Q1 · UPSC Civil Services Mains 2025 · GS III · 10 marks · 3 min read

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Distinguish between the Human Development Index (HDI) and the Inequality-adjusted Human Development Index (IHDI) with special reference to India. Why is the IHDI considered a better indicator of inclusive growth?

Topic: Inclusive Growth. Syllabus: Inclusive growth and issues arising from it. Same official PYQ from year-wise 2025 and Inclusive Growth.

Revision summary

HDI combines life expectancy, education and GNI per capita into one average. India’s recent HDI is in the medium band, around 0.64, with a rank still in the 130s. IHDI reduces that score for inequality; India has often lost about thirty per cent of HDI to uneven shares. Inclusive growth needs the extra income and services to reach the bottom, which HDI alone can hide. IHDI is therefore the better national test, alongside the multidimensional poverty index.

Model answer

Copper italics in this answer — like this — are the key facts. Each one is unpacked in the Facts & figures rail.

Introduction

The Human Development Index (HDI) measures a country's average achievement in health, education and standard of living. The Inequality-adjusted Human Development Index (IHDI) goes a step further by adjusting these achievements for their unequal distribution. Thus, HDI shows the average level of human development, while IHDI shows how much of that development is actually enjoyed across society.

Body

HDI and IHDI: Key Distinction

  • HDI: Measures three dimensions — life expectancy, mean and expected years of schooling, and GNI per capita.
  • IHDI: Uses the same three dimensions but discounts the HDI according to inequality in their distribution.
  • HDI as an average: It can conceal disparities between States, regions, genders, rural and urban populations and social groups because a high-performing group can raise the national average.
  • IHDI as an inequality-sensitive measure: It reveals the loss in human development caused by unequal access to health, education and income.
  • Potential vs actual development: HDI represents the level of development before considering distributional inequality, whereas IHDI gives a more realistic picture of the human development actually experienced by the population.

India-Specific Picture

  • India's HDI has improved substantially over the long term, but the national average can conceal regional and socio-economic disparities.
  • The source material places India's recent HDI at approximately 0.685, ranking 130 out of 193 countries, in the medium human development category.
  • India's IHDI falls to approximately 0.50, showing a substantial loss of human development because of inequality.
  • The gap demonstrates that improvement in national averages does not automatically mean that health, education and income gains are distributed equally.

Why IHDI Is a Better Indicator of Inclusive Growth

  • 1. Exposes the limitation of averages: HDI can rise even when development remains concentrated among better-off regions and groups. IHDI reveals whether improvements are reaching the poorer and marginalised sections.
  • 2. Measures the cost of inequality: The difference between HDI and IHDI represents the loss in human development due to inequality, making inequality a measurable part of development assessment.
  • 3. Captures India's socio-economic diversity: Differences across States, rural-urban areas, women, SCs, STs and tribal communities can remain hidden behind a single national HDI. IHDI provides a more distribution-sensitive assessment.
  • 4. Helps target public policy: A large inequality-adjusted loss signals the need for greater attention to healthcare, school quality, income opportunities and access to basic services among disadvantaged groups.
  • 5. Directly reflects inclusive growth: Inclusive growth is not merely about increasing aggregate income; it requires the benefits of development to reach different sections of society. Since IHDI penalises unequal distribution, it is a better test of whether growth is genuinely inclusive.

Limitation of HDI

HDI remains important because it provides a simple measure of long-term national progress and enables international comparison. However, it should be read alongside IHDI and measures such as the Multidimensional Poverty Index (MPI) to understand both average development and its distribution.

Flow diagram

Flow diagram

Conclusion

HDI is useful for measuring India's overall human-development progress, but its reliance on averages can conceal substantial disparities. IHDI provides a more meaningful assessment of inclusive growth because it discounts development achievements when they are unequally distributed. For India, the significant gap between HDI and IHDI highlights that the next stage of development must focus not only on raising averages but also on ensuring equitable access to health, education and income opportunities.

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  1. 2024 · Q1 · GS III · 10 marks

    Examine the pattern and trend of public expenditure on Social Services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?( ).

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  2. 2022 · Q2 · GS III · 10 marks

    Is inclusive growth possible under market economy ? State the significance of financial inclusion in achieving economic growth in India.

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  3. 2020 · Q1 · GS III · 10 marks

    Explain intra-generational and inter-generational issues of equity from the perspective of inclusive growth and sustainable development.

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  4. 2019 · Q11 · GS III · 15 marks

    It is argued that the strategy of inclusive growth is intended to meet the objectives of inclusiveness and sustainability together. Comment on this statement.

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  5. 2017 · Q13 · GS III · 15 marks

    What are the salient features of 'inclusive growth'? Has India been experiencing such a growth process? Analyze and suggest measures for inclusive growth.

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More from this topic

Q1 · UPSC Mains 2024 · GS III · 10 marks · Solution

Examine the pattern and trend of public expenditure on Social Services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?( ).

Inclusive Growth

After 1991, social-services spending did not jump at once; it thickened from the mid-2000s with school, health, work and food missions. States spend more on social services than the Union; education is the largest slice and health is smaller. The direction matches inclusive growth: more public money on people, not only on factories. The match is incomplete because learning, public health and out-of-pocket medical costs still exclude many. Inclusive growth is tested by who is reached, not by the size of a budget head alone.

Q2 · UPSC Mains 2022 · GS III · 10 marks · Solution

Is inclusive growth possible under market economy ? State the significance of financial inclusion in achieving economic growth in India.

Inclusive Growth

A market economy does not by itself deliver inclusive growth; it rewards those who already hold assets. Inclusion is possible when the State provides public goods and repairs missing credit and insurance markets. India pairs liberalisation with MGNREGA, NFSA 2013 and Direct Benefit Transfer. Financial inclusion (Jan Dhan, JAM, UPI, Mudra, PM-Kisan) channels savings, cuts leakage and supports demand. Significance for growth depends on actual use of accounts and fair credit, not on account-opening numbers alone.

Q1 · UPSC Mains 2020 · GS III · 10 marks · Solution

Explain intra-generational and inter-generational issues of equity from the perspective of inclusive growth and sustainable development.

Inclusive Growth

Intra-generational equity is fairness among people alive now; it is the core of inclusive growth. Inter-generational equity is fairness toward the unborn; it is the core of sustainable development. Jobless or unequal booms fail the first test even when GDP rises. Aquifer mining, carbon lock-in, and weak environmental clearance fail the second. Policy must raise present capability without running down the ecological and fiscal stock.

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