Human Development Report 2003 says that the rank of India has slipped, in terms of human development index, from 124th place in 2000 as reported in Human Development Report published last year to 127th place in 2001 as reported in the Human Development Report this year although in absolute terms human development index has improved from 0.577 in 2000 to 0.590 in 2001. Many news captions mentioned it as a case of deterioration of conditions. When pointed out about the inconsistencies in the Report, the UNDP team showed its willingness to revisit the exercise, which they did not. To be fair, it has also been pointed out in the Report that three newly carved out countries/territories, which did not find place in the last year's report are now included and have all better human development index. The Report of 2004 has again placed India in the same rank in 2002 though her index has improved to 0.595. But the question why the case is often presented as one of deterioration? Nevertheless, the fact remains there continues to be a great interest in this UNDP exercise though of late the news item has attracted the front page of only a few dailies, which was earlier the universal case.

Ever since the United National Development Program came out with its Human Development Report in 1990 under the guidance of an eminent economist (now, late) Mahbub ul Haq, it is claimed, more than 135 countries have prepared similar reports for their countries. Many sub-national units and some supra-national regional bodies have also published human development reports for their respective areas. Various research organizations have also undertaken extensive exercises. In some cases, it is an annual or a bi-annual feature. More than 500 reports have been prepared and published world over. This shows the importance accorded to the idea of human development. A caveat however, needs to be added here. Very few developed countries have cared to publish such reports though serious scholars always found the idea to be equally relevant for developed countries as well. In fact, some core consultants had wanted human development be so defined that it has scope for application in developed countries as well and therefore nuanced indicators in a manner that they are serviceable to the developed countries.

While the idea of human development caught imagination of the people, the UNDP also took up the task of developing an index and called it human development index. Though the methodology of constructing the index was defective and there were made frequent changes in it, the UNDP went on mechanically ranking countries. The UNDP and the media often highlighted such indictors as did not correctly post the achievements of many countries. Inclusion and exclusion of several countries in different years make the whole exercise farcical. The Indian exercise, done of late by the Planning Commission is somewhat superior but for the fact that database is quite dated. Nevertheless the human development index howsoever calculated is a partial index and one has to look beyond and within.

Close on the heels of idea of welfare state following warfare state in the Western World, the developing countries, on assumption of independence from the colonial yoke and alien rule adopted the approach of what has now been called human development. It assumed the importance in the wake of harsh impact on vulnerable sections in many societies where the structural adjustment programme promoted by the Bretton Woods twins were tired. While it was being suggested that the structural adjustment programmes should have human face, the United Nations Development Program came up with idea of taking stock of human dimensions of development-how humane were the conditions of people in different countries of the world. Actually, when Mahbub ul Haq joined the UNDP in 1989 as the special advisor to the Administrator of the United Nations Development Program, it naturally occurred to him that a report on conditions of human beings and their well-being be prepared. In addition to the human costs of structural adjustment programmes in the 1980s in several countries under the aegis of the IMF and the WB, there were other changes in political climate that were sweeping the communist countries as well as disturbances and distress that were caused in the rich countries in terms of rising crime, growing pollution, spreading AIDS, weakening social fabric, idea of the annual publication of such a report become acceptable to the then Administrator of the UNDP.

It was also found that many developing countries had shown that they could improve human conditions or quality of lives of their fellow citizens in terms of education, health and nutrition despite low per capita income. And at the same time it was also found that several other countries despite being rich in terms of per capita income, had failed to secure to a large section of their population the conditions that could be said to be ‘humane’. This signified that a country needed not to wait to be rich for securing minimum essentials of life that enhance capabilities of its citizens.

After some deliberations with core consultants, the UNDP team selected the term ‘human development’ for the Report they would finally compile. Now, defining human development was the task. Amartya Sen had been, for quite a few years, toying with the ideas of capabilities and functionings. It came handy to conceive development in terms of intrinsic capabilities as an alternative to that in terms of extrinsic commodities.

Development was always at least implicitly identified with widening of choices. This time the phrase human development was used to denote ‘widening of choices through enhancement of capabilities’ rather than expansion of commodities. Capabilities were understood to have ‘positive’ connotation. A capability could be equated with a trait or skill, enhancement whereof improves one's choices without limiting those of others. In order to go straight we choose to ignore the fact that one's acquiring of many innocuous looking capabilities like literacy/education may limit choices of the others. Living longer, being healthy, being literate and acquiring such traits of persona that help one choose from a wider set of commodities have always been constant endeavor of human race, we should note, as has been expansion of quantities and varieties of goods.

