Capital:** Physical capital (like machinery, buildings, and vehicles) depreciates largely due to continuous mechanical wear and tear, and eventually becomes entirely obsolete due to the rapid change of technology. It has a finite lifespan. **Human Capital:** In stark contrast, the depreciation of human capital primarily takes place through the natural process of biological ageing. However, uniquely, this depreciation can be significantly reduced or delayed through continuous, proactive investments in education, specialized training, and healthcare. Unlike machines, this continuous investment also empowers human capital to easily cope with and adapt to any changes in technology.

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Economics > Indian Economic Development > Human Capital Formation

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