Published in P. Nayak (ed.

) Growth and Human Development in North East India, Oxford

University Press, New Delhi, pp.3-18.

Human Development: Concept and Measurement

Purusottam Nayak

Abstract
The human development approach to development and growth as proposed by
UNDP in 1990 is a widely accepted approach all over world. This paper in this
connection is an attempt to describe in details about evolution of the concept of human
development, its emergence as an approach to development and the methodological
issues on its measurement. It provides an account of various changes in the methods of
measurement brought out by UNDP, the Planning Commission, Government of India and
the individual researchers at different points of time since1990.

Introduction
Development experience of many fast-growing developing countries revealed that
their high GNP growth rates failed to reduce the socio-economic deprivation of
substantial sections of their population. Even developed industrial nations realized that
high income is no protection against the rapid spread of such problems as drugs,
alcoholism, AIDS, homelessness, violence and the breakdown of family relations. At the
same time, some low-income countries demonstrated that it is possible to achieve high
levels of human development if they skillfully use the available means to expand basic
human capabilities. This establishes the fact that the expansion of output and wealth is
only a means to development. The end of development is the welfare of human beings.
Therefore, the central focus of development analysis and planning must be directed
towards people’s needs and oriented towards achievement of this ultimate end. As a first
step towards achievement of this end there is a need to create a database on improved
social statistics and new development measures. To cater to this need the concept of
human development and its measurement through a measure called Human Development
Index (HDI) was introduced by UNDP (1990) in its first Human Development Report.
The human development approach of development as is commonly understood
differs from the conventional approaches to economic growth, human capital formation,
human resource development, human welfare and basic human needs. The following
arguments help us in understanding the same: (1) GNP growth is treated as being
necessary but not sufficient for human development. Human progress may be lacking in
some societies despite rapid GNP growth or high per capita income levels unless some

Electroniccopy
Electronic copyavailable
available at:
at: https://ssrn.com/abstract=1081274
https://ssrn.com/abstract=1081274
 2

additional steps are undertaken to improve the same. (2) Theories of human capital
formation and human resource development view human beings primarily as means
rather than as ends. They are concerned only with the supply side, with human beings as
instruments for furthering commodity production. It is true that human beings are the
active agents of all production and wealth creation but they are also the ultimate ends and
beneficiaries of this process. Thus, the concept of human capital formation (or human
resource development) captures only one side of human development, but not in its
entirety. (3) Human welfare approaches look at human beings more as the beneficiaries
of the development process than as participants in it. They emphasize only the
distributive policies rather than production structures. (4) The basic needs approach
usually concentrates on the bundle of goods and services such as food, shelter, clothing,
healthcare and water that deprived population group needs. It focuses on the provision of
these goods and services rather than on the issue of human choices.

Concept of Human Development

Human development is a process of enlarging people’s choices. In principle, these
choices can be infinite and can change over time. But, at all levels of development, the
three essential choices are for people to lead a healthy and long life, to acquire knowledge
and to have access to the resources needed for a decent standard of living. If these
essential choices are not available, many other opportunities remain inaccessible. But
human development does not end there. Additional choices, highly valued by many
people, range from political, economic and social freedom to opportunities for being
creative and productive and enjoying self-respect and guaranteed human rights.
Human development has two sides: (1) the formation of human capabilities such as
improved health, knowledge and skills and (2) the use of theirs acquired capabilities for
productive purposes, leisure or for being active in cultural, social and political affairs.
Considerable human frustration results if the scale of human development does not finely
balance the two sides. In this sense income is clearly one of the options that people would
like to have, albeit an important one. But it is not the sum total of lives. Development must,
therefore, be more than just the expansion of income and wealth. Its focus must be on people
(HDR, 1990). The HDR (1991) elaborates the concept of human development along the
following lines: People must be at the center of human development. Development has to be
woven around people, not people around development. It has to be development of the
people, by the people and for the people.

