Measuring human development: the HDI and the Human Development Report

Detail

1. What the Human Development Index is

• Human Development Index (HDI) is a single number that sums up how well a country is doing on three basic things:
• health (a long and healthy life)
• education (access to knowledge)

• access to resources (a decent standard of living)

• The score runs from 0 to 1. Countries are ranked by it. The closer the score is to 1, the higher the human development.

• NCERT gives two examples. A score of 0.983 means very high human development. A score of 0.268 means very low human development.
• Who made it:
• Mahbub ul Haq was a Pakistani economist. He created the HDI in 1990.
• Amartya Sen worked with him. Sen's idea of "capabilities" (the real freedoms people have to live the life they value) is the thinking behind the index.

• The first Human Development Report (HDR) was published by UNDP in 1990.

• Why it was made: income (GDP) alone does not show whether people live long, learn and have choices. The HDI shifts the focus from the size of the economy to people's lives.

2. The original (NCERT) method: indicators and weights

In the NCERT version, each of the three dimensions has an equal weight of one-third.

Dimension	Indicator (NCERT)	What it shows
Health	Life expectancy at birth	A higher figure means people have a better chance of living long, healthy lives
Knowledge	Adult literacy rate + gross enrolment ratio	How easy it is for people to get knowledge
Resources	Purchasing power (in US dollars)	How much people can actually buy

• Life expectancy at birth: the average number of years a newborn baby is expected to live, if current death rates stay the same.
• Adult literacy rate: the share of people aged 15 and above who can read and write.
• Gross enrolment ratio (GER): total enrolment at one level of education (primary, secondary and so on), whatever the students' age, as a percentage of the population of the official age for that level.
• Because over-age and under-age students are counted, GER can be more than 100%.

3. The present method (since HDR 2010)

The education indicators changed:

• Mean years of schooling (MYS): the average number of years of school that adults aged 25 and above have completed. It replaced the adult literacy rate.
• Expected years of schooling (EYS): the number of years of school a child at school-entry age can expect to get, if today's enrolment patterns continue. It replaced the GER.

The income indicator changed:

• It is now GNI per capita in PPP dollars. GNI (gross national income) is all income earned by a country's residents, including income earned abroad.
• HDR 2025 uses 2021 PPP $ [3]. (Earlier HDRs used 2017 PPP $.)

Goalposts in HDR 2025. Goalposts are fixed minimum and maximum values. Each indicator is turned into a 0-1 index using them [3]:

Dimension	Indicator	Minimum ("natural zero")	Maximum ("aspirational target")
Health	Life expectancy at birth	20 years	85 years
Education	Expected years of schooling	0	18 years
Education	Mean years of schooling	0	15 years
Standard of living	GNI per capita (2021 PPP $)	100	75,000

Why these numbers were chosen [3]:

• 20 years: no country in the 20th century had a life expectancy below 20 years.
• 85 years: a realistic target. Hong Kong, China (SAR), Monaco and San Marino have already gone above it in some years.
• 18 years of EYS: roughly equal to finishing a master's degree in most countries.
• 15 years of MYS: the highest value this indicator is projected to reach by 2025.
• 0 years for education: societies can survive without formal schooling.
• 100 dollars: poor economies have a lot of subsistence and non-market production that official data does not count.
• 75,000 dollars: income above this adds nothing to the HDI. Nine countries were above it in 2023: Brunei Darussalam, Denmark, Ireland, Liechtenstein, Luxembourg, Norway, Qatar, Singapore and Switzerland.

How the HDI is calculated, step by step [3]:

• Step 1: make each indicator a dimension index between 0 and 1.
• Dimension index = (actual value − minimum) ÷ (maximum − minimum)
• Education index: work out the MYS index and the EYS index, then take their simple (arithmetic) average. A country with poorly schooled adults but high school enrolment can still score well.

• Income index: uses the natural logarithm (log) of income. Each extra dollar improves people's lives less than the dollar before it. So a jump from 1,000 to 2,000 dollars counts for much more than a jump from 50,000 to 51,000 dollars.

• Step 2: combine the three indices.

• HDI = (Health index × Education index × Income index)^(1/3). This is the geometric mean.
• Before 2010 the HDI was a simple average, so a high score in one dimension could fully make up for a low score in another.
• With a geometric mean, a weak dimension cannot be fully made up for by a strong one. This rewards balanced progress.

Worked example: India, HDR 2025 (data for 2023) [4][3]

• Health: (72.0 − 20) ÷ (85 − 20) = 0.800
• Education:
• EYS 13.0 ÷ 18 = 0.722
• MYS 6.9 ÷ 15 = 0.460

• Average = ≈ 0.591

• Income: [ln(9,047) − ln(100)] ÷ [ln(75,000) − ln(100)] = ≈ 0.681

• HDI = (0.800 × 0.591 × 0.681)^(1/3) = ≈ 0.685

4. Purchasing power parity (PPP)

• Purchasing power parity (PPP) converts incomes from different currencies using rates that make the same basket of goods and services cost the same in every country.
• Why it is needed: 1 US dollar changed into rupees at the market exchange rate buys much more in India than in the USA. PPP corrects for this, so living standards can be compared fairly.
• Who produces PPP rates:
• The International Comparison Program (ICP), run worldwide by the World Bank [6].
• It collects prices of matched goods and services and data on GDP spending, then converts them into a common currency [6].
• The latest round refers to 2021 and covered 176 economies. Its results were released in May 2024 [7][3].
• On this basis, the world economy was 152 trillion dollars (PPP) in 2021 [7].

