The 2010 UNDP Global Human Development Report- The Real Wealth of Nations:
Pathways to Human Development, introduced a new index, the
Inequality-adjusted HDI aimed at capturing the distributional dimensions of
human development. Three dimensions of HDI i.e. income, education and
health are adjusted for inequalities in attainments across people.
Globally, India is ranked 119 out of 169 countries but loses 32 percent of
its value when adjusted for inequalities.

The 2010 UNDP HDR entitled The Real Wealth of Nations: Pathways to Human
Development focuses specifically on inequalities in human development
attainments across countries. To quantify the potential loss because of
such inequalities, the Report introduces three new indices, viz.,
Inequality-adjusted Human Development Index (IHDI), Gender Inequality Index
and Multi-dimensional Poverty Index.

The Government of India (GoI) has been concerned about rising inequalities
and uneven distribution of the benefits of growth. Accordingly, the thrust
of the 11thFive-Year Plan (2007-12) was on inclusive growth. The
forthcoming 12th Five-Year Plan is expected to deepen and sharpen the focus
on inequalities.

In view of the above, this report presents a methodology and provides
estimates for the Inequality-adjusted HDI for Indian states. The report is
organized as follows: The first section focuses on the methodology adopted
to arrive at these estimates and data sources utilized.

The second section outlines the IHDI estimates for India's states and
findings from the analysis. The paper concludes by highlighting key areas
for further research and policy interventions.

Amidst growing concern over these persistent inequalities, and in light of
government emphasis on inclusive growth, this report calculates the HDI and
Inequality-adjusted HDI for states in India. The methodology adopted is
similar to the approach of the HDR 2010 and data utilized from different
rounds of the National Sample Survey on appropriate variables. To
facilitate a cross-country comparison, the indices are normalized with
reference to the goalposts outlined in the HDR 2010.

When ranked according to global goalposts, Kerala's rank is 99 (between
Philippines and the Republic of Moldova) whereas Orissa is ranked 133
(between Myanmar and Yemen). Amongst India's states, Madhya Pradesh suffers
the greatest loss of HDI due to inequality with 35.74 percent. Variations
in IHDIs across states and a comparative analysis with global averages
reveal that inequality in the distribution of human development is
distinctly more pronounced in India than elsewhere.

Further, loss resulting from inequality varies across dimensions and is
highest in education (43 percent), followed by health and income. Loss
resulting from inequality in education is much higher than the global
average of 28 percent and loss due to inequality in health is 34 percent,
compared to the global average of 21 percent.

The findings of this report suggest that human development outcomes alone,
without measurement of inequalities, may significantly mask the performance
of individual states.

Full report is available at:
http://www.undp.org.in/sites/default/files/reports_publication/IHDI_I...<http://www.undp.org.in/sites/default/files/reports_publication/IHDI_I...>