Electroniccopy
Electronic copyavailable
available at:
at: https://ssrn.com/abstract=1081274
https://ssrn.com/abstract=1081274
 3

Previous concepts of development have often given exclusive attention to economic

growth on the assumption that the benefits of growth would trickle down to various sections
of the society. But the past experience does not support this hypothesis much. Higher growth
does not necessarily bring higher degree of welfare for every section of the society. Growth
needs to be translated into improvements in people’s lives.
Human development also encompasses elements that constitute the critical issues of
gender and development. There are four major elements in the concept of human
development such as productivity, equity, sustainability and empowerment. As far as
productivity is concerned people must be enabled to increase their productivity and to
participate fully in the process of income generation and remunerative employment to
achieve higher economic growth, which is a subset of human development models.
Productivity is not the only means to achieve welfare in a society. People must have access to
equal opportunities. All barriers to economic and political opportunities must be eliminated
so that people can participate in, and benefit from, these opportunities. These benefits also
need to be distributed over generations. Access to opportunities must be ensured not only for
the present generation but for future generations as well. All forms of capital such as
physical, human and environmental should be replenished. Besides, empowerment is a
necessity as regards human development is concerned. People must participate fully in the
decision making process that can shape their lives. Human development is impossible
without gender equality. As long as women are excluded from the development process,
development will remain weak and lopsided (HDR, 1995).
Development should increase people’s choices with two caveats. First, while
enhancing the choices of one individual or a section of a society, should not restrict the
choices of another. This calls for equity in human relationships. Second, while improving the
lives of the present generation should not mortgage the choices of future generations (HDR,
1991). In other words, the development process must be sustainable. The concept of human
development has gone beyond its basic premises to emphasize the sustainability of the
development process. It not only puts the people at the center of the development process but
also advocates protection of the opportunities of future generations and respecting the natural
systems on which all life system depends. Sustainable human development addresses both
equity within the generation and among the generations enabling all generations, present and
future, to make the best use of their capabilities.
The issue of sustainability has three dimensions such as capacity, environment
and institutions. If the development process does not create institutions fully supportive
of people’s rights, it cannot be sustainable in the long run. Human development thus
Electronic copy available at: https://ssrn.com/abstract=1081274
 4

emphasizes strengthening the institutions of both government and civil society so that the
entire development process becomes internally sustainable (HDR, 1995). Human
development is not a concept separated from sustainable development but it can help to
rescue ‘sustainable development’ from the misconception that it involves only the
environmental dimension of development. All these approaches have emphasized the
need for people–centered development, with concerns for human empowerment,
participation, gender equality, equitable growth, poverty reduction and long-term
sustainability (HDR, 1998). According to Haq (1976), “the defining difference between
the economic growth and the human development schools is that the first focuses
exclusively on the expansion of only one choice, i.e. income, while the second embraces
the enlargement of all human choices whether economic, social, cultural or political”.
There are at least six reasons for which we talk and aspire for human development
and poverty eradication. First, it is an end in itself; indeed it is the whole purpose of
development. Second, it contributes to higher productivity. Third, it lowers re-
productivity and therefore controls population growth. Fourth, poverty reduction reduces
degradation of environment from soil erosion, deforestation and desertification. Fifth, the
growth of a civil society and democracy leads to greater social stability. Lastly, its
political appeal is that not only it reduces civil disturbances but also acts as a means to
political stability (Streeten, 1995).

Measurement of Human Development: UNDP Method

What does the HDI include? How is it measured? These are some the few
questions which need to be addressed first. The HDI is a composite index of three basic
components of human development, viz. longevity, knowledge and standard of living.
Longevity is measured by life expectancy. Knowledge is measured by a combination of
adult literacy having two-thirds weight and mean years of schooling with one-third
weight. Standard of living is measured by purchasing power, based on real GDP per
capita adjusted for the local cost of living (purchasing power parity, or PPP).
The question then arises: Why do we take only these three components to
measure human development? In any system of measuring and monitoring human
development, the ideal could have been to reflect all aspects of human development to
obtain as comprehensive a picture as possible. In support of the choice of three
components of HDI, the following arguments are made in HDR (1990): One of the
probable reasons is lack of data that imposes some limits on its measurements. Secondly,

