Education and healthcare lie at the heart of development. For an economy, while physical capital is the sum total of its physical assets employed in the production of goods and services, education and healthcare are its human capital. Its productivity rises when their levels are raised. In fact, the better the education and health care system, the richer a region, a state or a country in human capital. Here we can say that the education system in our state fundamentally revolves around two economic processes – the interaction between economically motivated demand for education and the politically responsive supply of it; and the distinctions between benefits and costs of different levels of education. On the demand side, there are two influences on the quantum of education demanded. First, a more educated individual’s prospects of availing future better employment opportunities are enhanced. Second, the educational costs that a student or his family must bear. On the supply side, the quantity of education at the primary, secondary and university levels is largely determined by political processes and policy responses, often unrelated to or in misalignment with economic criteria. While a study of demand side of the education sector is interesting, the supply side of it is even more interesting and worth highlighting, particularly at the school levels. Given the unemployment scenario and an ever mounting political pressure on governments to create more jobs, state governments have increased the supply side of public education by endlessly employing teaching professionals year after year as a convenient policy measure to fire fight unemployment. What worsens this condition is that adequate measures have not been taken to also enhance the corresponding demand for public education, let alone ensuring the requisite infrastructural needs. However, private education systems in the state, even though affected by many non-economic factors, are largely determined by demand and supply, like any other commodity and service. Meanwhile, in the human capital approach of development, when we speak of analysing the state’s educational system for its niceties and nuances, it is also necessary to duly consider its health system. The World Health Organisation in ‘Framework of Action (2007)’ describes that ‘a health system consists of all organizations, people and actions whose primary intent is to promote, restore or maintain health. A health system is therefore more than the pyramid of publicly owned facilities that deliver personal health services. Outside this formal system is an informal network, often used by poorer citizens, which includes traditional healers and medicinal systems. It is a fact that although, the number of medical institutions has increased considerably over the years in the state but the dependence of people per medical institution is still very high. The health infrastructure in the state at all levels suffers from shortages that are both qualitative as well as quantitative in nature. In fact despite progress made in the health delivery system, the progress has been quite uneven with huge inter-district variations and rural and remote areas continue to have deficit in health facilities and manpower. At the same time our state is also beset by the challenges of the contemporary issues faced by developing economies worldwide that encroach upon its human capital. These issues include absolute poverty, youth unemployment, child labour, AIDS epidemic, malnutrition, prevalent and neglected diseases and lack of resilience to natural disasters. These issues are as relevant to the state as to any developing economy, irrespective of their current levels of prevalence. And the other issues are equally threatening. But by ensuring basic education and health, such issues can be largely dealt with. On the whole, ensuring adequate investments in physical and human capital, supplemented by effective management and resolution of the issues will lead to unprecedented economic growth and development. However, these investments need to be cross-cuttingly coherent and in sync with market factors, policy measures and political responsiveness.