Human Development Index
The Human Development Index (HDI) is a composite statistic published annually by the United Nations Development Programme (UNDP) that measures a country's average achievement in three dimensions: a long and healthy life, access to knowledge, and a decent standard of living.
The HDI was conceived by Pakistani economist Mahbub ul Haq and Indian economist Amartya Sen and first published in 1990. Its core argument was that economic growth measured by GDP alone is an incomplete proxy for human welfare. The index combines three normalised sub-indices: life expectancy at birth (health dimension), mean years of schooling and expected years of schooling (education dimension), and Gross National Income per capita at Purchasing Power Parity (income dimension). Each sub-index is scaled between 0 and 1, and the HDI is the geometric mean of the three.
India's HDI trajectory illustrates both progress and persistent challenges. India's HDI value stood at 0.644 in the 2023/24 Human Development Report (based on 2022 data), placing it in the medium human development category, ranked 134th out of 193 countries. This represented meaningful improvement from 0.498 in 1990, reflecting gains in life expectancy, adult literacy, and income. However, India's rank remained below several smaller South Asian economies when inequality-adjusted HDI (IHDI) was considered, because the gains from development have not been uniformly distributed.
State-level HDI within India varies dramatically. Kerala, Himachal Pradesh, and Goa have consistently ranked near the top, while Bihar, Uttar Pradesh, and Jharkhand have lagged. This heterogeneity is important for businesses and investors evaluating regional consumer markets, labour quality, and infrastructure readiness.
For investors, HDI improvements signal rising human capital quality, which is associated with productivity gains, higher consumption, and a deeper skill base for knowledge-intensive industries. Healthcare, education, and financial services companies tend to benefit from structural HDI improvements. Conversely, states or countries with stagnating HDI often require continued public spending support, which has implications for fiscal deficits and interest rates.