Electronic copy available at: https://ssrn.com/abstract=1081274

 5

comprehensiveness is not always and entirely desirable. Too many indicators may
produce a perplexing picture, perhaps distracting policy makers from its thrust.
Moreover, some indicators may overlap with existing indicators. Infant mortality, for
example, is already reflected in life expectancy. Thus, arbitrary inclusion of more
indicator variables may not solve the purpose for which the index is constructed. The
crucial issue has therefore been on emphasis on the policy variables.
The next question then arises: How to combine these three indicators measured in
three different units? The breakthrough for the HDI, however, is to find a common
measuring rod for the socio-economic distance traveled. For each of these three
dimensions, the report identified minimum achievements, viz. the lowest national life
expectancy, the lowest national level of adult literacy and the lowest national level of per
capita income. It also established a maximum or desirable level of attainment for each of
these dimensions and then showed where each country stood in relation to these scales. It
was expressed in terms of a numerical value between 0 and 1. Income above the average
world income was adjusted using a progressively higher discount rate. The scores for the
three dimensions were then averaged in an overall index.
The HDI was constructed in three steps: In the first step the measure of
deprivation of a country was made for each of the three basic indicators using the
following formula:
Max( X ij )  X ij
1...............................I ij 
Max( X ij )  Min( X ij )

The indicator variable I  used

ij in (1) refers to the deprivation indicator for the

j th country with respect to the i th variable. In the second step an average deprivation
indicator I j  was defined by taking a simple average of the three indicators as given

below:
1 3
2..............................I j   I ij
3 i 1

In the third step HDI was measured as one minus the average deprivation index as
follows:
3.............................HDI j  1 I j

The human development index attracted a lot of attention among policy makers,
development professionals, academics, the press and the people. Many criticisms were

Electronic copy available at: https://ssrn.com/abstract=1081274

 6

raised against the construction and robustness of the index. As a result of these criticisms
two improvements were brought out in its construction in the subsequent HDR (1991).
First, knowledge variables such as adult literacy and years of schooling were combined to
produce a synthetic measure of educational achievement by assigning weights to the two
components as follows:

4.........................E  a1 Literacy   a 2 Years of Schooling 

The symbols used, i.e. E , a1 and a 2 in equation (4) respectively refer to educational
achievement, respective weights of literacy and mean years of schooling. These weights
were assumed as a1  ⅔ and a 2  ⅓ in the 1991 report whereas the same were taken as
a1  1 and a 2  0 in the 1990 report. Second, modification was made in the treatment of
income. As we know HDI in the 1990 report was based on the premise of diminishing
returns from income which was reflected through the use of logarithm of income and
assignment of zero weight to income above the poverty line. However, in 1991 the
method was revised by using the well-known and frequently used Atkinson formula for
measuring utility of income as follows:
1
5............................W (Y )  (Y 1  )
1 
Where W (Y ) is the utility or well-being derived from income, and the parameter є
measures the extent of diminishing returns. It is the elasticity of the marginal utility of
income with respect to income. If   0 there is no diminishing returns. If  approaches
1, the equation becomes:
6.............................W (Y )  Log (Y )
The modification adopted in the HDI (1991) was to let the value of є to rise slowly with
rise in income. For this purpose, the full range of income was divided into multiples of
 
the poverty line income Y * . Thus, most countries were falling in the income range

between 0 to Y * , some between Y * to 2Y * , even fewer between 2Y * to 3Y * and so on. For

all countries for which Y  Y * (the poor countries), є was set equal to 0 meaning thereby
that there was no diminishing returns. For income between Y * and 2Y * , є was set equal to

½. For income between 2Y * and 3Y * , it was set at ⅔ and so on. In general,

Electronic copy available at: https://ssrn.com/abstract=1081274

 7


when Y *  Y    1Y * , it implied that  (where  representing constants such
 1
as 1, 2, 3, 4, etc to be multiplied with poverty line income to determine various ranges of
income where a country falls according to its level of income). Thus, we have
7 ......................W Y   Log Y  for 0  Y  Y *

 Y*  2 Y Y *  1
2
for Y *  Y  2Y *
1 1
 Y *  2(Y * ) 2
 3(Y  2Y * ) 3
for 2Y *  Y  3Y *
1 1 1
 Y *  2(Y * ) 2
 3(Y * ) 3
 4(Y  3Y * ) 4
for 3Y *  Y  4Y * etc.

