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The article discusses the role and significance of education in economic, political and social change. The educational system now tends to be viewed as the master determinant of all aspects of change. This article illustrates both the strengths and weaknesses of the approach to the problem adopted by one school of neo-classical economists. The author attempts to estimate for India the "internal rates" of return to investment in human capital, comparing them with returns to investment in physical capital in the modem private sector of industry. It is concluded that the returns on educational investment for India appear to be considerably lower than for investment in private industry. In determining the growth potential of investment in education problem arises of weighing up the economic and social consequences of investment in different types and levels of education. Still influential is the view that as the underdeveloped countries of the world suffer from a shortage of skilled manpower, investment should be directed overwhelmingly into vocational education.