One potent criticism of the Indian growth story is that it has not generated corresponding improvements in social indicators. The new global ranking of countries based on their human development index (HDI) was released by the United Nations Development Programme on Monday. India has moved up six notches from 2009 to 2014.
The data also shows that most of the current Indian ranking can be explained by the level of average income. The difference between India’s gross national per capita income rank and HDI rank is four. In other words, India is just four places below what its average income predicts. But then, Bangladesh has an HDI ranking five places above its income ranking. Sri Lanka’s HDI ranking is 29 places above its income ranking. This means that economic growth is still the best bet for improving living conditions—but that is not the whole story.
HDI, as it is defined today, involves three parameters that directly increase human capabilities—a long and healthy life, knowledge, and a decent standard of living. The new Human Development Report (HDR) explores in detail one fundamental factor which increases or decreases human capability—work.
It says: “Of the world’s 7.3 billion people, 3.2 billion are in jobs, and others engage in care work, creative work, voluntary work or other kinds of work or are preparing themselves as future workers. Some of this work contributes to human development, and some does not. Some work even damages human development.”
Implicit work like the contributions of homemakers and volunteers add significantly to human development, whereas explicit work which is underpaid or bonded may have negative repercussions. The work of overseas workers and their remittances have brought about human development to both the source and destination countries. In 2014, with $70 billion (4% of GDP) India topped the list of developing nations which received remittances from abroad.
The report takes special care to differentiate work from jobs. While work is not necessarily always rewarded, a job is work done for a predetermined payment. It is the divergence between the monetary evaluation of work and job that essentially divides the world, widening inequality. Between 1990 and 2015, income poverty in developing country regions fell by more than two-thirds. But during the same period, income inequality increased by 11%. High inequality in all three dimensions has cut India’s HDI score by an estimated 28.6%.
According to the report, the two groups of labour whose potential is not fully utilized are the youth and women. HDI is lower for women than men in all regions. The world youth-to-adult unemployment ratio is at a historical peak.
India has a lot of work to do here.
India needs to address the three parameters of human development separately—and simultaneously.
First, it cannot possibly envisage a long and healthy life without addressing the issue of malnutrition which is plaguing it. The recent improvements in nutrition have been noteworthy but not enough.
Second, in terms of knowledge, India needs to ensure access and quality through effective implementation of schemes such as Digital India and Skill India.
Third, for a higher standard of living, it should ensure that work is quantitatively and qualitatively enhanced in the country. The country’s efforts in terms of employment guarantee schemes have been lauded for its role in reducing unemployment. But it is by no means a long-term remedy. India needs to reform its rigid labour market governed by obsolete laws, address problems of child labour and forced labour, and bring about wage equality.
HDR 2015 has an agenda for decent work that rests on four pillars: employment creation and enterprise development; standards and rights at work; social protection and governance; and social dialogue. The formula is simple enough. Making use of it will be less so.
Do you think inequality prevents human development?