So, the higher the income relative to the poverty level, the more sharply the diminishing
returns affects the contribution of income to human development. Income above the
poverty line thus has a marginal effect, but not a full dollar-for-dollar effect. This
marginal effect is enough, however, to differentiate significantly among industrial
countries. The original HDI formulation (HDR, 1990), by comparison, was:
W (Y )  Log (Y ) for 0  Y  Y *
 Log (Y * ) for Y  Y *
The revision thus does not take  1 , but allows it to vary between 0 and 1 (HDR, 1991).
The calculation of HDI for 1994 was again made different from that of the
previous years. Maximum and minimum values were fixed for the four basic variables
such as life expectancy 85.0 and 25.0 years  , adult literacy 100 and 0 per cent  , mean
years of schooling 15.0 and 0 years  and income PPP $ 40,000 and 200  . For income,
the threshold value was taken to be the global average real GDP per capita
of PPP $ 5120 . Multiples of income beyond the threshold was discounted using a
progressively higher rate (HDR, 1994).
Since the publication of the HDR (1994), two changes have been brought out in
the construction of HDI relating to variables and minimum and maximum values. First,
the variable of mean years of schooling has been replaced by the combined primary,
secondary and tertiary enrolment ratios mainly because the formula for calculating mean
years of schooling is complex and has enormous data requirement. Second, the minimum
value of income has been revised from PPP $ 200 to 100 . This revision has been made
because in the construction of the gender-related development index GDI  for different
countries, the minimum observed value of female income of PPP $100 has been used as
a lower goal post. It is necessary to use this fixed minimum for construction of the overall

Electronic copy available at: https://ssrn.com/abstract=1081274

 8

HDI to maintain consistency between the construction of HDI and that of GDI and to
ensure comparability between the two indices. For HDI , the revision is only marginal
and it has little effect on HDI values. For any component of the HDI , individual indices
are computed according to the general formula:
X i  Min X i 
8........................Index 
Max X i   Min X i 
For the construction of the dimension indices maximum and minimum values
have been fixed as shown in the following Box:

DIMENSION INDICES
Indicators Scaling Norms for HDI
Maximum Minimum
Life expectancy at birth (years) 85 25
Adult literacy rate (per cent) 100 0
Combined gross enrolment ratio (per cent) 100 0
GDP per capita (PPP US $) 40,000 100
Source: HDR 2005, UNDP
Up to1999 Atkinson formula was used to construct the income (GDP) index in the
Human Development Report. The basic approach in the treatment of income was driven
by the fact that achieving a respectable level of human development does not require
unlimited income. To reflect this, income was always discounted in calculating the HDI.
To calculate the discounted value of the maximum income of PPP $ 40,000 which falls

between the income range of 6Y * and 7Y * the following formula (constructed before
1999) was used:

9........W (Y )  Y *  2(Y * ) 2  3(Y * )

1 1 1 1 1 1
3
 4(Y * ) 4
 5(Y * ) 5
 6(Y * ) 6
 7(40000  6Y * ) 7

 6311PPP US $

The main problem with this formula is that it discounts the income above the
threshold level very heavily, penalizing the countries in which income exceeds the
threshold level. It reduces the PPP $ 34,000 between the threshold and maximum level
of income to a mere PPP $ 321 . In many cases income loses its relevance as a proxy for
all dimensions of human development other than a long and healthy life and knowledge.
To overcome this problem the HDR (1999) brought out a thorough review of the
treatment of income and suggested its improvements. Putting the methodology on a more

Electronic copy available at: https://ssrn.com/abstract=1081274

 9

solid analytical foundation by introducing the formula as shown below made the
refinement:
Log (Y )  Log MinY 
10..........................W (Y ) 
Log MaxY   LogMinY 
There are several advantages to this formula. First, it does not discount income as
severely as the formula used earlier. Second, it discounts all income, not just the income
above a certain level. Third, the asymptote starts quite late, so middle-income countries
are not penalized unduly; moreover, as income rises further in these countries, they
continue to receive recognition for their increasing income as a potential means for
further human development (HDR, 1999).
Subsequently Anand et al (1993, 1995 and 2000) and Chaubey (2002) suggested
further modifications to the UNDP formula but these are yet to be popularized (Nayak
and Thomas, 2007). Anand and Sen suggested the following two forms for rectification
of the transformation adopted by UNDP:
11..............................  e y where  0
  y e where   0 and   0
 y