Unfortunately, most of development debate in the West got waylaid and was mired in the din of tonnes, barrels and metres. It was late in the day that the real end of all development was brought back into focus. It took a long route through growth, employment, redistribution and basic needs. Though, inappropriately called human development, the approach has focused our attention on the achievement of a society in terms of longevity of life and health conditions as perceived in terms of morbidity and mortality, literacy and education in terms of enrolment and dropouts, availability of safe drinking water, sanitation and public health, etc. To quote Paul Streeten, in the previous decades those concerned with development have sometimes got lost in technical intricacies of means-growth rates, production, productivity, savings ratios, export ratios, capital output ratios, tax ratios and so on and lost sight of the end. To be candid, if they were true means to some ends then achievement of means should have resulted into achievement of ends. It is therefore difficult to assert that they were really the means to the ends that had to be promoted. Does it not mean that the theories behind propagation of such instruments were faulty?

Moreover, it has now been duly recognized that results of consuming commodities will depend on the characteristics of the consumer and the society of which he/she is a member. You may have enough money to have good food (which is available) and also a good stomach and therefore are capable of enjoying good food yet you may choose to fast. This is a situation of choice. It is different from the one in which either you do not have enough money (entitlement) or there is not enough good food available and you have to starve. All these situations are different from the one in which you are not well to enjoy food (capability). Human development insists on capabilities-capability to enjoy good food, capability to be well-dressed, capability to be well-read, capability to participate in one's community and so on. A more capable person enjoys greater freedom to choose to lead the life that he or she values.

Finally, though human development has undoubtedly enriched the development dialogue it is not the ultimate insight into development but one of the shifting fashions and new ideas will replace it, may be ere long. Amartya Sen has already starting talking of development as freedom.

However, it needs to be noted that human development approach which focuses on the ends rather than means, it is conceptualized on the individual level and is concerned with capabilities rather than achievements.

Human development approach, insists the UNDP, concentrates on the ends, not the means. Whether people are living longer and more healthily. Whether people have become more knowledgeable. Whether people are able to participate in their community affairs and in decision-making processes. Whether people have access to adequate food, safe drinking water, basic health facilities and so on. Whether people enjoy freedom-political and social. Whether people are secure. The Human Development Reports provide details and analyses on various dimensions referred to above and many more.

Comparing countries for a variety of aspects requires some kind of quantification such as percentage of people having access to safe drinking water or percentage of children below a certain age in school or child deaths below 5 per thousand. Improvement in these indicators over time may be taken as development. The Reports also try to present many of these achievements by rural-urban/male-female/ethnic divisions to highlight the disparities that a given country suffers from in these vital matters.

We may note that human development has been conceptualized at the individual level and is concerned with capabilities rather than achievement. Capabilities defined as set of functionings have a limitation of being measured. Moreover, when it comes to assessing human development at an aggregate level it is the achievement level, which becomes important. What is the level of health that people are enjoying rather than that they are capable of having? What is the level of literacy that people as a whole are enjoying rather than the level they can possess? Not what India is capable of achieving but what India has achieved in terms of development dimensions!

We may want comparison of achievements by two countries or improvements scored by two countries on an overall basis. Then, combining various indicators becomes necessary. Only such indicators as reflect independent dimensions should be combined to construct an overall index. The dimensions chosen should be fundamental ones. After a lot of deliberations, the UNDP team decided to construct what it called human development index and chose following three key components: longevity, knowledge and income. Obviously, they are totally independent of each other.

Mahbub ul Haq insisted that an overall index should be devised. Amartya Sen and many other friends of his tried but failed to dissuade him from venturing into an exercise, which could be but very crude. Mahbub ul Haq was willing to have an index so long it was as vulgar as GDP. Then, Amartya Sen helped him devise what came to be known as Human Development Index, which in my view may be little more vulgar than GDP. But Amartya Sen is happy to have failed in dissuading him to be pursuant for an index!

It considers three dimensions long and healthy life, knowledge and education, and level of living. Longevity was always measured in terms of life expectancy at birth and it is taken to reflect total health conditions of people though Amartya Sen has once called it quantity of life. Knowledge to begin with was measured in terms of adult literacy rate, adults being defined as persons above 25. Later, knowledge was replaced by educational attainment and it was measured by adult literacy rate and mean years of schooling with 2/3rds and 1/3rd weights. Still later, mean years of schooling was replaced by combined enrolment ratio, denominator being the population of age group 6–23. The reasons cited for such changes were non-availability of data, poor discriminatory power of adult literacy rate, etc. in the case of developed countries.

