Distinguish between the Human Development Index (HDI) and the Inequality-adjusted Human Development Index (IHDI) with special reference to India. Why is the IHDI considered a better indicator of inclusive growth?

Introduction

Both indices are published in the UNDP's Human Development Report. The Human Development Index (HDI) is a composite of three dimensions—a long and healthy life (life expectancy), knowledge (mean and expected years of schooling) and a decent standard of living (GNI per capita). The Inequality-adjusted HDI (IHDI) discounts each of these achievements for how unequally they are distributed.

Distinguishing the Two

• What they measure: HDI captures average national achievement; IHDI captures the actual level of human development after accounting for inequality across the population.
• Method: IHDI applies the Atkinson inequality measure to each dimension. When distribution is perfectly equal, IHDI equals HDI; the wider the gap, the greater the 'loss' in the IHDI value.
• India: India's HDI (medium human development band) falls appreciably once adjusted for inequality—the percentage loss reflects deep disparities in income, health and education across regions, gender and social groups.

Why IHDI Is a Better Indicator of Inclusive Growth

• Inclusive growth requires benefits to reach all sections; IHDI penalizes concentration of achievements among a few, exposing what an average conceals.
• It links distribution to development, aligning with equity and the SDG pledge to 'leave no one behind'.

Conclusion

By revealing the cost of inequality, the IHDI is a sharper lens on inclusive, equitable development than the headline HDI.