Unit 4 Macro: Progress in Meeting Development Goals in India

Explain and discuss four indicators of progress made by India in achieving her main development goals.

Inequality

Inequality is a useful indicator when measuring progress. High levels of inequality reflect the scale of relative poverty in a country. From a Hayekian perspective, inequality is necessary, as growth cannot be even across all income levels; consequently, it could be argued that India’s rising Gini coefficient (which increased from 0.31 in 1983 to over 0.33 by 2005) is a sign of its rapid growth. However, in attempting to understand development, inequality seems to be more of a negative factor. High inequality means a higher proportion of the population are living in relative poverty, and that for the majority of the population, incomes are below the mean. As such, inequality must be taken into consideration when looking at other development indicators. India’s GDP per capita has certainly been rising, but the rising inequality suggests that the rate of income increase has been lower for the low rather than the high-income earners. This growing disparity not only has the potential to lead to social problems, it also means that the rate of income increase for most workers will be lower than what the nationwide average suggests.

Technological progress

Another indicator of India’s progress can be found in its technological development. As countries grow and begin to develop, the domestic demand for more sophisticated technologies increases. Internet penetration is a good indicator because there has traditionally been a correlation between the level of Internet use and growth. It can also be used to assess inequality – low internet use in rich country, for example, suggests high inequality as a large number of people lack access to it – and can be a good predictor of growth and development. India’s Internet usage has increased markedly: in 1998, 0.1% of the population had access to Internet; by 2010, this had risen to 8.5% (ITU/IWS). Globally, Internet use has grown from 3.6% to 32.7%, meaning India’s use of the Internet is increasing at a faster rate than the global average. As an indicator, web usage does have some limitations: it is debatable how far it reflects development, because it is feasible that in different countries it will be valued differently. For example, poorer European countries might place a high value on internet as a result of the high levels of use in their richer neighbours, while in India, the lack of this effect may mean it is valued less (on average) and so does not become a main goal of development.

Rising per capita income, progress in reducing extreme poverty

One other major indicator of progress made in development by India is the rapid rise, especially since 2000, of per capita income. Per capita income measures the average income per head of the domestic population. As shown by the graph, per capita income in India has almost doubled since 2000. This means that, on average, an individual living in India earns double the income that he/she did 12 years ago. This in turn should lead to a higher standard of living for many more Indians, as they are now able to afford more essential goods and services and even some luxury items. As well as this, a rise in the income per capita would likely lead to a decrease in absolute poverty in India, alleviating some of the associated social problems.

The Human Development Index (HDI)

One of the most obvious signs of development is the Human Development Index (HDI) of India. Developed by the United Nations in conjunction with Amartya Sen, the HDI combines a number of factors to display how developed a country is. As the HDI encompasses numerous key areas, all of which indicate levels of development in a country, it is a very strong indicator of how developed a nation actually is. Since 1980 India’s HDI score has increased by significant amounts (+0.203) from just 0.344 to 0.547. This indicates the large strides India has taken in improving welfare around the country. However as shown by the graph, there is one area that India needs to address in order to raise its HDI score further: Education. Conversely, as also shown, health in India is at very high levels, much higher than around 20 years previously. This shows how India has developed, as a country, to provide health care and crucially better sanitation that has been fundamental in raising the life expectancy at birth throughout India

Authors: Mark Austen and Max Goswami-Myerscough