QUES . 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? Answer in 150 words 10 marks. UPSC MAINS 2025 GS PAPER 3
HINTS:
The Human Development Index (HDI), introduced by UNDP in 1990, measures development beyond GDP by considering health, education, and income. The Inequality-adjusted HDI (IHDI), introduced in 2010, refines this by accounting for disparities in the distribution of these dimensions.
The UNDP Human Development Report 2025 placed India at 130th rank in HDI (HDI value 0.685) but its IHDI value (0.475) fell further due to inequality across regions, gender, and social groups — reflecting the gap between aggregate progress and lived realities.
According to UNDP, income and gender inequality reduced India’s HDI value by 30.7%, which is among the highest losses in the South Asia region. Without such inequality, India’s HDI would be much higher.
What is Human Development Index (HDI)?
The HDI is a global measure developed by the UNDP to assess how well countries are doing in three areas:
1 . Health (measured by life expectancy at birth)
2 . Education (measured by expected and mean years of schooling)
3 . Standard of Living (measured by Gross National Income per capita in PPP terms)
However, HDI ignores inequality, gender disparity, regional variation. Two countries with same HDI may differ drastically in actual distribution.
Must read: Why did human development fail to keep pace with economic development in India?
What is Inequality-adjusted Human Development Index (IHDI)?
The IHDI shows the actual level of human development in a country after adjusting for inequality in health, education, and income. While the normal HDI gives national averages, the IHDI shows how unevenly these benefits are shared. If everyone had equal access, HDI and IHDI would be the same. But in countries with large gaps, IHDI is much lower.
Why is India’s IHDI low?
India faces large gaps in health, education, and income. These gaps are more severe for women, rural populations, and people from disadvantaged backgrounds. For example, average schooling for females is much lower than for males, life expectancy is shorter among the poor, and income is concentrated among the top earners. These differences reduce India’s real human development achievements.
Must read: Disparities in development and incomes between regions in India
For example:
1 . Inequality in standard of living: According to the World Inequality Lab, the top 1% of India’s population holds 22.6% of national income and 40.1% of national wealth.
2 . Inequality in health: As per NFHS-V (2019-21), the Infant Mortality Rate is 41.6 per 1000 live births among Scheduled Tribes (ST), 40.7 per 1000 live births among Scheduled Caste (SC) which is higher than the overall rate of 35.2 per 1,000 live births.
3 . Inequality in education: As per the Census 2011, the literacy rate for males was 82.14% and for females, it was 65.46%.
Countries like Norway or Switzerland lose less than 10% of their HDI when adjusted for inequality. China loses about 11.4%. But India’s loss is over 30%. This means that while India has made progress, the benefits are not shared fairly across its population.
Difference Between Human Development Index (HDI) and Inequality-adjusted Human Development Index (IHDI)
֍ While HDI treats all citizens as if they equally share national achievements, IHDI reveals the “loss” due to inequality, showing how countries like India may appear well developed on paper but less so in terms of inclusive growth.
֍ HDI captures potential achievements, while IHDI measures how far societies fall short due to inequality.
֍ HDI measures average achievements in life expectancy, education, and income whereas IHDI adjusts HDI values for inequality in distribution across dimensions.
֍ HDI ignores inequality and assumes equal access for all whereas IHDI penalises inequality; higher inequality leads to lower IHDI.
֍ HDI shows potential human development under perfect equality while IHDI shows actual human development after accounting for inequality.
Why IHDI is Considered a Better Indicator of Inclusive Growth?
IHDI Highlights Vulnerable Groups and Disparities: Captures gender, caste, regional, and rural–urban inequalities often masked by HDI averages.
IHDI is Outcome Driven: Unlike HDI, IHDI reveals how well development reaches the poorest sections. Thus, IHDI is a more outcome-driven rather than policy-driven.
IHDI correlates with SDGs: SDGs are designed to end poverty, hunger, and discrimination against women and girls. Especially SDG-10 strives to reduce inequality within and among countries.
IHDI promotes targeted interventions: Identifies specific dimensions needing attention.
IHDI is distribution driven: IHDI focuses on distribution, not just growth. It highlights whether progress benefits the majority of the people or remains concentrated in pockets.
IHDI is a better development measure: Especially for a country like India, where mostly the top earners see improvements, IHDI prompts us to focus on leaving no one behind.
Measures inequality loss and helps in policy targeting: Quantifies the “loss” from inequality, helping set priorities where gaps are largest. Helps governments identify dimensions where inequality drags development the most. For example, health, education, income,etc.
Closer link to welfare: Societies with high HDI but poor IHDI (e.g., India, Brazil, South Africa) face social unrest and exclusion despite growth.
Conclusion
IHDI, by incorporating inequality, provides a more realistic and policy-relevant measure of inclusive growth. True development lies not just in averages but also in reducing inequality. After all, a nation’s greatness is measured by how it treats its weakest members.
