Giving Primacy to Human Development

The recent Human Development Report highlights India's development challenges and the need for a comprehensive strategy for progress.

India's Ranking on HDI and Gender Inequality Index: 

• HDI Ranking: India's ranking on the Human Development Index (HDI) improved slightly in 2022, reaching 134 out of 193 countries, but still lagging behind several neighboring countries like Bhutan, Bangladesh, and Sri Lanka.
• Gender Inequality Index: While India's ranking on the Gender Inequality Index improved in 2022, it still faces significant gender disparities, particularly in labor force participation rates, with a substantial gap between men and women.
• Global Inequality Trends: The Human Development Report raises concerns about increasing inequality globally, with significant economic concentration in a few countries, exacerbating disparities and limiting agency for marginalized populations.

Concerns about Rising Inequality: 

• Impact on India: When adjusted for inequality, India's loss in HDI is substantial, highlighting the need to address income disparities, which are higher than those observed in neighboring countries like Sri Lanka and Bangladesh.
• Implications of Income Inequality: The World Inequality Lab study underscores the widening income gap in India, with the top percentile earning significantly more than the rest of the population, leading to economic polarization and challenges in aggregate demand, consumption, and human welfare.
• Record High Household Debt: India's household debt levels have reached a record high, accompanied by low savings and high debt burdens, necessitating a reevaluation of growth strategies to prioritize human development over short-term gains.

Mains question: 

Discuss the implications of rising inequality on human development and the economy.