Meaning of Economic and Social Development. Human Development Index (HDI)and Human Poverty Index (HPI).

Human development is a process of enlarging people’s choices. The most critical ones are to lead a long and healthy life, to be educated and to enjoy a decent standard of living. Additional choices include political freedom, guaranteed human rights and self-respect.Human development has to be development of the people, by the people, for the people. Human development is about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests.

The first Human Development Report was published in 1990,States human development as a process of enlarging people’s choices and enhancing their capabilities. The process concerns the creation of an enabling environment in which people can develop their full potential and live productive and creative lives according with their needs, interests and own values. In this sense, human development paradigm promotes well-being in a society.

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 Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the following three dimensions:-

a. A long and healthy life, as reflected in life expectancy at birth.

b. The acquisition of education and knowledge, as reflected in the mean years of schooling (adjusted for out of school children) and literacy rate (age 7 years and above).

c. Th e standard of living and command over resources, as reflected in the monthly per capita expenditure adjusted for inflation and inequality.

India’s human development index (HDI) ranking for 2015 puts India ranked as 131 out of 188 countries. Asia’s third largest economy is among a group of countries classed as “medium” in the list, as opposed to “low” in the 1990s, which is largely due to  an increase in life expectancy and mean years of schooling in the past 25 years.

The following are the reasons to keep India at the bottom of human development

(a) rapid increase in population

(b) large number of adult illiterates and low gross enrollment ratio

(c) high drop- out rates

(d) inadequate government expenditure on education and health,

(e) large proportion of under weight children as well as under nourished people

(f) very poor sanitation facilities and low access to essential life saving medicines.

Human Poverty Index (HPI)

The Human Poverty Index (HPI) was first introduced into the Human Development Report by the United Nations Development Programme (UNDP) in 1997 in an attempt to bring together in a composite index the different features of deprivation in the quality of life to arrive at an aggregate judgement on the extent of poverty in a community.

There are two indices; the HPI – 1, which measures poverty in developing countries, and the HPI-2, which measures poverty in OCED developed economies.

Calculation of HPI-1 for Developing countries:-The following three dimensions are taken into account:

  • deprivation of longevity, measured as a percentage of the individuals with a life expectancy lower than 40 years (P1).
  • deprivation of knowledge, expressed as a percentage of illiterate adults (P2).
  • deprivation of decent living standards (P3). This last indicator is made up by the simple average of three basic variables:
    • the percentage of the population without access to drinking water (P31),
    • the percentage of population without access to health services (P32) and lastly,
    • the percentage of underweight children aged less than five (P33).

The indicator P3, referred to the living standard, is then obtained as an average of the three indicators, in this way:

[(P31 + P32 + P33) / 3

The global index HPI-1 is obtained by combining these three dimensions into one single measure giving a greater weight to the most disadvantaged situation.

The formula is:

HPI-1 = [(P13 + P23 + P33 ) / 3]1/3

While HPI-2 is calculated as follows:-

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Multi Dimensional Indian poverty index

Poverty is a multi-dimensional issue and various experts/committees and institutions estimate poverty based on different perceptions/definitions. However, Planning Commission is the nodal agency in the Government of India to estimate poverty in the country. TheMultidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the United Nations Development Programme. and uses different factors to determine poverty beyond income-based lists. It replaced the previous Human Poverty Index.

Various dimentions of MPI are:-

Dimension Indicators
Health
  • Child Mortality
  • Nutrition
Education
  • Years of schooling
  • School attendance
Living Standards
  • Cooking fuel
  • Toilet
  • Water
  • Electricity
  • Floor
  • Assets

Life expectancy at birth: Number of years a newborn infant could expect to live if prevailing patterns of age-specific mortality rates at the time of birth stay the same throughout the infant’s life.
Expected years of schooling: Number of years of schooling that a child of school entrance age can expect to receive if prevailing patterns of age-specific enrolment rates persist throughout the child’s life.
Mean years of schooling: Average number of years of education received by people ages 25 and older, converted from education attainment levels using official durations of each level.
Gross national income (GNI) per capita: Aggregate income of an economy generated by its production and its ownership of factors of production, less the incomes paid for the use of factors of production owned by the rest of the world, converted to international dollars using PPP rates, divided by midyear population.

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