DEALS WITH THE KNOWLEDGE OF HUMAN DEVELOPMENT AND HDI

1. UNIVERSITY OF LUCKNOW
DEPARTMENT OF BUSINESS ADMINISTRATION
Term Paper Assignment
In
SUBJECT- MANAGING FOR SUSTAINABILITY
On
TOPIC- HUMAN DEVELOPMENT INDEX (HDI)
SUBMITTED BY-
NAME- PRIYANSHI SRIVASTAVA
ROLL NO- 200012135198
MBA (FINANCE)
SEMESTER – 4 TH
SUBMITTED TO -
DR. AJAI PRAKASH SIR

2. ACKNOWLEDGEMENT
I WOULD LIKE TO EXPRESS MY SPECIAL GRATITUDE
TOWARDS MY SUBJECT TEACHER ‘DR. AJAI
PRAKASH’ SIR WHO GAVE ME THIS GOLDEN
OPPORTUNITY TO WORK ON THIS ASSIGNMENT ON
THE TOPIC ‘HUMAN DEVELOPMENT INDEX’ WHICH
HELPED ME DO A LOT OF RESEARCH, SO THAT I CAN
HAVE A BETTER UNDERSTANDING OF THE GIVEN
TOPIC. I WOULD ALSO LIKE TO THANK MY FRIENDS
WHO HELPED ME IN COMPLETING THIS ASSIGNMENT.
-PRIYANSHI SRIVASTAVA

3. HUMAN DEVELOPMENT
 Introduction
Human development refers to the overall growth and
changes that occur over a person’s life span, from conception to death. It
is a concept that provides another way of looking at the differences and
similarities between countries around the world. It is an alternative
approach to a single focus on economic growth, and focused more
on social justice, as a way of understanding progress. The United
Nations Development Programme defines human development as "the
process of enlarging people's choices", said choices allowing them to
"lead a long and healthy life, to be educated, to enjoy a decent standard
of living", as well as "political freedom, other guaranteed human rights
and various ingredients of self-respect". Thus, human development is
about much more than economic growth, which is only a means of
enlarging people's choices.
 Pillars of Human development
There are six basic pillars of human development that are-: equity,
sustainability, productivity, empowerment, cooperation and security.
 Equity- It is the idea of fairness for every person, between men and
women. Both have the right to education and health care.
 Sustainability- It is the view that we all have the right to earn a
living that can sustain our lives and have access to a more even
distribution of goods.
 Productivity- It states the full participation of people in the process
of income generation. This also means that the government needs
more efficient social programs for its people.
 Empowerment- Is the freedom of the people to influence
development and decisions that affect their lives.

4.  Cooperation- Which stipulates participation and belonging to
communities and groups as a means of mutual enrichment and a
source of social meaning.
 Security- Offers people development opportunities freely and safely
with confidence that they will not disappear suddenly in the future.
 Measurement of human development
One measure of human development is the Human Development
Index (HDI), formulated by the United Nations Development
Programme. It is a standardized way of quantifying human capability
across nations and communities. Aspects that could be left out of the
calculations include incomes that are unable to be quantified, such as
staying home to raise children or bartering goods/services, as well as
individuals' perceptions of their own well-being.
 HUMAN DEVELOPMENT REPORT
The Global Human Development Reports (HDR) is an annual
publication released by the UNDP's Human Development Report Office
and contains the Human Development Index. Within global HDR there
are four main indexes that are Human Development Index, Gender-
related Development Index, Gender Empowerment Measure and the
Human Poverty Index.
There are not only a global Human Development Reports but there are
also regional and national reports. The Regional, National and
subnational (for portions of countries) HDRs take various approaches,
according to the strategic thinking of the individual authorship groups
that craft the individual reports. The Human Development Index is a
way for people and nations to see the policy flaws of regions and
countries. Although the releasing of this information is believed to
encourage countries to alter their policies.

