Bridging India’s Inequality Divide
A first-ever study by UNDP reveals that significant inequalities across Indian states impact human development outcomes and that considerable gains are possible by reducing the extent of inequality in other dimensions of human development such as education and health.
At the India release of the Global Human Development Report The Real Wealth of Nations: Pathways to Human Development in New Delhi last year, Syeda Hameed, Member of India’s Planning Commission summarised the dilemma facing Indian policy makers when she noted that “India had moved one notch higher in the Human Development Index. I feel we have a long way to go. Far too many people are being left out in India’s growth story.” India is ranked 119 out of 169 countries on the HDI and is one of the world’s top ten movers in income growth. However, it loses 30 percent of its value when adjusted for inequality.
- A first-ever study by UNDP reveals that significant state-level inequalities impact human development outcomes
- States lose 43 percent of their HDI due to education inequality; and 34 percent due to health inequality
- Considerable gains possible by reducing extent of inequality in education and health
Through this study, a first of its kind, UNDP India makes a contribution to this discussion by revealing that significant inequalities across Indian states impact human development outcomes and that considerable gains are possible by reducing the extent of inequality in other dimensions of human development such as education and health.
“We hope this new evidence on state level inequality will inform the design of the Twelfth Plan” says Patrice Coeur-Bizot, United Nations Resident Coordinator and UNDP Resident Representative, India. The study also reveals interesting comparisons with global benchmarks. India’s top performing state of Kerala ranks 99 (between Philippines and the Republic of Moldova) and Orissa ranked 133 (is between Myanmar and Yemen).
The study examines inequalities in 19 states across India and finds that educational outcomes are most unequal within states resulting in a loss of 43 percent to HDI values of states. This is a significantly higher loss than the global average of 28 percent. States also lose 34 percent of their HDI value when inequality in health outcomes is factored in. Again, Indian states suffer a higher loss when adjusted for inequality in health compared to the global average of 21 percent.
The central Indian state of Madhya Pradesh which is ranked 16 as per the HDI of Indian states ranks lowest when the IHDI for the same 19 states is computed, having lost 35 percent of its HDI value when adjusted for inequality. The study also finds that Kerala which tops the HDI is also the most equal in human development attainments – the state is ranked first both in the HDI and IHDI.
This study points to the reality that a strategy aimed at growth with redistribution can no longer effectively bridge India’s inequality divide. According to Caitlin Wiesen, Country Director, UNDP India, “Variations in IHDIs across India’s states reveal that inequality is negatively impacting human development attainments which makes inclusive and equitable growth a real need of the hour.”
The study is being disseminated across the states and translation is underway to facilitate wider dissemination. According to S Prasuraman, director of the Tata Institute of Social Sciences quoted in the Times of India, one of the country’s most widely read English language newspapers, “The IHDI would help identify exactly who was benefiting from growth or not and reveals that economic growth wasn’t translating into opportunities for everyone.”
In collaboration with the Federation of Indian Chambers of Commerce and Industry, the paper outlines the constraints and challenges of financial services; impact of government and regulator policies to promote financial inclusion; and product-specific challenges in enabling greater access to financial services.
The report highlights the emerging landscape in India and key development challenges that face the country. In doing so it aims to identify key areas that can contribute to transformational change that empower people and build an inclusive, climate-resilient, sustainable development paradigm for 2013-17 and beyond.
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