Inclusive Development Index, 2017

WEF’s ‘Inclusive Growth and Development Report 2017’ released in January 2017 has ranked India 60th among 79 developing economies. India’s rank is below neighbouring China and Pakistan. Lithuania tops the list with Azerbaijan and Hungary at second and third positions.

About the Index

The Inclusive Development Index, developed by the World Economic Forum, evaluates the standard of living of the countries based on certain key performance indicators. At present, it assesses 109 countries on the basis of these standards and ranks them according to the current level of inclusive development. It also evaluates the performance of these countries for the last 5 years. As per this Index, Norway ranks first (the country with the most inclusive development), followed by Luxemberg, Switzerland, Iceland and Denmark. On the other Greece has been ranked the last in the index (having the least inclusive development).

What is Inclusive Development?

Now before understanding the structure of the Inclusive Development Index, one needs to know the meaning of the term ‘Inclusive Development’. Inclusive Development refers to the development in which all the marginalized and excluded groups are stakeholders or all are able to participate equally in the development. Some of the bases of such marginalization or exclusion are according to UNDP gender, ethnicity, age, sexual orientation, disability or poverty. So the inclusive development is affected when the richest ten per cent population of the world own 99% of the assets and the remaining poor population is left with only one per cent of the assets or resources.

UNDP has also mentioned certain criteria which a country must fulfill in order to have an inclusive development. One such criterion is creating productive and gainful employment. The next is social safety and security- this can be achieved by enhancing public services like building schools, hospitals, training teachers and doctors or providing access to water, sanitation and transportation. Yet another effective step could be proper use of taxpayers’ money for the benefit of the public at large.

Working of the Inclusive Development Index

The basic framework of the index consists of seven pillars which are as follows:

  1. Education and Skills– This pillar is measured through access to education, quality of the education that is accessed and equity in providing education.
  2. Basic Services and Infrastructure- It includes basic and digital infrastructure as well as health related infrastructure.
  3. Corruption level– This is measured in terms of political and business ethics in a country.
  4. Financial and real economy investment– This refers to the inclusion of all classes in the financial system of a country.
  5. Asset Building and Entrepreneurship- This is measured in terms of the number of ownership of small businesses in a country and wage and non-wage compensation granted.
  6. Fiscal transfers– The efficiency of tax collection and utilization of tax money i.e. ensuring social protection through this means.

The National Key Performance Indicators that this Index uses to rank countries are:

  1. Growth and Development– This is measured with other important indicators like GDP (per capita), labour productivity, employment and life expectancy.
  2. Inclusion– This can be measured through the Poverty Rate of each country, income distribution in the country, the median household income.
  3. Intergenerational Equity and Sustainability– This is measured by the Dependency Ratio, Adjusted Net Savings and Public Debt as a share of GDP.

The countries have been classified on the basis of Advanced and Developing Economies. The countries under these categories are first given top ranks and then countries showing an improvement in 5 year growth trend are also given rankings accordingly. In this manner, India has been placed in the category of developing economies.

India’s Position in Inclusive Development Index

According to the World Economic Forum Report, India has been ranked 60th among the 79 developing countries evaluated, much behind China and Pakistan who have bagged 15th and 52nd rank respectively. This situation is prominent even when India has bagged a top 10 position in GDP growth among the developing countries and the labour productivity growth has also been strong. This reflects that India has really performed poorly in other areas like employment opportunity, poverty rate, life expectancy, level of education and corruption etc. The reason behind such low ranking as stated by the WEF, is the default in choosing an appropriate measurement tool and growth model that guided policy makers for decades.

Conclusion

So India has to seriously relook into the growth model adopted and identify the flaws in its working. The Indian government has to sincerely focus on the other parameters provided by the WEF which can help in not only inclusive development but may enhance the overall growth of the country.

There are various schemes and programmes dealing with these indicators like Sarva Siksha Abhiyan for education, NREGA for employment and various other poverty alleviation programmes. But the problem mainly lies with their proper implementation. This is evident from the fact that even though Sarva Siksha Abhiyan has been continuing for more than a decade and mid day meal scheme has also been started, the dropout rates among children from Below Poverty Line (BPL) households still remain pretty high. There have been lots of complaints on the quality of education in these schools and the quality of food in the mid day meal. The same goes with other programmes like the Public Distribution System, where complaints of genuine holders of BPL cards are denied ration even today. Thus, there is a need not of framing new policies but proper implementation of the current policies and programmes by identifying the loopholes in their functioning and finding new ways to improve them.

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