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Economics · 2026 · 4 marks
Employment: Growth, Informalisation and Other IssuesInformalisation of Indian Workforce4 marksApplyshort answer
CBSE 2026 · Region 5 · Set 1 · Q32
Rayansh works as a teacher in a school. He receives a fixed monthly salary, social security benefits, paid leave and medical allowances. His friend Mohan works at a small toy shop. He has very little income, he does not have access to provident fund, paid leave or health insurance.Classify the types of sectors Rayansh and Mohan are working in and highlight the distinction between the two sectors.(b)Define ‘Human Capital Formation’.(ii)Explain ‘Expenditure on migration’ as a source of human capital formation.
Rayansh works as a teacher in a school. He receives a fixed monthly salary, social security benefits, paid leave and medical allowances. His friend Mohan works at a small toy shop. He has very little income, he does not have access to provident fund, paid leave or health insurance.
Classify the types of sectors Rayansh and Mohan are working in and highlight the distinction between the two sectors.
(b)
Define ‘Human Capital Formation’.
(ii)
Explain ‘Expenditure on migration’ as a source of human capital formation.
Marking-scheme solution
Rayansh is working in the formal sector.
On the other hand; Mohan is working in the informal sector.
Formal sector includes all the public sector establishments and those private sector establishments which employ $\displaystyle 10$ hired workers or more. Formal sector workers are entitled to fair wages and other social security measures such as pension, provident fund, etc. Additionally, they get paid leaves and medical allowances.
Whereas;
Informal sector includes those private sector establishments which employ less than $\displaystyle 10$ hired workers. Workers in the informal sector do not get regular income and social security benefits. They can be dismissed without any compensation. Additionally, they may not get paid leaves and medical allowances.
(b)
Human Capital Formation refers to the addition to the stock of human capital over a given period of time.
(ii)
People migrate in search of job opportunities that fetch them higher earnings. Technically qualified persons like engineers and doctors, migrate to other areas because of higher incomes and better opportunities. Migration also involves transportation costs, higher cost of living and psychic costs of change in socio-cultural setup. However, the enhanced earnings at the new place outweighs the costs of migration; hence, expenditure on migration is the source of human capital formation.
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CBSE Class 12 Economics past-paper question from the 2026board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.