5. HDI categories

• Fixed cut-off points for the four categories were brought in by HDR 2014 and are still used in HDR 2025 [3].

Category	HDI value	Group average, HDR 2025 (2023 data) [4]
Very high	0.800 and above	0.914
High	0.700–0.799	0.777
Medium	0.550–0.699	0.656
Low	below 0.550	0.515

• In 2023 the world HDI was 0.756 and the South Asia HDI was 0.672 [4].

6. UNDP and the Human Development Report

• United Nations Development Programme (UNDP): the UN's main development agency. It was set up in 1965 and has its headquarters in New York.
• UNDP publishes the Human Development Report every year. Each report has a theme.
• Indices published with the HDR [3]:
• IHDI (Inequality-adjusted HDI): the HDI after it is reduced for inequality inside a country
• GDI (Gender Development Index): female HDI ÷ male HDI
• GII (Gender Inequality Index): measures reproductive health, empowerment and the labour market
• MPI (Multidimensional Poverty Index)
• PHDI (Planetary pressures-adjusted HDI): reduces the HDI for CO₂ emissions per person and material footprint per person (the amount of raw material a person uses)

7. HDR 2025: the latest rankings

• Title: "A matter of choice: People and possibilities in the age of AI". Data is for 2023.

• Top three [4]: 1. Iceland: 0.972 2. Norway and Switzerland: tied at 0.970

• Bottom [4]:

• Somalia: rank 192, HDI 0.404
• South Sudan: rank 193, HDI 0.388

India in HDR 2025 [2][4]:

• Rank 130 of 193. India shares this rank with Bangladesh (both 0.685).
• HDI 0.685, up from 0.676 in 2022. India is in the medium category, close to the 0.700 line for "high".
• Rank went up from 133 (2022) to 130 (2023). Most of the gain came from mean years of schooling and income per capita.

Indicator (2023)	India value [4]
Life expectancy at birth	72.0 years (58.6 years in 1990 [2])
Expected years of schooling	13.0 years
Mean years of schooling	6.9 years
GNI per capita	9,047 dollars (2021 PPP)

India's long-run trend:

• India's HDI was 0.446 in 1990, recalculated with today's method [5]. (NCERT-era figure: about 0.43.)
• It reached 0.501 in 2000, 0.590 in 2010 and 0.685 in 2023 [5].
• That is a rise of over 53% since 1990, faster than both the world and South Asian averages [2].
• Average yearly growth from 1990 to 2023 was 1.31% [5].

India's neighbours in HDR 2025 [4]:

Country	Rank	HDI	Category
China	78	0.797	High
Sri Lanka	89	0.776	High
India	130	0.685	Medium
Bangladesh	130	0.685	Medium
Nepal	145	0.622	Medium
Pakistan	168	0.544	Low

Prelims Hooks

• The HDI was created in 1990 by Mahbub ul Haq (a Pakistani economist), working with Amartya Sen. It is published by UNDP, which was set up in 1965 and has its headquarters in New York.
• NCERT-era indicators: life expectancy, adult literacy (age 15+), GER and purchasing power. Present indicators: life expectancy, mean years of schooling (age 25+), expected years of schooling and GNI per capita (PPP $).
• Goalposts: life expectancy 20–85 years. EYS 0–18 years. MYS 0–15 years. GNI 100–75,000 dollars (2021 PPP in HDR 2025).
• Trap: the HDI is a geometric mean of three indices, but the education index is an arithmetic mean of its two parts. Income is put on a log scale.
• Category cut-offs: very high ≥ 0.800. High 0.700–0.799. Medium 0.550–0.699. Low < 0.550. These were fixed by HDR 2014.
• HDR 2025 ("A matter of choice: People and possibilities in the age of AI"): Iceland (0.972) is first. Norway and Switzerland are tied second. South Sudan (0.388) is last, at 193.
• India in HDR 2025: rank 130 of 193, HDI 0.685, medium category. It is tied with Bangladesh. Its rank rose from 133.
• South Asian ranking, highest to lowest HDI (2023): Sri Lanka (89) > India = Bangladesh (130) > Nepal (145) > Pakistan (168, low category).
• PPP rates come from the World Bank's International Comparison Program. The latest round is for 2021 and covered 176 economies.
• GER can be more than 100%, because over-age and under-age students are counted.

Mains Points

• What the HDI gets right:
• It moved the development debate from GDP to people's lives, in line with Sen's capability approach.
• The geometric mean (since 2010) penalises uneven progress.

• India's weak link shows clearly. Its MYS of 6.9 years gives an education sub-index of only 0.46, while its health index is 0.800 (2023).

• Limits of the HDI (useful in GS-I answers on development and in essays):

• It leaves out inequality, gender gaps, freedom and environmental damage.
• This is why UNDP added the IHDI, GDI, GII, MPI and PHDI [3].

• National averages also hide large gaps between states and regions inside India. Examples are Kerala compared with Bihar, and tribal areas compared with the rest of India.

• India's path: HDI rose from 0.446 (1990) to 0.685 (2023), faster than the world and South Asian averages [2][5]. To reach the "high" category (≥ 0.700), India needs:

• more adult education and skilling (to raise MYS)
• better quality in school education
• faster income growth per person

• continued health gains (life expectancy rose from 58.6 to 72 years between 1990 and 2023) [2]

• Regional comparison: Sri Lanka (89) is in the "high" group with a much lower income than many richer countries. This shows that spending on health and education can lift human development more than income growth alone. Bangladesh, at the same rank as India, makes the same point [4].