HUMAN ECONOMICS

DEVELOPMENT INDEX PROJECT

INTRODUCTION
Human Development Index (HDI) is a tool to measure a country’s development
based upon its economic and social measurements. The tool was developed to lay on
the fact that a country’s overall development is not only accessed based on its
economic growth but also accessed based on its people and their capabilities.
Both social and economic dimensions of a country consider the health of the people,
their education capabilities, their standard of living, and Gross National
Income(GNI) per capita.
Human Development Index is calculated through the normal indices of each of the
above three factors. Human Development Index is the mean of these indices. HDI is
also used to question a country’s national policy and compare the countries with
similar GNI per capita to question why the human development of there countries
are different despite having similar Gross National Income (GNI) per capita.
WHAT IS THE HUMAN
DEVELOPMENT INDEX?
Human Development Index or HDI integrates the significant social and economic
aspects of a country to assess the overall development of the country. HDI generally
uses the three dimensions of the development of the country’s population that
include their education, their standard of living and the health of the people based on
which countries development is assessed .
In the year 1990, the Human Development Index was first used by the Pakistani
Economist Mahbub Ul Haq. The index is further used by the United Nation
Development Program to rank countries and is considered as one of the best tools to
assess the country’s development on the basis of its economic and social
measurements.
 ORIGIN OF HDI
The origins of the HDI are found in the annual Human Development Reports
produced by the Human Development Report office of the United Nations
Development Program (UNDP). These were devised and launched by the Pakistani
economist Mahbub Ul Haq in 1990, and had the explicit purpose “to shift the focus
of development economics from national income accounting to people-centered
policies”. Haq believed that the simple composite measure of human development
was needed to convince the public, academic, and politicians that they can and
should evaluate development not only by economic advances but also improvements
in human well being.
 FACTORS CONSIDERED
FOR HDI
The Human Development Index considers three main dimensions to evaluate the
development of a country :
1. Long and healthy life
2. Education
3. Standard of living
~ Create an overall score between 0 and 1.
~ 1-indicate a high level of economic development.
~ 0 - a very level
 GROWTH AND
DEVELOPMENT
Dynamic panel estimates of economic growth using standard measurements of GDP
per capita are compared to estimates of a model of growth in the Human
Development Index(HDI) developed by the United Nations . The only independent
variables that are found to be significantly related to growth in HDI are population,
population growth, and the initial level of GDP. The difference in the two models
cannot be simply explained as HDI measuring the same effect as GDP. Restricting
the sample to only developing countries and estimating the model using the HDI
rank order of countries does not significantly alter the results.
FOUR PILLARS OF
HUMAN DEVELOPMENT
Just as any building is supported by pillars, the idea of human development is
supported by concepts of equality, sustainability, productivity and empowerment.
1. EQUITY – refers to making equal access to opportunities available to everybody.
2. SUSTAINABILITY – means continuity in the availability of opportunities.
3. PRODUCTIVITY – here means human labour productivity or productivity in
terms of human work.
4. EMPOWERMENT – means to have the power to make choices.
MEASURING HUMAN
DEVELOPMENT
The Human Development Index (HDI) is a composite statistics of life expectancy,
education and income indices to rank countries into four tiers of human development . It
was created by economist Mahbub Ul Haq , followed by economist Amartya Sen in 1990,
and published by the United Nations Development Programme (UNDP) .
In its 2010 Human Development Report, the UNDP began using a new method of
calculating the HDI. The following three indices are used:
1. Life Expectancy Index
2. Education Index: It includes;
A) Mean years of schooling index
B) Expected years of schooling index
3. Income Index
Finally , the HDI is the geometric mean of the above three normalized indices.