In the first part of function (11), y is the elasticity of the function, which is a
positive function of income and therefore increases linearly with the increase in income.
The second part is a more general class, which combines the constant absolute inequality
aversion and constant relative inequality aversion forms.
Chaubey provided an alternative to these formulations, which made the use of the
idea of poverty line and followed the principle of diminishing marginal returns to
income:
12........................W  Y for Y  Y *
  Y 
 Y *  Y *  Log  *  for Y  Y *
  Y 
The diagram given below offers a clear overview of how the HDI is constructed:

Dimension Healthy and Long Life Knowledge Decent Standard of Living

Indicator Life Expectancy at Birth Adult Literacy Rate Gross Enrolment Ratio GDP Per Capita

Adult Literacy Index Enrolment Index

Dimension Indices Life Expectancy Index Education Index GDP Index

Electronic copy available at: https://ssrn.com/abstract=1081274

 10

Human Development Index

Construction of Indices in UNDP Report

Life Expec tan cy Index LEI  : The life expectancy index measures the relative
achievement of a country in life expectancy at birth. The life expectancy index of India
having life expectancy of 63.6 years at birth for the year 2004 is calculated to be 0.643 as
shown below:

i .........................LEI  63.6  25  0.643

85  25
Education Index EI  : The education index measures a country’s relative achievement in
both adult literacy and combined primary, secondary and tertiary gross enrolment. First,
an adult literacy index  ALE  and gross enrolment index GEI  are calculated. Then these

two indices are combined to create the education index EI  , with two-thirds weight
given to adult literacy and one-third weight to combined gross enrolment. For India with
an adult literacy rate of 61.0 per cent and a combined enrolment ratio of 62.0 per cent in
2004, the education index is calculated to be 0.613 as shown below:

iia ...................... ALI  61.0  0  0.610

100  0

iib ......................GEI  62.0  0  0.620 \\\

100  0

ii ...........................EI  2 3  ALI   13 GEI   2 3 0.610  13 0.620  0.613

GDP Index GDPI  : The GDP index is calculated using adjusted GDP per

capita PPP US $ . In the HDI income serves as a surrogate for all the dimensions of
human development not reflected in a long and healthy life and in knowledge. Income is
adjusted because achieving a respectable level of human development does not require
unlimited income. Accordingly, the logarithm of income is used. For India with a
GDP per capita of PPP $ 3139 in 2004, the GDP index is worked out to be 0.575 as
shown below:
Log (3139)  Log (100)
iii ......................GDPI   0.575
Log (40000)  Log (100)

Electronic copy available at: https://ssrn.com/abstract=1081274

 11

Human Development Index HDI  : Once the individual indices are calculated determining
the HDI is straightforward. It is a simple average of Life Expectancy Index (LEI),
Education Index (EI) and GDP Index (GDPI):

iv .........................HDI  13 LEI  EI  GDPI 

1
3
0.643  0.613  0.575  0.610
Measurement of Human Development: Planning Commission Method
The National Human Development Report prepared by Planning Commission of
India is an attempt to map the state of human development in India (Planning
Commission, 2002). A major objective of the NHDR is to bring about a certain
conceptual and methodological consensus on the use of human development approach in
the country in general, and the framework for identifying indicators and building
composite human development indices at the State level, in particular. The work is
expected to guide similar initiatives at sub-State level in future. It seeks to put together
indicators and composite indices to evaluate development process in terms of ‘ex-post
incomes’ rather than only in terms of available ‘means’ of ‘inputs’. The report,
recognizing the broad based consensus that exists on the three critical dimensions of
well-being, focuses on identifying the various contextually relevant indicators on each of
them. These dimensions of well-being are related to the following:
 Longevity: the ability to live long and healthy life;
 Education: the ability to read, write and acquire knowledge; and
 Command over resources: the ability to enjoy a decent standard of living and
have a socially meaningful life.
The various indicators of these attainments and composite indices capture the process of
development and the well being of the people from two perspectives. The first is the
‘conglomerate perspective’, which captures advances, made by the society as a whole and
the second is the ‘deprivation perspective’ that assesses the status of the deprived in a
society. Both these perspectives are needed to adequately understand the process of
development in any society (NHDR 2001, p.10).
A composite index of diverse indicators, though it is conceptually and
methodologically difficult to put together, has been considered as a useful tool in policy
planning in India. It is believed to help in facilitating comparisons with other composite
measures. It is expected to help in a meaningful comparison of the human development

