"India should make a transition to the Knowledge Economy". The above statements implies that strength of India lies in :

Strength in Human Capital Formation

The correct answer is option (2) : Strength in Human Capital Formation

(2) Strength in Human Capital Formation

The statement "India should make a transition to the Knowledge Economy" implies that the strength of India lies in its human capital formation. A knowledge economy is characterized by an increasing reliance on intellectual capabilities, information, and skills rather than traditional factors of production like natural resources or manual labor. For a country to transition successfully to a knowledge economy, it needs a well-educated and skilled workforce, which is an aspect of human capital. Human capital encompasses the knowledge, skills, and abilities that individuals possess, and investing in education, training, and skill development contributes to the formation of a strong human capital base. Therefore, the emphasis on transitioning to a knowledge economy suggests a recognition of the importance of human capital, indicating that the strength of India lies in the skills, knowledge, and intellectual capacity of its population.

"World Bank, in its recent report, ‘India and the Knowledge Economy — Leveraging Strengths and Opportunities’, states that India should make a transition to the knowledge economy and if it uses its knowledge as much as Ireland does (it is judged that Ireland uses its knowledge economy very effectively), then the per capita income of India will increase from a little over US $1000 in 2002 to US $ 3000 in 2020. It further states that the Indian economy has all the key ingredients for making this transition, such as, a critical mass of skilled workers, a well-functioning democracy and a diversified science and technology infrastructure."

Note: Question from old NCERT Book.