The promise of development has emerged as a rallying point for political parties for the elections. Taking stock of the achievements of the past few years, as portrayed in the Human Development Report, underscores the task ahead and the need for a clear strategy for embarking on a long journey.

HIGHLIGHTS

• Reports on India’s Development:
  • The Human Development Report 2023-24 by UNDP and a paper by the World Inequality Lab highlight key facets of India’s development.
  • These reports provide a comparative perspective on human development achievements and long-term trends in income and wealth inequality.
• India’s HDI Ranking and Trends:
  • India ranked 134 out of 193 countries in the UN Human Development Index (HDI) in 2022, showing a marginal improvement from 2021
  • However, even though India moved up a rank compared to 2021, it still fell behind Bhutan, Bangladesh, Sri Lanka, and China. The medium human development category of countries includes Myanmar, Ghana, Kenya, Congo and Angola.
  • The HDI value increased from 0.633 in 2021 to 0.644 in 2022, placing India in the medium human development category.
  • From 1990 to 2022, India’s HDI value increased by 48.4%, reflecting overall progress.
• Gender Inequality Index (GII):
  • India improved in the Gender Inequality Index (GII), ranking 108 out of 193 countries in 2022 compared to 122 in 2021.
  • However, there’s a significant gender gap in labor force participation, with a 47.8% difference between women (28.3%) and men (76.1%).
• Concerns on Rising Inequality:
  • The reports highlight rising inequality between countries, affecting human development advancements.
  • Economic concentration is substantial, with a few countries dominating global trade and technology markets.
  • Increased inequality impacts agency and control over lives, particularly for the bottom 50% of the population.
• Adjusted HDI and Comparative Loss:
  • When adjusted for inequality, India’s HDI loss is 31.1%, higher than some neighboring countries like Sri Lanka, Bangladesh, Nepal, and Pakistan.
• Income Distribution:
  • The bottom 50% of India’s population receives only 15% of the national income.
  • In contrast, the top 1% earns 23 times more on average than the average Indian, with an income of 5.3 million INR compared to 0.23 million INR.
  • Average incomes for different income groups show significant disparities:
    • Bottom 50%: INR 71,000 (0.3 times national average)
    • Middle 40%: INR 1,65,000 (0.7 times national average)
    • Richest 10,000 individuals: INR 480 million (2,069 times the average Indian)
  • Implications of Income Inequality:
    • This stark income inequality affects aggregate demand, consumption patterns, and overall human welfare.
    • Growth rates in incomes are disproportionately higher for the top decile compared to the rest of the population.
    • Incomes of the middle 40% grew slower than the bottom 50% during 2014-2022, indicating a potential reduction in the size of the ‘middle class.’
  • Economic Polarization and Two-Class Emergence:
    • When growth is concentrated at the top, economic polarization accelerates, leading to the emergence of two distinct classes: the wealthy (‘haves’) and the less affluent (‘have-nots’).
    • This polarization can have profound socio-economic implications, impacting opportunities, social mobility, and overall societal cohesion.

• Record High Household Debt Levels:
  • Household debt in India reached 40% of GDP by December 2023, a record high.
  • Net financial savings declined to 5.2% of GDP, indicating financial strain for households.
  • Types of household debt include unsecured personal loans (rapid growth), secured debt, agricultural loans, and business loans.
• Surge in Annual Borrowings:
  • Annual borrowings by households surged to 5.8% of GDP in 2022-23, the second-highest level in independent India.
  • This high level of borrowing reflects increased financial pressure on households.

SUGGESTIONS

• Education and Skill Development:
  • Strengthen education systems to ensure quality education and skill development opportunities for all segments of society.
  • Invest in vocational training programs and lifelong learning initiatives to enhance employability and income-generating capabilities.
• Healthcare Access and Quality:
  • Improve access to affordable healthcare services, especially in rural and underserved areas.
  • Focus on preventive healthcare measures, disease management, and mental health support to enhance overall well-being.
• Gender Equality and Women’s Empowerment:
  • Implement policies and programs to address gender disparities in labor force participation and income.
  • Promote women’s empowerment through education, entrepreneurship support, and equal opportunities in the workforce.
• Inclusive Economic Growth:
  • Foster inclusive economic growth by supporting small and medium-sized enterprises (SMEs), startups, and rural businesses.
  • Implement policies to reduce income inequality, such as progressive taxation and social safety nets for vulnerable populations.
• Debt Management and Financial Literacy:
  • Develop strategies for responsible borrowing and financial management, including promoting financial literacy programs.
  • Provide support and resources for households to manage debt, especially focusing on reducing reliance on high-interest loans.
• Environmental Sustainability:
  • Integrate environmental sustainability into development plans, promoting green technologies, renewable energy, and sustainable practices.
  • Address climate change challenges and mitigate environmental impacts for long-term human development.
• Policy Coordination and Implementation:
  • Ensure coordination among government agencies, civil society organizations, and private sectors to implement holistic development policies.
  • Monitor progress, evaluate outcomes, and make necessary adjustments to achieve sustainable human development goals.
• Community Engagement and Participation:
  • Encourage community involvement and participation in decision-making processes related to development initiatives.
  • Foster partnerships between stakeholders to leverage resources, expertise, and innovative solutions for addressing development challenges.