Human capital formation is a process which converts human resources into human capital. It is the process of acquiring and increasing the number of people who have the skills, education and experience which is necessary for the economic development of the country.
For example, if in the year 2014, the number of doctors and engineers in our country were 4,50,000 and in the year 2015, their number grew to 5,00,000, then it can be said that there is human capital formation to the extent of 50,000 doctors and engineers.