1. Among 187 counties ranked in the Human Development Report, India comes in at a
dismal 135th (2014) in the main composite index .
2. HDR 2011 makes the important point that environmental degradation and climate change
will exacerbate inequalities, a trend already evident.
3. The report said India’s Human Development Index(HDI) value for 2011 was 0.547
positioning the country in the ‘medium human development category’.
4. Neighbouring Pakistan was ranked at 145 (0.504) and Bangladesh at 146 (0.500)
5. It said between 1980 and 2011, India’s HDI value increases from 0.344 to 0.547, an
increase od 59 percent or an average annual increase of about 1.5 percent.
 COMPUTING THE
HDI
To construct the index, fixed minimum and maximum values have been established
for each of the indicators:
1) Life expectancy at birth : 25 years and 85 years.
2) General literacy rate : 0 percent and 100 percent.
3) Real GDP per capita (PPP$) : PPP$100 and PPP$40,000.
Individual indices are computed first on the basis of a given formula, HDI is a
simple average of these three indices and is derived by dividing the sum of these
three indices by 3.
With normalization of the values of the variables that make up the HDI, its value
ranges from 0 to 1. The HDI value for a country or a region shows the distance that it
has to travel to reach the maximum possible value of 1 and also allows inter-country
comparisons.
 CALCULATION OF
HDI
Formula to calculate Human Development Index (HDI)=(Life Expectancy Index X
Education Index X Income Index) 1/3
HDI = LEI * EI * II /3
New Human Development Index (HDI) is the geometric mean of Life Expectancy
Index (LEI), Education Index (EI) and Income Index (II).
After this calculation the total value will be between 0 and 1. As per the values
gained, countries will be placed in the list of division of countries. They are divided
into very high human development , high human development , medium high human
development and low high human development countries.
 EXAMPLE OF HDI
For example the life expectancy at birth of a particular country is 65 years. Assuming
maximum value and minimum value of life expectancy to be 80 and 20 respectively for a
particular year, the life expectancy index can be calculated as follows:
LEI = 65-20/80-20 = 45/60 = 3/4 = 0.75
As calculated above, the individual indices of educational attainments and adjusted real
GDP per capita can be found out for a particular year. Then by taking a simple arithmetic
average of all the three indices, we can get a human development index for the country
concerned.
Human development index= LEI + EAI + SLI / 3
Where, LEI = LIFE EXPECTANCY INDEX
EAI = EDUCATIONAL ATTAINMENT INDEX
SLI = STANDARD OF LIVING INDEX OR real GDP per capita index.
From the above case it is clear that the human development index emphasizes the quality
of life in contrast to the national and per capita income.

Which only focus on quantitative aspects of development. According to the human

development report 2001. Indian was in 115th position in the world out of 174 countries
in terms of human development index prepared for the year 1999. In 2004, India’s
position went down to 127.

In India, the planning commission has prepared the human development index for
different stated and union territories for 2001. According to the report, Kerala ranks first
(0.638) followed by Punjab (0.537). Orissa’s position is 11th in the order (0.404).
 INTERNATIONAL
COMPARISONS
Human Development Index (HDI) integrating greenness and fairness indicators is an
important reference for global governance. This paper used the geometric method to
measure the primary HD index (CHDI1). HDI integrating greenness indicators
(CHDI2).HDI integrating fairness indicators (CHDI3) and HDI integrating greenness
and fairness indicators(CHDI4) of 57 countries from 1990 to 2014. The results show
that four CHDI of 57 countries were all increased , but the development levels where
unbalanced among countries. Some emerging industrialized countries, such as china,
have made great achievements in development, but the basic patter has not changed.
The average CHDI1 of 51 countries was 0.58 in 2014, and this index decreased by
23.3, 20.3 and 39.34% respectively, after corrections by greenness, fairness and both
indicators. China’s CHDI1 rapidly increased from 1990 to 2014, which accounted
for 84.71 of the mean value of 57 countries in 2014 and its rank moved up 12 places
among 57 countries. However , this index decreased by 19.2, 42.25 and 53.3%
respectively . In order to improve the quality and efficiency of HD, China should not
only promote the growth of material wealth and the improvement of social service,
but also promote ecological civilization and pay more attention to social fairness.
 HDI ASPECTS OF INDIA
As compare to the pre-independence days India had done well in development in
general. As per Human Development Reports(HDR) published annually by the
UNDP, India has consistently improved on the human development front and is
grouped among the countries with ‘medium human development’.