5. HUMAN DEVELOPMENT INDEX
 Overview
There are various standards that can be used to evaluate how
developed a country is. A country’s economic growth as measured by
GDP and GNI can be used or the average life expectancy. Living in a
country with high GDP and long average life expectancy can provide
conditions to ensure happiness and it is more likely that one will live
comfortably enjoying the advantages of modern civilization. However,
we cannot evaluate happiness on the standard of wealth alone. That is
why the United Nations uses a summary measure that takes into account
how long one is expected to live when born, the number of expected
years and the average years of schooling, and average income of the
country’s people to evaluate the quality of life of countries in the world.
This measure is known as Human Development Index or HDI. It is a
statistic composite index of life expectancy, education, and per capita
income indicators, which are used to rank countries into four tiers
of human development. A country scores a higher level of HDI when
the lifespan is higher, the education level is higher, and the gross
national income GNI (PPP) per capita is higher.
The HDI was created to emphasize that people and their capabilities
should be the ultimate criteria for assessing the development of a
country, not economic growth alone. The HDI can also be used to
question national policy choices, asking how two countries with the
same level of GNI per capita can end up with different human
development outcomes. These contrasts can stimulate debate about
government policy priorities. The index is based on the human
development approach, developed by Mahbub ul Haq, anchored
in Amartya Sen's work on human capabilities, often framed in terms of
whether people are able to "be" and "do" desirable things in life.

6. Examples include – being well fed, sheltered, healthy, doing work,
education, voting, participating in community life. The freedom of
choice is central – someone choosing to be hungry (as during a
religious fast) is quite different from someone who is hungry because
they cannot afford to buy food, or because the country is in a famine.
The index does not take into account several factors, such as the net
wealth per capita or the relative quality of goods in a country. This
situation tends to lower the ranking for some of the most advanced
countries, such as the G7 members and others.
 Origins
The origins of the HDI are found in the annual Human Development
Reports produced by the Human Development Report Office of
the United Nations Development Programme (UNDP). These were
devised and launched by Pakistani economist Mahbub ul Haq in 1990,
and had the explicit purpose "to shift the focus of development
economics from national income accounting to people-centered
policies". Haq believed that a simple composite measure of human
development was needed to convince the public, academics, and
politicians that they can and should evaluate development not only by
economic advances but also improvements in human well-being.
 Dimensions
In a nutshell, the Human Development Index measures the quality of life
of a given group of people, mainly in countries or regions with
recognized political autonomy. Precisely, the HDI seeks to investigate
and establish the quality of life which is measured through the life
expectancy rate. Life expectancy at birth is the number of years a person
is expected to live in a particular country with special consideration
given to the quality of life. It also takes into account the mortality rate of
the people concerned.

7. Besides life expectancy, another important aspect of HDI is the
education index that seeks to measure the quality of education available
to people in a particular country. This dimension takes into account the
years of schooling and the expected number of years that the inhabitants
are expected to have access to education. The education index is shaped
by such factors as access to basic primary school education by all
demographic groups which crucially determines literacy levels.
HDI also measures the gross national income per capita that is mainly
done in USD. Per capita income which sometimes can be given in
purchasing power parity figures is the income per person in a given
territory. It usually indicates the production potential and contribution to
the GDP of every individual in a given economy. Many times
economists use per capita income as an indicator of a country’s standard
of living.
The HDI simplifies and captures only part of what human development
entails. It does not reflect on inequalities, poverty, human security,
empowerment, etc. The HDRO offers the other composite indices as
broader proxy on some of the key issues of human development,
inequality, gender disparity and poverty.
Calculation of HDI
Calculation of HDI has slightly changed over the years especially due to
the dynamics of human life and economic development. The old

8. calculation method that was used in the UNDP reports up to the year
2011 used three indices, i.e. life expectancy, knowledge and education
and standard of living. In the new method of calculation however, HDI
is calculated using the three indices with minor changes.
In the new method, the life expectancy index remains the same while the
education index does not give a lot of weight to knowledge. It is
important however to note that knowledge is considered to be crucial in
the new method as indicated by one’s level of education. In the standard
of living index, the new method notably uses gross national income
instead of gross domestic product.
Old method (HDI before 2010)
The HDI combined three dimensions last used in its 2009 report:
 Life expectancy at birth, as an index of population health and
longevity to HDI
 Knowledge and education, as measured by the adult literacy rate
(with two-thirds weighting) and the combined primary, secondary,
and tertiary gross enrollment ratio (with one-third weighting).
 Standard of living, as indicated by the natural logarithm of gross
domestic product per capita at purchasing power parity.
The Human Development Index (HDI) then represents the uniformly
weighted sum with 1
⁄3 contributed by each of the following factor
indices:

