Distinguish between the Human Development Index (HDI) and the Inequality-adjusted Human Development Index (IHDI) with special reference to India. Why is the IHDI considered a better indicator of inclusive growth? UPSC MAINS 2025 GS3 Model answer

Distinguish between the Human Development Index (HDI) and the Inequality-adjusted Human Development Index (IHDI) with special reference to India. Why is the IHDI considered a better indicator of inclusive growth?

The Human Development Index (HDI) and the Inequality-adjusted Human Development Index (IHDI) are key tools to measure development beyond GDP. The distinction lies in their treatment of inequality.

Human Development Index (HDI)

  • HDI measures average achievements in three dimensions:
    1. Health – Life expectancy at birth
    2. Education – Mean and expected years of schooling
    3. Standard of living – Gross National Income (GNI) per capita
  • It represents the potential human development level if there were no inequality.
  • Limitation: It provides a broad snapshot but ignores distribution among the population.

Inequality-adjusted Human Development Index (IHDI)

  • IHDI adjusts HDI values by incorporating inequality across the same three dimensions.
  • It “discounts” the HDI based on inequality levels, showing the actual human development people experience.
  • The gap between HDI and IHDI reflects the loss in human development due to inequality.

 

India’s HDI and IHDI: A Case Study

HDI Performance

  • According to the 2023–24 Human Development Report, India ranked 134th out of 193 countries with an HDI value of 0.644 (Medium Human Development).
  • Life expectancy, schooling, and GNI per capita have steadily improved.

IHDI Performance

  • India’s IHDI value in 2022 stood at 0.444, indicating a 31.1% loss due to inequality.
  • This sharp decline highlights that national progress is unevenly shared, with persistent gaps in health, education, and income.
  • Regional disparities (Kerala vs. BIMARU states), gender inequalities, and rural–urban divides explain much of this loss.

 

Why IHDI is a Better Indicator of Inclusive Growth

  1. Measures Equity, Not Just Averages
    • HDI may mask elite-driven growth.
    • IHDI reveals whether benefits are equitably shared, aligning with inclusive growth principles.
  2. Identifies Policy Gaps
    • Breaks down inequality in health, education, and income.
    • Helps India focus on targeted interventions such as healthcare access, digital education, and poverty reduction schemes.
  3. Encourages People-Centric Policies
    • Shifts focus from GDP-driven growth to human well-being.
    • Promotes policies like Ayushman Bharat, NEP 2020, and social security schemes to reduce inequality.

 

Conclusion

While HDI provides a macro-level picture of human development, the IHDI offers a truer reflection by integrating the equity dimension. For India, where inequalities in caste, gender, and region remain stark, IHDI is a better indicator of inclusive growth, ensuring that development translates into improved lives for all citizens.

  Note: This model Answer for Reference Purpose only

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