The recently published report on HDI by the United Nations Development Programme (UNDP) has posed some critical questions for Indian policymakers. BE’s Saptarshi Deb spoke to Basudeb Guha-Khasnobis, Chief of Policy & Senior Economist, UNDP India.
Q) A new parameter has been added to the existing parameters used for evaluating HDI. Can you please explain its importance and impact?
A) This year, the UNDP introduced a new index that factors in the climate footprint of growth and development. It is a major innovation in the way development may be measured and reflects the organisation’s continued thought process at looking at development in ways that reflect the realities of a fast-changing world.
To place it in context, the UNDP introduced the concept of the human development index back in 1990 to emphasise that income alone cannot be an indicator of the well-being of people. At the very minimum, health and education outcomes are critical as they shape an individual’s freedom to fulfil their true potential and live a life they want. For the past 30 years the HDI has been unrivaled as a comprehensive measure of human development. Its popularity can be attributed to its simplicity and natural appeal to everyone. The UNDP introduced several adjustments to the original index which are also regularly published. The two most important variants are the inequality adjusted HDI and the Gender Inequality index. The first underscores the fact that averages often do not reveal the true status of development across any dimension – income, health, and education. The distribution of the same is important. The inequality adjusted HDI measures the loss in human development due to inequality. Similarly, the Gender Inequality index looks at the status of women separately and ranks countries accordingly.
In a similar vein, the P-adjusted HDI accounts for the climate or planetary (P) footprint of a country’s growth. It is captured by two factors: the per capita CO2 emission and the per capita material usage. The original HDI is multiplied by the arithmetic mean of these two to arrive at the P-HDI. When this correction is made, the report shows that many countries in the high human development category drop several places in the ranking.
This new index is experimental. It may be finetuned in the coming years after receiving feedback. But it is a path-breaking step in integrating climate change into development outcome. The climate footprint of countries will be measured systematically. One can hope that everyone will be even more vigilant of the impact of growth on climate change and choose pathways which protect nature.
Q) India has dropped by two points in the recently disclosed HDI rankings. Can you explain its significance?
A) Although India has dropped a couple of places, the absolute value of the index shows a slight improvement. Thus, one can surmise that India has not done badly, but other countries did a little better. The ranking is relative. The absolute value of index rose quite sharply from 1990-2010, slowing down thereafter. India made significant improvements in all three components of the HDI over the years. It will be important to regain the momentum because it is too early for India’s HDI to reach a plateau.
Q) Life expectancy in India is lower than its neighbours like Bangladesh and Pakistan. What can be the reasons?
A) Life expectancy changes slowly over time. It depends primarily on three factors: health spending, access to sanitation and vaccination coverage. India is making commendable improvement in the last two factors. But there is scope for ramping up health spending and strengthening the public health infrastructure as the poorer sections avail public services first. Universal health coverage through schemes such as Ayushman Bharat is a commendable step in that direction and we can expect to see the results in the years to come. One should also bear in mind that “health” is a state subject. Every state must have a good State Health Plan accounting for the realities on the ground. It would be good to monitor life expectancy at the state level on a regular basis, because the final figure that goes into the HDI is nothing but an average of the accomplishments of individual states.
Q) The UNDP report has stated malnutrition is higher among girls in India and linked it to governmental disinvestment. Your comments.
A) Malnutrition is a serious issue in many parts of India. Stunting is the most severe form of malnutrition as it has life-long consequences not just for health but for overall cognitive abilities of the child.
Poverty is often the ultimate cause of malnutrition. However, in a patriarchal society, it is the girl child on whom the impact of poverty falls disproportionately. When food, both in terms of quantity and quality, is limited, families provide for boys first. This discrimination has been observed in other south Asian countries as well. It is not just with respect to food. It applies to medical attention as well. When a boy falls sick, he is more likely to be taken to a doctor than a girl child. Again, these are perverse signs of gender discrimination in our society and within families.
A new form of malnutrition is emerging. It is obesity. Ironically, it is more prevalent among the urban affluent classes, unlike stunting which is more readily associated with poverty and rural areas. Obesity leads to other diseases such as diabetes and hypertension, all of which inhibit a person’s productivity.
Malnutrition in poor and rural societies in South Asia is also caused by gender inequality, especially the lack of women’s economic empowerment. This is known as the “South Asian enigma” where despite enjoying high overall development status compared to sub-Saharan Africa, South Asia fares badly in terms of malnutrition. It is partly attributable to the lower status of women within the families in South Asia compared to sub-Saharan Africa. Evidence shows that women’s empowerment measured in terms of her paid work, education, age at marriage enables her to have a greater say in the way the family budget is spent. If a mother is empowered, a greater portion of the family budget goes for child consumption with less discrimination against a girl child. Therefore, investment alone cannot solve the problem. It requires a broader change of societal norms.
Q) The HDI index also revealed a fall in Gross National Income on the basis of purchasing power parity. What steps can be taken to revitalise the Indian economy in this respect?
A) PPP adjusted gross national income is meant to facilitate cross country comparison of actual living standard arising out of a monetary value of income. The adjustment factor depends on accurate reporting of prices by all countries. When such price data are missing, the International Comparison Programme (ICP) often needs to impute missing values based on regional averages, or by relying on data from price levels in capital cities where prices are often higher than in rural parts of the country.
Also, the identification of a common basket of goods is difficult and arbitrary. One can agree on broad categories such as food and clothing relatively easily. But narrowing down the exact items is much more complicated since allowances must be made for differences in factors such as product quality.
These limitations of PPP apart, between December 2018 and September 2019, nominal year-on-year growth in rural wages has seen a marginal decline from 3.76% to 3.42%. There is a slowdown in the economy, reflected in falling consumption expenditure in the rural sector. This trend is also evidenced in sluggish growth of fast-moving consumer goods (FMCG) and two-wheeler sales.
The growth momentum can return through higher investments in both physical as well as human capital formation. Gross capital formation seems to be lagging of late. Also, the majority of India’s vast population still lack the kind of modern skills necessary to boost their productivity. Well-designed skill development programmes are required all over India. The time is now, as the window of demographic dividend will close sooner than later.
Q) What can be the positive highlights for India in the recently published HDI report?
India’s HDI rank improves by one place when adjusted for planetary impact. Thus, India has an opportunity to balance GDP growth and the impact on climate. This lies in contrast to some of the high-income countries whose HDI ranks drop significantly when adjusted for planetary impact.
India announced the National Action Plan for Climate Change back in 2008. Between 2014 and 2019 India’s solar capacity increased dramatically from 2.4GW to 30GW. If such progress to address climate concerns continue, India can be a leader in achieving high and climate compatible growth while recovering from the current pandemic. Also, India’s rank in the gender inequality index is 123 – 8 places higher than its rank in HDI.