1. Health Infrastructure

2. Expenditure on education.

The Source of human capital formation: 

1. Health Infrastructure or Investment on Health:

The various forms of health expenditures are as follows:

• Preventive medicine – vaccinations to prevent deadly diseases.
• Curative medicine – obtaining medical treatment during illness.
• Social medicine – spread of awareness about keeping good wealth and its importance.
• Provision of clean drinking water and good sanitation 

The healthy individuals are source of human capital as they directly contribute for regular and higher productivity of labour. A sick labourer without access to medical facilities has to remain absent from work. This leads to loss of productivity. Hence expenditure on health is an important source of human capital formation.

2. Expenditure on Education:

Investment in education is considered as one of the main sources of human capital formation. Spending on education by individuals is similar to spending on capital goods by companies to increase their profits in future. Similarly, the individuals invest in education in order to increase their earnings in the form of money income in future.

Investment on education also promotes individual development which ultimately promotes overall economic growth of the country. The investment on education by an individual provides following benefits:

• Provide source of knowledge and enhance skills among individuals.
• Improve efficiency of labour
• They will be eligible for high salaried jobs.
• The ordinary individual will turn into essential human capital for economic growth.