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The role of human capital in economic development:

Policymakers who aim only at lifting people out of poverty miss an essential fact: even as many people move out of poverty, many others fall back into it. This column argues that tackling poverty requires not only helping the existing poor, but also preventing the growth of future poverty

Heera Gujar was not born in poverty. Twenty-five years ago, Heera and his family were among the more prosperous households of his village. “We owned land,” he told me. “We also owned many cattle.” But things have since changed for the worse. Today his family are among the poorest people in the village, receiving community handouts on religious holidays.

Heera told me about the events that had led to this decline.“My father fell ill about 18 years ago. We must have spent close to 25,000 rupees on his treatment, but to no avail. When my father died, we performed the customary death feast, spending another 10,000 rupees. We sold our cattle and had to borrow money. We worked harder in order to repay these debts. Then, about ten years ago, my wife fell seriously ill, and she has still not recovered. We borrowed more money to pay for her medical treatments. More than 20,000 rupees were spent for this purpose. It became hard for us to keep up with our debts. Somehow we could make do for another two or three years. Then the rains failed for three years in a row, and that was the end of the road for us. We had to sell our land. Now, my sons and I work as casual labor, earning whatever we can from one day to the next.”