9. Gross Enrollment Index (GEI) = CGER - 0
100 – 0
GDP = log(GDPpc) – log(100)
log (40000) - log(100)
 New method (2010 HDI onwards)
In this method the HDI combines three dimensions:
 A long and healthy life: Life expectancy at birth
 Education index: Mean years of schooling and Expected years of
schooling
 A decent standard of living: GNI per capita (PPP international
dollars)
In its 2010 Human Development Report, the UNDP began using a new
method of calculating the HDI.
The following three indices are used:

10. Where,
LE: Life expectancy at birth
MYS: Mean years of schooling (i.e. years that a person aged 25 or older
has spent in formal education)
EYS: Expected years of schooling (i.e. total expected years of schooling
for children under 18 years of age)
GNIpc: Gross national income at purchasing power parity per capita.
1. Life Expectancy Index (LEI)
LEI is 1 when Life expectancy at birth is 85 and 0 when Life expectancy
at birth is 20.
2. Education Index (EI)
Mean Years of Schooling Index (MYSI)
Fifteen is the projected maximum of this indicator for 2025.
Expected Years of Schooling Index (EYSI)
Eighteen is equivalent to achieving a master's degree in most countries.

11. 3. Income Index (II)
II is 1 when GNI per capita is $75,000 and 0 when GNI per capita is
$100.
Finally, the HDI is the geometric mean of the previous three normalized
indices
INDIA’S RANK IN HDI
Human Development Index 2020 is a report published by the United
Nations Development Programme (UNDP). In 2020, UNDP has released
planetary pressures-adjusted Human Development Index. This means
that the standard Human Development Index (HDI) is adjusted by a
nation's per capita carbon dioxide emissions and material footprint.
India ranked at 131st position out of 189 countries in the index, felling
in the medium human development category with an HDI value of
0.645. In the year 2019, India ranked at 129th position. It is to be noted
that between 1990 and 2019, India’s HDI value increased from 0.429 to
0.645, an increase of 50.3%.
 Structure of the 2020 Human Development Report
1- Renewing human development for the Anthropocene.
2- Mechanisms of change to catalyse action.
3- Exploring new metrics.
Causes due to which India is lagging in HDI
There are certain reasons as to why India is lagging behind in the human
development index.
 Health- India has numerous causes for its poor health standards,
contributing towards its low levels of human development. Firstly,

12. there is a lack of doctors to help those who need it. As a result a lot of
illnesses go unchecked and untreated, and overtime worsen. Another
cause of poor health includes poor sanitation. Lack of toilets and
bathrooms in over 122 million households in the country [38]
lead to
improper disposal of stools, which are often left in the open. This
open air defecation leads to the spread of disease through parasitic
and bacterial infections. Lack of safe drinking water in India also
accounts for their poor levels of health.
 Income- The low incomes of Indian citizens have also been a result
of many root causes. These causes are quite numerous and quite
significant, and have as a result contributed to India’s low levels of
human development. Widespread unemployment is the biggest cause
of India’s low GNI per capita. The continuously expanding
population of unemployed is another cause of poverty. Furthermore,
India’s ineffective economic policies have contributed to the
reduction of income generation by the nation. Another cause of a low
income generation by citizens includes their under qualification. Due
to poor education in their past, many Indian adults are unable to find
well-paying jobs as they do not have the qualifications to do so.
Another cause of poor income generation in India is the unequal
distribution of income. Due to this economic inequality different
people in India are receiving different incomes even though they may
be doing the same jobs as others who are receiving a higher income.
 Education- Firstly, one of the factors that affect India’s low levels of
education includes lack of spending on education. India has had a
long and unwilling thought on spending their money on education.
Another cause of India’s inadequate levels of education includes
the lack of teachers and the number of under qualified teachers.
Another big cause of low levels of education in India is the dilemmas
of most families including the need to earn against the need of
education. Most families from poorer backgrounds send their kids to