PROGRESS MADE BY INDIA

~ India’s gross national income per capita has more than double since 2005,
according to the UNDP’s HDR reports 2019, and the number of “multidimensional
poor“ individuals has decreased by more than 271 million since 2005-06.
~ Inequalities in “basic areas” of human development have also decreased.
~ In terms od educational attainment, historically marginalized groups, for example
are catching up to the rest of the population.
REASONS FOR INDIA’S
UNDER PERFORMANCE
ON HDI
India is ranked 131st in the 2020 HDI, with per capita income of $6,681, a notch
lower than its 2019 ranking of 129th. Deep-rooted societal and economic
disadvantages are to account for a poor ranking for an economy that is in the world’s
top six in terms of size. The following causes can be attributed to India’s poor HDI
performance.
~ INCREASING INCOME INEQUALITIES
Income disparities amplify failures on other HDI human development indices. In
countries with substantial income disparity, intergenerational income mobility is
lower.
~ GENDER INEQUALITY
According to statistics, female per capita income in India is just 21.8 percent of that
of males, although it is more than twice in other emerging countries , at 49 percent.
~ CUMULATIVE IMACT
These elements have a long- term impact that spans generations. This intergenerational loop
deprives people at the bottom of the pyramid od opportunity.

Conclusion
India’s HDI scores can be significantly improved if a politically committed government
implements inclusive policies to improve public health, education and nutrition as well as to
eliminate gender discrimination and usher in a more equal society.
HDI PROGRAMME IN
INDIA
~ Unique in its kind.
~ Preparation of not only national reports, but also sub- national Human Development
Reports.
~ Decentralized and integrated the human development concept into its development
agenda at national, state as well as district level.
~ More HDRs have been produced in India than the total number of global HDRs.
~ Plan is made by the Planning Commission United Nation Development Programme
(UNDP) partnership through the preparation of State Human Development Reports
(SHDR) and District Human Development Reports (DHDR).
~Human Development Programme started in five year plan(1992-97).
~ First state – Madhya Pradesh .
~ The world’s first state HDR was published in Madhya Pradesh in 1995.
~ Computation of the states HDI’s as well as HDI for all the districts in the state made by
the state government.
~ So far 21 states have prepared HDR’s .
~ State Government have initiated the work on district HDR’s for 80 districts of which
23 HDR’s have been released till date.
~ In 2009- The first city HDR (Mumbai) was launched.
 HDI STATE WISE
LIFE EXPECTANCY STATE WISE
Among Indian states Kerala, Delhi, Jammu & Kashmir, NE states (excluding Assam)
and Maharashtra have highest Male Life Expectancy. Kerala tops the charts with
male life expectancy of 73.5 .
In female life expectancy Kerala, Jammu & Kashmir, Delhi, Uttarakhand &
Himachal Pradesh tops the charts with Kerala leading at 79.2 years.
PROJECTED LEVELS OF
EXPECTATION OF LIFE AT
BIRTH
STATE & UT’s MALE FEMALE
Andhra Pradesh 69.6 73.6 Assam
67 69.7 Bihar
70.9 71.8 Chhattisgarh
67.1 70.8 Gujarat
70.4 74.6 Haryana
69.4 74.1 Himachal Pradesh 70.9
76.8 Jammu & Kashmir 72.8
77.8 Jharkhand 70.4
71.8 Karnataka 69.7 73.3
Kerala 73.5 79.2
Madhya Pradesh 66.7 70.5
Maharashtra 71.9 75.9 Delhi
73.5 77 NE
States(excluding Assam) 72.1 75.9
 IMPORTANCE OF
HDI
~ The HDI gives an overall index of economic development.
~ It does give a rough ability to make comparisons on issues of economic welfare
much more than just using GDP statistics show.
~ It gives ideas regarding areas of development which requires improvement.
~ Statistics give better decision making for areas having wide disparity.
~ More focus on social and human development rather than only capital
accumulation and growth.
 LIMITATIONS OF HDI
~ Wide divergence between countries . For example countries like China and Kenya
have widely different HDI sources depending on the region.
~ Economic welfare depends on several other factors , such as threat of war, levels of
pollution, access to clear drinking water etc.
~ GNI does not show how the income is spend by the government , some countries spend
more on military than on health care.
~ When knowledge is measured it only take into account what children learn at school
not in the family. And so may be knowledge statistics may be distorted if the family plays
more of a role in education in the home. Longevity can also be distorted as a life
expectancy of a a person does not consider how healthy the life was led.
~ Life expectancy value for a country is given as an average of the total population.
There are so many communities in the country that will not have access to good health
care services and so there will be variations of life expectancy values.
 CONCLUSION
The HDI gives an overall index of economic development . There are certain
difference among different states development conditions so there must be equal
opportunities for development for all. Some important issues are missing in HDI
such as infrastructure and some economic factors .