Level of living was represented by a transform of per capita income. As the exercise was international in nature and exchange rate was found to be a poor indicator of comparative purchasing power, the UNDP measured per capita income in purchasing power parity dollars, which was transformed. The transform was changed twice. The attempt through the transform was to make it reflect diminishing returns to income in terms of well-being. Technical experts have found the UNDP formulations suffering from certain theoretical weaknesses.

It may be noted that these aggregates were converted into unit-less achievement levels before they were aggregated. For this, actual achievement levels are first rescaled with reference to corresponding minimum achievement levels, which is then divided by the range/span of achievement over the minimum. Choice of minimum and maximum values has a chequered history. First the minima and maxima were chosen from the current profile of the achievements of the countries and then, on realization that this can create problem for valid comparison, the minima and maxima were chosen from a longer history. As that too did not resolve the problem, plausible figures were chosen as goalposts: 25 years and 85 years for life expectancy, 0 per cent and 100 per cent for literacy, 0 and 100 per cent for combined enrollment ratio and PPP$100 and $40000 for income per capita. While life expectancy in a few cases was found in the past to be lower than the minimum stipulated there are emerging countries crossing the maximum stipulated for income per capita. In such cases, the UNDP is using the stipulated figures instead where actual ones are warranted.

Further, all the three dimensions are said to have been assigned equal weights. But, in fact, one can see that there are four variables and only two of them have the weight of 1/3. Adult literacy rate has the weight of 2/9 while combined enrollment ratio has that of 1/9.

Critics have pointed out many problems with the UNDP formulation(s), an important one being the mixing of stock variables like life expectancy and adult literacy ratio with flow variables of gross enrollment ratio and gross domestic product per capita. They also point out that income per capita is not an end to be pursued for its own sake and human development approach does not permit its inclusion. The UNDP defends its decision by holding that it is a proxy for all those variables, which have not been included.

According to the original Human Development Report (HDR) published in 1990, India's human development index was computed to be 0.439 for 1987. However, subsequently it was computed to be 0.297/0.309 for 1990 in the HDR 1992/1993. Obviously this downward revision owed to methodological changes. However, with one more turn of revision in methodology, we come to know that HDI level for India was 0.510 for 1990. It was computed to be 0.405 even in 1975. Very few people-scholars and researchers, in India questioned the UNDP exercises carried out in haste and used these figures to buttress their own views.

Since the UNDP divided countries into low, medium and high HDI countries depending upon the level of HDI below 0.5, between 0.5 and 0.8 and above 0.8, India was declared as low HDI country by earlier reports and as medium HDI country by later reports for the same levels of achievement. The UNDP ranks of various countries went up or down also because some of the countries were included or not included in the UNDP's HDRs. The HDI for India was found to be 0.571, 0.577, 0.590 and 0.595 for 1999, 2000, 2001 and 2002 in Reports recently brought out by the UNDP. It would be a good idea to compare the HDI figures for India that were first flashed. See Table 1.

Later, their exercises suggested that for 1990, the index was not 0.297 but 0.510-full 70 per cent higher. Similarly, for 1995 the figure was subsequently revised from 0.451 to 0.545, which is more than 20 per cent higher. The country was earlier declared one with low human development index. Hundreds of scholars accepted these and wrote thousands of papers undermining India's achievement before liberalization phase. Some damage was thus done. It is difficult to decide whether this was innocently done or deliberately.

Anyway, the Planning Commission did an exercise, which shows adequate consistency and ensures comparability across states and over time. See Table 2. India has improved its HDI from 0.302 in 1981 to 0.472 in 2001, that is, by 56 per cent in 20 years. However, if one uses reduction in deprivation as achievement, then the same absolute improvement turns out to be just 25 per cent as the deprivation index reduces from 0.698 in 1981 to 0.528. Deprivation index is reckoned as additive inverse of human development index with respect to 1. One may see that the difference owes to the denominator figure. The farther the figure of achievement/deprivation departs from 0.5, the greater is the distortion caused to the measurement in terms of improvement. In fact, (1/a) is greater/less than (1/(1-a)) depending upon whether a is less/greater than 0.5. Averaging the initial and final figures for use in denominator can bring about some moderation.

