Q. 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?
Introduction:
HDI measures average human development achievements, while IHDI adjusts it for inequality, reflecting actual distribution of welfare.
HDI vs IHDI – Key Differences
| Aspect | HDI | IHDI |
|---|---|---|
| Concept | Average achievements | Inequality-adjusted achievements |
| Dimensions | Health, Education, Income | Same 3 dimensions |
| Inequality factor | Ignored | Incorporated (distribution-sensitive) |
| Nature | Potential human development | Actual human development |
| Interpretation | Higher = better average | Lower than HDI if inequality exists |
| Developed by | United Nations Development Programme | Same (introduced in 2010 HDR) |
India: HDI vs IHDI (Key Insights)
- HDI Rank (2023): ~0.64 (Medium human development category)
- IHDI Value: Drops significantly (~20–25% loss due to inequality)
- Inequality Loss: Higher than global average in education & income
Dimension-wise Inequality (India)
- Education: Rural–urban divide, gender gap
- Health: Inter-state disparities (e.g., Kerala vs BIMARU states)
- Income: Top 10% holds ~57% of national income (World Inequality Report)
Example
- Kerala: High human development + relatively low inequality
- Uttar Pradesh/Bihar: Lower HDI + higher inequality → larger IHDI drop
Why IHDI is a Better Indicator of Inclusive Growth?
1. Captures Distribution (Equity Dimension)
- HDI ignores who benefits
- IHDI reflects intra-societal disparities
2. Reveals Hidden Deprivations
- Same HDI, different inequality levels → different IHDI
- Example: India vs countries with similar HDI but lower inequality
3. Aligns with Inclusive Growth Goals
- Inclusive growth = growth + equity
- IHDI integrates both → better policy guidance
4. Policy Relevance
- Highlights need for:
- Targeted welfare (DBT, MGNREGA)
- Social sector spending (health, education)
- Supports recommendations of:
- NITI Aayog (SDG localisation)
- World Bank (shared prosperity focus)
5. Tracks SDGs More Effectively
- Linked to SDG-10 (Reduced Inequalities)
- Helps monitor leave no one behind principle
Challenges Highlighted by IHDI in India
- Regional imbalance (North–South divide)
- Gender inequality (low FLFP, education gaps)
- Social stratification (caste, tribe-based exclusion)
- Urban–rural service delivery gaps
Way Forward
- Redistributive policies: Progressive taxation, welfare targeting
- Human capital push: NEP 2020, Ayushman Bharat
- Regional focus: Aspirational Districts Programme
- Gender inclusion: Skilling + employment generation
Conclusion:
IHDI, by adjusting for inequality, provides a truer picture of inclusive development, making it a superior tool for policy design in diverse societies like India.