Introduction
The Human Development Index (HDI), developed by UNDP, measures average achievements in health, education and income. However, it ignores how these achievements are distributed. To overcome this limitation, the Inequality-adjusted Human Development Index (IHDI) was introduced, which adjusts HDI for inequality within a country. This distinction is crucial for a highly diverse and unequal country like India.
HDI vs IHDI: Key Differences
| Basis | HDI | IHDI |
| Nature | Average level of development | Actual level after inequality adjustment |
| Treatment of inequality | Ignores inequality | Penalises inequality |
| Value | Always higher | Always lower or equal |
| Interpretation | Potential human development | Real lived human development |
| Policy relevance | Broad progress | Inclusiveness of growth |
India: HDI and IHDI Performance
- India falls under the medium human development category based on HDI.
- When inequality is adjusted, India loses nearly 30% of its human development value.
- This gap reflects regional, rural-urban, gender and socio-economic disparities — e.g., southern vs BIMARU states.
Why IHDI is a Better Indicator of Inclusive Growth
- Captures Distribution, Not Just Averages: HDI can rise even if benefits reach only the elite, while IHDI reflects mass inclusion.
- Reflects Ground Reality: Shows real access to health, education and income.
- Reveals Hidden Inequalities: High GDP growth with poor welfare is exposed by IHDI.
- Guides Targeted Policy: Helps evaluate welfare schemes and subsidies.
- Aligns with Inclusive Growth: Measures both growth and equity together.
Conclusion
While HDI reflects India’s overall progress, IHDI exposes the unequal distribution of these gains. The significant HDI-IHDI gap highlights that development benefits remain uneven. Hence, IHDI is a superior indicator of inclusive growth as it measures equity along with development — a necessity for sustainable and just progress.
