Inequality adjusted Human Development Index for India’s States
Abstract
The 2010 UNDP Global Human Development Report The Real Wealth of Nations: Pathways to Human Development introduced a new index, the Inequality-adjusted HDI aimed at capturing the distributional dimensions of human development. Three dimensions of HDI i.e. income, education and health are adjusted for inequalities in attainments across people. Globally, India is ranked 119 out of 169 countries but loses 32 percent of its value when adjusted for inequalities.
Amidst growing concern over these persistent inequalities, and in light of government emphasis on inclusive growth, this paper calculates the HDI and Inequality-adjusted HDI for states in India. The methodology adopted is similar to the approach of the HDR 2010 and data utilized from different rounds of the National Sample Survey on appropriate variables. To facilitate a cross-country comparison, the indices are normalized with reference to the goalposts outlined in the HDR 2010.
When ranked according to global goalposts, Kerala’s rank is 99 (between Philippines and the Republic of Moldova) whereas Orissa is ranked 133 (between Myanmar and Yemen). Amongst India’s states, Madhya Pradesh suffers the greatest loss of HDI due to inequality with 35.74 percent. Variations in IHDIs across states and a comparative analysis with global averages reveal that inequality in the distribution of human development is distinctly more pronounced in India than elsewhere.
Further, loss resulting from inequality varies across dimensions and is highest in education (43percent), followed by health and income. Loss resulting from inequality in education is much higher than the global average of 28 percent and loss due to inequality in health is 34 percent, compared to the global average of 21 percent. The findings of this paper suggest that human development outcomes alone, without measurement of inequalities, may significantly mask the performance of individual states.