India: a development report card

Spectacular economic growth over the past two decades has made India a global economic power-house. Between 1990 and 2011, India’s economy grew at a compound rate of around 7 per cent per year in current dollars and per capita income (in current dollars) increased from $860 to $3620. The Indian economy is currently the third largest in the world by purchasing power parity (PPP), after the United States and China.

What are the developmental consequences of this surging economic growth for India’s 1.2 billion people? Has economic growth benefited living conditions of its citizens? We answer these questions by applying the most recent data pertaining to the indicators used by Dreze and Sen 2011 (Putting Growth in its Place).

The indicators are: Gross National Income per capita, life expectancy at birth, Infant mortality rate, Children underweight, Maternal mortality, Improved sanitation, Immunization of children 12-23 months, Mean years of schooling and Female (age 15-24) literacy rates.

Improved Living Conditions: The data from The World Bank’sWorld Development Indicators database show that between 1990 and 2011 health and education indicators all displayed significant improvements, with maternal mortality, infant mortality and youth female literacy showing the fastest improvements.

Maternal deaths from births fell three times while the infant mortality rate declined from 81 to 47. Youth female literacy rate increased from 49 to 74 percent. Average life expectancy, the percentage of the population with access to sanitation facilities, immunization rates and average years of schooling all increased over the last twenty years, but not as rapidly as India’s per capita income. 

These trends indicate that economic growth between 1990 and 2011 has significantly enhanced the health and well being of the wider Indian society. 

Distributional Effects: While economic growth is absolutely crucial in raising the living standards of the population, but distributional effects of economic growth as measured by income distribution plays a significant role in determining thedevelopment trends and how much welfare citizens enjoy.

In terms of income distribution India is the second most unequal country in South Asia. In 2010 the Gini coefficient for India, which measures income distribution, was 33.9 indicating that a large fraction of national income is concentrated among the few and income distribution is heavily skewed towards the rich. Sri Lanka with Gini coefficient of 36.4 was the most unequal South Asian country and Pakistan the most equal with a Gini index of 30.0.  Bangladesh and Nepal’s Gini coefficients were 32.1 and 32.8 respectively.

Indiaand its Neighbours: South Asiais one of the poorer regions of the world. Is the lower rate of economic growth among India’s neighbours creating different development trajectories in South Asia?

One would expect that compared with India the lower rates of economic growth and income inequalities in the neighbouring South Asian countries would adversely affect their developmental trajectories. But that was not the case.

Despite India’s rapid economic growth between 1990 and 2011 itdid not fare as well its neighbours. Nepal and Bangladesh have overtaken India in various basic social indicators. In 1990 the average life expectancy in India was comparable to Bangladesh and higher than Nepal’s. In 2011 life expectancy in India became lower than that in Nepal and Bangladesh.

A similar pattern holds for infant mortality. In 1990 India’s infant mortality rate was about 20 percent lower than that of Bangladesh’s, Nepal’s and Pakistan’s. By 2011, India’s infant mortality rate was higher than both Nepal’s and Bangladesh’s, but lower than Pakistan’s. India also fared poorly in providing sanitation facilities and increasing its immunization rates.

In 2010 only about one-third of its citizens had access to improved sanitation facilities and while its neighbours (with the exception of Pakistan), have achieved almost universal DPT immunization coverage of children aged two years India barely increased its immunization rate.

Furthermore, India’s efforts in curbing maternal deaths pale in comparison to Nepal’s impressive achievements in that area. Nepal’s maternal mortality ratio was 170 in 2010, compared to India’s 200. India has also fallen behind in the schooling indicators such as average years of schooling and youth female literacy rates. Bangladesh has overtaken India in both measures despite being some way behind a few decades earlier.

Table 1 presents India’s ranking in South Asia on the various social indicators in 1990 and in 2011. On two indicators, per capita income and life expectancy, India’s ranking improved. But with respect to other indicators, India’s rank has actually fallen.

Its rate of social development has lagged behind much poorer Nepal and Bangladesh.  During the 1990s, India was ranked near the top-two in most of the indicators. Two decades later and notwithstanding its stellar economic performance, India was in the bottom-two and for some indicators (proportion of underweight children and immunization rates) it is the worst performing country.

Despite Bangladesh’s per capita income being almost half of India’s, it performed much better in most of the basic indicators and it has exhibited the most dramatic improvements in basic living standards among the five countries. Nepal has also caught up with India and has surpassed India in maternal mortality, immunization rates, youth female literacy and life expectancy at birth and this in spite of Nepal’s per capita income being one-third of India’s.

From these trends it appears that compared to its much poorer neighbours India has performed poorly and has gone backwards.

Concluding Remarks:Indicators of social well-being did improve in the period of India’s rapid economic growth. But when examined in the context of its South Asian neighbours, India has gone backward not forward.

Our analysis confirms Dreze and Sen’s findings that with respect to the indicators examined here; India’s ranking has slipped badly in comparison to its South Asian neighbours. There appears to be a disconnect between the rate of economic growth and improvement in living conditions. Economists take the causal relationship of these two indicators as given but the case of India and its neighbours tells us something different.

The realm of civil society organizations and NGOs know well that growth does not translate into better living conditions and human development as growth is not equal. It would appear that the planning and implementation of public policies seeking to advance collective wellbeing is more important than the scale or rate of economic growth.