Based on this Table, the Tenth Plan (Volume III) tries to impress upon that Southern States generally have done better, which on examination does not turn out to be quite correct if one considers improvement in level rather than level itself. If we compare the figures for 1981 and 2001, we find Rajasthan has done much better than Andhra Pradesh. While in 1981, Rajasthan had an HDI level of 0.258 and Andhra Pradesh, of 0.298, in 2001, Rajasthan has scored the level of 0.424 but Andhra Pradesh could reach up to 0.416. Thus, while Rajasthan's HDI improved by 0.176 points, Andhra Pradesh's HDI improved by 0.118 points only.

West Bengal (0.305) was way behind Karnataka (0.346) in 1981; in 2001 the gap is negligible-merely 0.006: West Bengal has 0.472 as against Karnataka's 0.478. Yes, compared to Gujarat, Haryana and Maharashtra, Tamil Nadu has performed better. Kerala is definitely way ahead of Punjab (by full 0.1 point); growth performance of Madhya Pradesh in HDI is better. It could definitely be argued that growth rate is likely to slow down at higher level. But Gujarat, Haryana, Punjab and Maharashtra, if we confine to only major states, have all done better than Karnataka. Yet, it should be accepted that Tamil Nadu is fast getting close to Punjab in terms of HDI level while Maharashtra is steadily losing.

The figures for smaller states/union territories-some of which are not so small are not available for 2001 but except Kerala they were at the top in 1991. They make up for a small population. Except Dadra & Nagar Haveli all union territories are included in this list. Chandigarh and Delhi were better off in 1991 and are likely to maintain the lead but Delhi, not so much because of health and education but because of per capita income even after adjustment for inequality and inflation. There were quite a few smaller units scoring HDI between Kerala and Punjab and they are likely to maintain their positions. Himachal Pradesh is likely to improve its score faster.

However, if we concentrate on major States for which HDI is available for all the three points of 1981, 1991 and 2001, and employ human development progress rate and deprivation reduction ratio, we get the following picture. See Table 3. Improvement in Tamil Nadu was the best during the period 1981–91, followed by West Bengal, Rajasthan, Mahrashtra and Haryana/Madhya Pradesh. The same order is not maintained when we compare deprivation reduction rates: Kerala follows Tamil Nadu, Mahrashtra follows West Bengal and Haryana does better than Rajasthan. All the low base States generally show better performance if progress rate in terms of achievement in human development index is employed even if their absolute gain was low.

During 1991–2001, it is Rajasthan followed by Uttar Pradesh, Maharashtra, West Bengal, and Karnataka/Madhya Pradesh/Haryana in that order so far absolute gain in human development index is concerned. Using deprivation reduction rate, we find the order is: Maharshtra followed by Tamil Nadu, Punjab/Rajasthan, Kerala and West Bengal, while using progress rate in human development the order we find is: Uttar Pradesh, Rajasthan, Madhya Pradesh, Bihar and Orissa. Again all low base States will show better performance if gain in development is considered instead of reduction in deprivation. Till 1991, among the major States, it was only Kerala having HDI more than 0.5. In 2001, there are five such States: Kerala, Punjab, Tamil Nadu, Mahrashtra and Haryana and ten are below, of which only the following four below 0.4: Madhya Pradesh, Uttar Pradesh, Assam and Bihar. One thing is clear that magnitudes of gain for 1991–2001 were clearly smaller than their counterparts for 198191, irrespective of indices employed. In somewhat not-so-distant future, analysts would start preferring use of progress rate rather than reduction rate.

If we consider the total duration of 1981–2001, we find Tamil Nadu to be the best performer in terms of absolute gain followed by Rajasthan, West Bengal, Maharashtra, Haryana/Madhya Pradesh. In terms of progress rate, one finds that it is Rajasthan and Madhya Pradesh followed by surprisingly Tamil Nadu and Bihar both, which are followed by Uttar Pradesh. In terms of deprivation reduction rate in deprivation, Kerala comes very close to Tamil Nadu, which is followed by Maharashtra, West Bengal and Haryana and then comes Rajasthan.

From the maze of this analysis of use of alternative, yet interdependent, indices for performance, two observations stand out clearly. One, some kind of flattening in improvement is in sight. Two, there exists phenomenon of a kind of catching-up. The lowest/highest ratio has changed from 0.47 in 1981 to 0.52 in 1991 to 0.57 in 2001.

Different societies choose to spend resources through public exchequer and private purses in different proportions on activities concerning human development. Again, organizations and institutions providing the services that promote human development may be in public domain or in private hands. Yet, in most societies public spending plays an important role and indicates the level of seriousness with which the state pursues the goal of human development.