Electronic copy available at: https://ssrn.com/abstract=1081274

 12

status across the States. It is, therefore, felt necessary to have core indices that are
functionally decomposable at State and sub-State levels. Keeping these points in view the
NHDR included a core set of indices from among the identified indicators that reflect, in
some sense, the common concerns, social values and development priorities of all the
States in India which permitted a meaningful comparison of the human development
status across the States. The other concern that were considered to be reflected in the
indices relates to their amenability to inter-temporal and inter-spatial analyses, as well as
their sensitivity to tracking developmental changes at more frequent interval of time. The
latter implies, making use of such indicators that are sensitive to capturing changes, for
instance, on an annual basis, as against using only those indicators that primarily capture
the accumulated attainments on each of the identified dimensions of well-being that is
included in the summary measure. Such a consideration is important when the objective
is to have composite human development indices where frequent or yearly changes are
not on account of changes only in the income variable. This is not the case with the HDI
of UNDP, which is presented annually in the human development reports. In their case
the yearly changes in the value of the index is mostly on account of changes in the
indicators that are sensitive to tracking gradual but continuous changes in such aspect of
well-being that have conventionally been captured, largely, through the slow moving
indicators like life expectancy at birth or even literacy rates.
While taking note of the social valuation and development priorities of India, the
scaling and weighting of diverse indicators into a composite index has been done keeping
in view the objectives for which the composite indices are being built. In scaling the
diverse indicators, the main consideration has been to make attainments on each of them
comparable and at the same time ensuring that the selection of end points, i.e. the
maximum and the minimum values on the scale for each indicator are such that they
support inter-temporal comparison for a reasonable period of time starting from 1980.
The scaling norms that have been selected are expected to remain valid at least till 2020,
at a reasonably improved pace of human development. While selecting the norms, the
attainments of the best performing State on the concerned indicators and the comparable
international norms are also kept in mind.
The issue of weights to combine the identified indicators on each of the three
dimensions of well-being is of course debatable. The report has adopted a predominantly
normative approach, as against a purely empirical basis of deriving weights to club

Electronic copy available at: https://ssrn.com/abstract=1081274

 13

different indicators. Conceptually, there are good reasons to suggest that different aspects
of well-being have to be co-realizable for an individual to have a meaningful sense of
well-being in today’s context. It follows that attainments on each aspect of well-being are
equally important and hence should be equally weighted. Thus both in HDI as well as in
HPI composite measures reflecting health, educational and economic
attainments/deprivation have been equally weighted. However, within the composite
measure on educational and health attainment, based on a sensitivity analysis, indicators
with somewhat distinct attributes have been clubbed using unequal weights so as to
reflect appropriately the country’s context, development priorities and the desired policy
focus. Accordingly, in case of the composite index on health attainment, life expectancy
has been given a 65 per cent weight as against only 35 per cent for infant mortality rate.
Similarly, in case of the composite index on educational attainment, while literacy rate
has been given a weight of 35 per cent, the indicator capturing intensity of formal
education (based on current enrolment rates in successive classes at school level) has
been assigned 65 percent. In case of indicator on economic attainment namely, inequality
adjusted per capita consumption expenditure, an adjustment for inflation over the period
had been made to make it amenable to inter-temporal and inter-spatial comparisons. As a
result, the composite indices are capable of tracking development across the States and
over the period of time for which they have been estimated.

