Economic Highlights

New Delhi, 12 September 2022

India’s HDI Rank Loss

UN WARNS OF UPHEAVAL

By Shivaji Sarkar

A rank loss on the UN Human Development Index is a grave indicator of India’s overall social and economic performance that invites investment and global participation. India slipped to 132 from 131 last year, 130 in 2015 as has been, with many countries during the controlled Covid-19 regime for over two years, says the UN Human Development Report (HDR).

The period was marked by slippage on quality of life, attainment to basic schooling, healthcare, job losses, penury, and overall lack of opportunities despite statistical growth, underlining the need for greater investments in human development. This indicates that the country has to measure up to the sufferings of the common man.

India needs course corrections for holistic happiness and not mere cosmetic achievements as it has hit sustainable development goals (SDG). The growth as per HDI is not merely the GDP but beyond it. It was created to emphasise that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone.

It is a succinct message for strengthening the political delivery at an effective pace to affirm that India’s run-up to the 5^th largest economy has to be more assimilative. It calls for a robust public sector to address the complex failures.

For instance as the country grows, its National Green Tribunal imposes Rs 200 crore penalty on Ghaziabad, an extension of the national capital Delhi, for its waste disposal lapses. Many cities like Bengaluru, Mumbai, Gurgaon, Hyderabad getting deluged by rains are another example of not so comfortable life devastated with capture of water bodies by the real estate dealers. The infra growth is marked by more discrimination. The rising fuel, food and commodity prices are creating many aberrations.

It is a complex composite index that reveals more than the GDP, a gauge of incomes or output. The HDI is computed on the basis of three parameters – life expectancy, mean years of schooling and average per capita national gross incomes. The per capita income of an Indian has fallen from Rs 94,270 in 2019 to Rs 85110 in 2021 and per capita GDP as per the World Bank is $ 1961.42, 16 percent of world average.

India’s HDI values of 0.633, down from 0.642 in 2020, correlating to a “medium human development category country” denotes miserable conditions including falling life expectancy from 69.7 to 67.2. It is behind Bangladesh (129^th), Bhutan (127^th), Sri Lanka (73^rd) and China (79^th). Switzerland with 0.962 got the top global ranking, meaning less than the best UN parameters.

Income inequalities amplify failings on other HDI indices of human development. Intergenerational income mobility is lower in countries with high-income inequality.While most reports suggest inequality has increased in India because of a rise in poverty and shrinkage of the middle class, the report by National Bureau of Economic Research shows a decline in inequality. This is because Indians in higher percentiles of the income distribution saw larger relative income declines during the pandemic. However, it fails to reflect the deprivations of poor households. An Oxfam report, considered biased by the official agencies, says inequality has been rising sharply in the last three decades.

For these three decades, since the 1990 neo-liberalism, rhetoric of open and free markets, less government and less regulation, more private players and entrepreneurs, has been concomitant with the slow death of key public institutions. Quite a few public institutions have been subjected to erosion like those of the health sector. The chaotic covid healthcare has been responsible for so many deaths.

The HDR appreciates India’s support to the vulnerable sections, South-South cooperation, International Solar Alliance and Coalition for Disaster-Resilient Infrastructure and net zero carbon emission targets.

The State of Inequality in India Report released by Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister (EAC-PM) in May, 2022, says that inequities across sectors of health, education, household characteristics and the labour market make the population more vulnerable and triggers a descent into multidimensional poverty.

The World Inequality Report 2022 says the world’s most extreme inequality has been observed in India. It notes India is a “poor country and very unequal, with an affluent elite”. The WIR says the top 10 per cent of the country’s population account for 57 per cent of the national income, of which, 22 per cent is held by the top 1 per cent. While a small section of India’s populace enjoys 5-star privileges, for the bottom 50 per cent sustainability of life is still a challenge. This is due to a variety of factors, including but not limited to, loss of job opportunities, an erratic unorganised sector, and rising poverty and inflation. The bottom 50 per cent are earning Rs 53160 and the top ten per cent Rs 1166520, 20 times more.

The Gini (inequality in income distribution) coefficient points to an increasing inequality in India. The coefficient in 2014 was 34.4 per cent (100 per cent indicates full inequality and 0 per cent full equality). The coefficient increased to 47.9 per cent in 2018. India is said to be next to Russia in the world in terms of inequality.

The report also suggests that stress, sadness, anger, and worry have been increasing over the last decade, now reaching record levels. The HDR cautions that “uncertainty, inequality and insecurity go hand in hand with polarisation and lack of trust”. It finds the political volatility becoming reality.

Developing countries in every region are entering a sharply divergent social, political and economic period with sharp downside risks for the most vulnerable and regression in gender equality. India’s per capita GDP increased five times between from $443 in 2000 and $2014 in 2019. This doesn’t mean a uniform rise in income. The top one per cent in India earned 21 per cent of total country’s income in 2019. This was 11 per cent in 1990.

The HDR sees a turbulence in low income, low HDI countries as interpersonal trust and human security may become casualties. The HDR praises India for its achievements on the Covid-19 vaccination but nonetheless it is concerned over the critical downslides that could lead to a volatile national and international scenario. The HDI remains a concern but it also hints at increasing conflicts across the world. It can be both conflict among the nations as being seen in Ukraine, Taiwan and elsewhere as also internal clashes and political upheavals. ---INFA

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