Source: Giving primacy to human development, The Hindu, (May 9, 2024)
India’s development story presents a complex picture. While the Human Development Index (HDI) shows improvement, a recent report by the World Inequality Lab paints a concerning picture of rising income inequality.
This widening gap, alongside a shrinking middle class and rising household debt, raises questions about the sustainability of India’s growth model. The need for a course correction is evident, with a shift towards a more human-centric development strategy becoming increasingly crucial.
Insights Into India’s Development
- Human Development Report 2023-24: The Human Development Report 2023-24 by the United Nations Development Programme compares human development achievements worldwide.
- World Inequality Lab Paper: A paper by the World Inequality Lab in March 2024 examines income and wealth inequality trends in India from 1922 to 2023.
- Overview of India’s Human Development: India’s rank in the UN Human Development Index (HDI) improved slightly in 2022, landing at 134 out of 193 countries. Between 1990 and 2022, India’s HDI value increased by 48.4%.
Comparison And Challenges:
- Despite its rank improvement, India still lags behind countries like Bhutan, Bangladesh, Sri Lanka, and China.
- India’s Gender Inequality Index improved in 2022, but it still faces significant gender gaps in labor force participation.
Concerns On Rising Inequality
- The reports raise concerns about increasing inequality worldwide.
- Economic concentration and the dominance of a few countries in global trade exacerbate inequality.
- Increased inequality affects people’s agency and control over their lives, particularly for lower-income groups.
- When accounting for inequality, India’s HDI loss is significant, surpassing that of neighboring countries like Sri Lanka, Bangladesh, Nepal, and Pakistan.
Widening Income Gap in India
A study by the World Inequality Lab reveals that in 2022-23, the bottom 50% of India’s population received only 15% of the national income. The top 1% earned an average of 5.3 million rupees, which is 23 times more than the average Indian.
Implications:
- Such stark income inequality affects overall spending and human welfare.
- Income growth for the top 10% has far outpaced that of the rest of the population.
Growing Debt:
- By December 2023, household debt in India reached a record high of 40% of GDP.
- Net financial savings plummeted to 5.2% of GDP.
Call for Change:
- Given these challenges, there’s a need for a new growth strategy prioritizing human development.
- This requires long-term vision and moving beyond short-term political gains.
- It’s time to rethink the development narrative and focus on inclusive growth for the betterment of all.