diffused within countries. india, home to a world - class technology hub in bangalore ranks at the lowest end of the technology achievement index ( tai ) of the united nations development programme ( undp ). another important aspect of the technology diffusion linked to human capital resource is the adaptation of new technology to local requirements. this requires availability of professionally trained researchers and technicians to customise standard technologies to suit the domestic environment. in the indian context, the foreign collaboration and technological transfer in the industry has been enabled by the presence of skilled human resources to adapt and utilize the new technology to domestic requirements and production processes. the information and communications technology sector requires less initial investment in capital and infrastructure than do more traditional sectors - which may explain why high - tech industries in developing countries. moreover, such industries are labour intensive, providing new jobs and wages for educated workers. wages are high for indian software professionals, but competitive in the global market. the human development report 2001 of undp states that india shows why public policy is important. by providing education for information technology - india ’ s english - language technical colleges turn out more than 73, 000 graduates a year - and investing in infrastructure ( especially highspeed links and international gateways with sufficient band - width ), the government has ensured india ’ s place in the new economy. these efforts will deliver long - term benefits for human development and equitable economic growth. an important challenge to the human resource development arises from the enormous demand on resources and sharing the financing burden of human capital formation. in india, the major burden of human capital formation is on the central and state governments as universal education as well as tertiary and technical education, health care system, sanitation are sponsored by the governments. within the government sector, the social sector expenditures such as expenditures on heads like education, vocational education, skill formation, primary health etc. have long term positive effects in terms of human capital accumulation and productivity growth of the workforce are mainly in the domain of the state governments. the worsening fiscal situation of states has, however, reduced the capacity of the states to release resources for such activities, which has impacted on the relative availability of such services and the quality of delivery of services has suffered. the social sector expenditure of states has marginally declined to 5 per cent of gdp during the period 1990 - 91 to 2000 - 01 as against 5. 1 per cent in the 1980s. this has happened despite the fact that there is greater demand on such services in an increasingly more competitive environment. the

. bis central bankers ’ speeches according to the report and a survey of country practices, of the 45 countries surveyed, new zealand and japan were the only countries that made no explicit estimates of unobserved activities in the estimation of gdp5. the importance of the unobserved economy is of course quite different across countries, so under reporting will vary for this reason. however, the issue for international comparison is that new zealand does not currently include any estimate of this production in its gdp. taking australia as a benchmark, where explicit estimates are not made for illegal activity, but are made for the underground economy and household backyard production, we believe gdp in new zealand could be underestimated by 2 percent6. given it is the household sector which is mainly engaged in this activity, household income and therefore saving could also be underreported. of course, it is worth noting that most estimates are that the underground economy in new zealand is somewhat small. as with other countries, our comprehensive gst system reduces opportunities for tax avoidance, as does our relatively comprehensive broad - based income tax system. we encourage further research in this area. 2. measuring the value of financial services banks and other financial intermediaries earn income not only through explicit fees and charges but also on the margin between the interest they pay to depositors and the interest they charge borrowers. because of the margin, the financial services that we consume do not necessarily have an explicit price, unlike most goods and services in an economy. for the purposes of the sna the services provided, through the use of the margin, are known as financial intermediation services indirectly measured or fisim. calculating the value of a service without a price is complex7. however, the sna provides guidelines on how this can be achieved through the use of a relevant reference rate. in addition to how the value of fisim is calculated, what is important for gdp estimates is how those financial services are allocated to their end users. within the sna framework, goods and services consumed by businesses in order to produce other goods and services, are treated as intermediate consumption ( or an expense ) and subtracted from gdp. however, the use of goods and services by household, government and the foreign sector are treated as final demand and these add to gdp. most countries treat fisim in a way that increases gdp by allocating the service to the sector that uses or consumes it8. in new zealand all financial services are assumed to be used by