In India, HRA, as a system, has not been introduced so far: The Companies Act, 1956 does not insist on the furnishing of any significant mention about HR in the financial statement of companies. Despite the constraints and challenges, a few public sector undertakings like BHEL, SALE, and MMTC have taken the lead in introducing HRA in their organizations. It is a welcome trend. At the same time, the application and usefulness of HRA depends on the efforts and experiments to be made by the practicing managers, accountants, and academicians. Of course, there is no motivating force behind the adoption of HRA except image building and fascination towards the latest accounting systems. Therefore, the application of HRA needs support from the professional bodies and the Government.

Men, materials, machines, and money are the most important factors of production. These factors can be utilized only when human resources are involved. Human assets constitute a valuable organizational resource and play a dominant role in the effective use of physical and financial resources. Human element is a key factor for the achievement of objectives of an organization. Therefore, both public and private sector enterprises stress the importance and contribution of their employees to the growth of the enterprise. Such qualitative pronouncements stress the importance of human resources in an enterprise.

Veda Vyas in the Mahabharata has stated, "For man nothing is superior to Men". Alfred Marshall has also expressed the importance of human beings by remarking "The most valuable of all capital is the investment in human beings". Fayol, the noted French management writer, was given charge of an almost bankrupt company, but he made it into a very successful concern. Everyone agrees that the only real long-lasting asset which an organization, say, any society or nation, possesses is the quality and caliber of the people working in it. It is, however, unfortunate that so far there is no agreed and generally accepted method of putting a value on this vital asset and showing it as a part of the financial statements.

Today, Human Resource Accounting (HRA) is increasingly gaining significance due to the fast changing economics of Human Resource Management (HRM). It refers to the measurement of the costs of recruiting, selecting, placing, training, development, and replacement of human resources of a concern. In fact, the scope of HRA is associated with the scope of modern HRA which is highly dynamic in nature. Thus, HRA is the process of identifying and measuring data about human resources and communicating the same to all concerned. Although, very recently corporate networks have realized the role of HRs in the success of an enterprise, they could not quantify their value, which ultimately gave birth to this accounting sub-system. It seeks to report and emphasize the importance of human resources—knowledgeable, trained, and loyal employees—in a company's earning process and total assets as a process in accounting language, i.e., it is a logical and significant extension of the scope of enterprise accounting which ought to measure and report the human dynamics of an enterprise to managerial mechanism.

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