INDICATORS OF HDI IN UNDP AND NATIONAL HUMAN DEVELOPMENT REPORTS

Attainments UNDP Indicators NHDR Indicators
Health Life expectancy at birth (1) Life Expectancy at Age 1 &
(2) Infant Mortality Rate
Educational Adult literacy rate combined (1) Literacy Rate 7 + &
with enrolment ratio (2) Intensity of Formal Education
Economic Real GDP per capita in PPP$ Per capita real consumption
expenditure adjusted for inequality

The formula used for constructing human development index in the NHDR is as
follows:
3 X ij  X i*
13....................HDI j  1 3
X i where X i 
i 1 X i**  X i*

In the above equation HDI is measured for the jth State where X ij refers to attainment of

the jth State on the ith indicator, X i** and X i* are the scaling maximum and minimum

Electronic copy available at: https://ssrn.com/abstract=1081274

 14

norms, X 1 refers to expenditure index based on inflation and inequality adjusted per
capita consumption expenditure, X 2 is the composite index on educational attainment
 X 2  0.35E1  0.65E 2  where E1 is literacy index based on literacy rate for the age
group 7 years and above and E2 is formal education index based on adjusted intensity of

formal education and X3 refers to composite index on health attainment

 X 3  0.65H 1  0.35H 2  where H1 is life expectancy index based on life expectancy at

age one and H 2 is infant mortality index based on infant mortality rate. In case of IMR
the reciprocal of the indicator is used.
The different indicators included in the development radars have been scaled and
normalized to take a value on a scale ranging from 0 to 5. “As a result, on each indicator
including the IMR and poverty ratio, where the reciprocal of the indicator has been used,
and the scaled least achievement corresponds to 0 whereas the best achievement is closer
to 5. In undertaking the said scaling procedure, desirable norms had to be adopted for the
chosen indicators’’ (NHDR 2002, p.133). In some cases the norms are self selecting, as
for instance, is the case with access to safe drinking water or literacy rate and in some
others like per capita consumption expenditure or even infant mortality rate, there is an
element of value judgment. In case of the inflation adjusted per capita consumption
expenditure (at 1983 prices) the maximum has been pegged at Rs. 500 per capita per
month. For poverty the minimum has been kept at 5 per cent such that it corresponds to a
value of 5 on a scale of 0.5 on the radar. In all other cases the scaling norms are as
follows:

DIMENSION INDICES

Indicators Scaling Norms for HDI

Maximum Minimum
Life expectancy at age 1 (years) 80 50

Infant mortality rate - 20 per 1000

Literacy rate for 7+ years 100 0

Adjusted intensity of formal education (Estimated) 7 0

Per capita monthly consumption expenditure (Rs.) 325 65

Source: NHDR 2001, Planning Commission, New Delhi

Electronic copy available at: https://ssrn.com/abstract=1081274

 15

References
 Anand, S. and A. Sen (1993): “Human Development Index: Methodology and
Measurement”, Human Development Report Office, Occasional Paper No.12,
New York, UNDP.
 Anand, S. and A. Sen (1995): “Gender Inequality in Human Development:
Theories and Measurement”, Human Development Report Office, Occasional
Paper No.19, New York, UNDP.
 Anand, S. and A. Sen (2000): “The Income Component of Human Development
Index”, Journal of Human Development, Vol.1, No.1.
 Anand, S. and M. Ravallion (1993): “Human Development in Poor Countries: On
the Role of Private Incomes and Public Services”, Journal of Economic
Perspectives, Vol.7, pp.133-150.
 Chaubey, P.K (2002): “The Human Development Index: A Contribution to its
Construction”, Indian Journal of Economics, Vol. 83, No. 328, pp. 95-100.
 Haq, Mahboob Ul (1976): The Poverty Curtain-Choices for the Third World,
Columbia University Press, New York, p.35.
 Nayak, P. and E.D. Thomas (2007): Human Development and Deprivation in
Meghalaya, Akansha Publishers, New Delhi.
 Planning Commission (2002): National Human Development Report 2001, Govt.
of India, New Delhi.
 Streeten, P.P. (1995): Thinking about Development, Cambridge University Press,
pp.19-20.
 UNDP: Human Development Report, Volumes for the years 1990, 1991, 1992,
1994, 1995, 1996, 1998, 1999, 2001, 2002, 2004 and 2006.

Electronic copy available at: https://ssrn.com/abstract=1081274