HDI and GDP Growth

The joyful pandemonium over economic growth faintly amuses me and reminds me of the games that able gentlemen play in the corporate boardrooms and corridors. It goes like this.

When we are talking about the progress of the country we must consider the overall growth not only economic. This holistic growth status is better described by Human Development Index in a very useful annual exercise by UNDP. This is a composite indicator which captures the achievements of the country on three basic dimensions of human development namely income, health and education. It is a much more comprehensive indicator than simple GDP growth.

Economic growth is one of the requirements of poverty reduction and human development. It is probably a very good indicator for developed economies which have reached desired levels on parameters like infant mortality, life expectancy or literacy. So in one sense, the only play the developed countries can actually have is economic growth. But poor and developing countries have a lot of work to catch up on the other parameters and the obsessive focus on economic growth alone after ignoring other indicators of progress is callous and insensitive.

It is analogous to the situation, for example ,in FMCG companies where the progress of the brand is projected depending on the requirements of the managers. So based on the context the state of brand could be described by a) current marketshares(ms) b)ms growth over last year c)urban ms d)growth in urban ms e)growth in ms vis-à-vis last quarter f)primary sales growth (sales from company depots to distributors)g)offtake (sales from outlets to consumers) and several others. So in most likelihood, some factors would be showing high growth or a positive trend and the trick is to focus on those factors, hide the unpleasant indicators thus ignoring the holistic health of the brand.

Similarly, economic growth today is being focussed on because it is positive and it induces a feel-good factor. The media is the champion of this drum-beating and I almost see the country’s politicians and industrialists thumping their chests with pride when they meet their counterparts in various seminars and conferences and saying “Mera economic growth tera economic growth se zyada hai”.

They tend to forget that four hundred million of their countrymen go to bed hungry everyday and 2.5 million child deaths ( the highest in the world and one fifth of it) occur in India every year. They forget that even though we are making progress, in absolute terms we have only dented the mammoth poverty obstacle.Illiteracy, hunger, pregnancy related deaths, gender inequality and incidence of disease are rampant and we fare just above sub-saharan Africa on these parameters. The situation in Bihar, MP, Rajasthan and UP are almost as sorry as sub-saharan Africa. These unpleasant truths are captured by HDI but hidden in the metric of economic growth.

So even though India is amongst the top ten countries in economic output on purchasing power parity basis, it is an abysmal 127 on the HDI rankings.

Maybe, it is time the states are ranked on these parameters and they are incentivised on their performance(if not being done already) and this is given wide publicity. ‘India today’ attempts a ranking on these but awareness about it needs to be spread more. At least, the middle classes could use this as pointers to their voting.


Good & well read article.
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