13. start working from very young ages, in order to help provide basic
needs for the family.
ADVANTAGES OF USING HDI
Some of the advantages of using human development index are as
follows:
 HDI uses 2 types of data social data (health and education) and 1 type
of economic data which means that the measure uses a broad range of
information and is not tied up with only one measure. This is a much
more accurate measure.
 The information is updated annually and collected by a range of
people who ensure that the data is as accurate as possible.
 It is necessary to determine social measures of development for
calculating the overall development of a nation. Human Development
Index measures the socio economic factors and therefore, is considered
very effective in measuring the performance of a country in terms of
these factors.
 HDI acts as a tool in evaluating the socio-economic status of nations
around the world every year and as such acts as a reliable indicator of
the development of the nations.
 Increase in the education level and health of individuals leads to
an improvement in the country’s infrastructure.
 HDI not only concentrates on economic development but also
looks at other areas to measure human development like social
measures and individuals’ health.
 HDI can enable policymakers in the country to easily adjust and
implement economic policies. It also helps question how countries
with the same GNI per capita have different HDI.

14.  HDI data enables the government to know areas that need
immediate attention and also to come up with appropriate
measures for development.
HDI AND SUSTAINABILITY
There are many links between the human development approach and
sustainable development goals. But it is worth noting up front that the
two are fundamentally different things. The Sustainable Development
Goals (SDGs) are a globally agreed tool for assessing development
progress. Human development, meanwhile, is a philosophy or lens for
considering almost any development issue one can think of.
The literatures and debates on human development on the one hand and
sustainability on the other share much in common. Human development
is essentially what sustainability advocates want to sustain and without
sustainability, human development is not true human development.
Human development and its measurement in the form of the Human
Development Index (HDI) can be linked with measures of both weak
and strong sustainability. Weak sustainability is built on the assumption
that different forms of capital are substitutable, whereas strong
sustainability rejects the notion of substitutability for certain critical
forms of natural capital. Empirical results over the period 1980 to 2006
show that many of the lowest performing countries on the HDI also face
problems of weak unsustainability, as measured by genuine savings.
Countries with high to very high HDI performance, on the other hand,
typically appear to be strongly unsustainable. In other words, the SDGs
provide a development destination. Human development allows one to
design the route to get there.

15. Two characteristics of the approach make it particularly suitable for
designing the policies that nations need to achieve the SDGs.
First, the SDGs are ‘integrated and indivisible’. And so, though the goals
are discrete, the policies for achieving them need to recognize the
interlinkages between the different areas. The human development
approach stresses the importance of integrated thinking and the ‘joined
up’ nature of development. For instance, when trying to make it easier
for someone to find work, one also needs to think about that person’s
health, other responsibilities (at home, for example), education, access to
transport, freedom to take a job (particularly for many women), and so
on.
Second, while all nations have agreed on the importance of the SDGs, it
is for each nation to pursue the goals according to their own priorities.
And so any broad development approach will need to be flexible if it is
to be useful to many countries. It is an approach that can be applied in
different places, by different people and in different ways to tackle
different issues.
CONCLUSION
The development world is rightly focused on the Sustainable
development goals. But global development will not of course grind to a
halt in 2030 even if all the SDGs are achieved. Old concerns will
continue. New ones will emerge. And the HDR has an important role to
play in ensuring we keep one eye on the horizon, even if most attention
is focused on the next 11 years.
In many countries today, for example, the gap between rich and poor
children has closed when we look at whether they have access to
primary education. But differences between these children are widening
when we consider the quality of that education, or whether they have
access to other schooling, such as early childhood education. These

16. ‘new’ inequalities will have lifetime consequences, particularly given
the rapid technological changes that are already impacting labour
markets. It is important that we pay attention to them now. It is also
important that we get ahead of the curve to see what important gaps will
emerge in the next decade, even if they are not included in the
Sustainable development goals.
The 2030 Agenda and the Sustainable development goals with their
universal call to action to end poverty, protect the planet and ensure that
all people enjoy peace and prosperity foreshadow a better world that the
human development approach is helping to build. But the story of global
development will not end in 2030. It is our job to ensure that human
development thinking will continue to shape the global development
landscape for the rest of the 21st century.
THANK YOU