One should however not lose sight of the fact whether the money is well spent or not. For a given situation, a well spent low expenditure may yield good outcomes whereas a less planned high expenditure may fail to achieve it. There are numerous such examples. In fact, if some underdeveloped countries could achieve spectacular results with much less resources and in far shorter period than many developed or rich countries, it suggests that the policy design of the former has been far superior.

Chapter 3 on ‘Financing Human Development’ of Human Development Report of 1991, reportedly based on a background paper by Gustav Ranis and Frances Stewart, had used the following four ratios: (1) public expenditure ratio, (2) social allocation ratio, (3) social priority ratio and (4) human expenditure ratio. [It is expected that expenditures at all level-central, state and local, subject to data limitations, should have been combined by them as the text does talk of inter-governmental difference between India and Brazil when it discusses about expenditure on health and education.] While the first and the last are expressed in terms of proportion to the gross domestic product, social allocation ratio is the proportion of public expenditure spent on social sector and social priority ratio is the proportion of social expenditure on human priority concern. Human expenditure ratio, which is the product of the first three ratios, has been said to be a powerful operational tool that helps policy makers to restructure the budget to reflect their intension.

Analyzing some of the figures complied by the UNDP, we discover that at one stage India, Sri Lanka and Thailand were each spending resources equivalent to 2.5 per cent of their gross domestic products but their achievements levels differed significantly. Moreover, their public expenditure ratios differed significantly. In late eighties while India had a public expenditure ratio of 37 per cent, Thailand had it barely 16 per cent. It meant that their social allocation ratios and social priority ratios significantly differed. Similar inference can be drawn for Kuwait and Korea, both spending around 4 per cent on human development concerns. But Kuwait's public expenditure ratio was 36 per cent and social allocation ratio, 42 per cent while Korea's was public expenditure ratio was just 16 per cent and social allocation ratio, 30 per cent. But what is significant is that while Kuwait spends about one-fourth of its social expenditure on priority concerns, Korea spends three-fourths of its on them.

What use more people living a longer life if they have to live an idle life for longer part of a year? What use more people being better educated if they have to loiter on roads because the doors of establishments are shut on their face when they seek wage employment or if they do not get remunerative prices when they choose to be self-employed in the wake of constricted wage labour market? Human development approach does not favour treatment of human beings as a resource but Human Development Reports did show some worry over the fact that economic growth presently taking place is jobless.

The idea of capability includes both being and doing though human development index could not adequately capture the doing part. Even while one may not like being treated as a resource one does want to be productive and creative and useful to the society and would like to earn one's wherewithal oneself. Western economics has treated work/employment as a means rather than as an end, which people pursue for its own sake. Today, people are forced to seek and assert right to work rather than leaders telling them work as their duty or preachers telling them work is worship.

That employment elasticity with respect to GDP, on current daily status basis, has been drastically reducing in the eighties and nineties. It declined from 0.52 during 1983–1994 to 0.16 during 1994–2000. As a result, the rate of unemployment increased from 6.0 per cent to 6.0 per cent during this period. Total number of unemployed person-years rose from 20 million to 26.6 million. The rate of unemployment has risen across age, sex and area of residence exception being the females in urban area but in their case the rate of unemployment is much higher than their male counterpart. This was the case when growth rate of labour force had drastically decelerated. In the years to come it is likely to accelerate from 1.3 per cent per annum during 1994–2000 to 2.5 per cent per annum during 2002–2007, and then to decelerate to 2.25 per cent per annum during 2007–2012 and 1.9 per cent per annum during 2012–2017.

In order to absorb the growth in labour force, at present level of employment elasticity, the required growth in GDP would be more than 15 per cent per annum-twice the rate we could think of. If the backlog has to be taken care of then growth rate required has to increase further. The Tenth Plan proposes policy changes and special employment programmes which will raise the employment elasticity to 0.34 and thus take care of possible rise in increase in labour force. While growth along with policy changes will induce employment for around 30 million, special programmes will generate employment for about 20 million. As per admission of the Planning Commission, the plan will still leave behind by 2007 more than 5 per cent of labour force (413.5 million) unemployed-frustrated and dejected. Most of the time we have failed in fulfilling promises. Earlier Plan (s) had not planned an employment elasticity of 0.16 but they had it. If we again fail this time, a high growth rate-if it materializes-will spell disaster in terms of poverty and inequality

Long life is good but with health. Physical health is good that comes along with mental health. Mental health comes with being employed. If combination of productivity rise and growth rate does not produce enough work for all willing hands, could we think of redistributing work to all?

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