Human development, health & education economics

From growth to human development

The human-development paradigm displaced the growth-centric view of welfare. Amartya Sen's capability approach argues that development is the expansion of substantive freedoms — the real capabilities people have to lead lives they value — not merely a rise in GDP or commodity command. Mahbub ul Haq operationalised this thinking into the Human Development Index (HDI), launched by UNDP in the first Human Development Report, 1990. The HDI is a geometric mean of three dimensions: a long and healthy life (life expectancy at birth), knowledge (mean years of schooling and expected years of schooling), and a decent standard of living (GNI per capita at PPP).

In the HDR 2023/24, India ranked 134 of 193 countries with an HDI of 0.644, placing it in the 'medium human development' band. Candidates must retain the methodological shift of 2010, when UNDP replaced literacy and enrolment with mean/expected years of schooling, switched GDP to GNI per capita, and adopted the geometric mean to penalise unevenness across dimensions.

The family of human-development indices

UPSC repeatedly tests the companion indices. The Inequality-adjusted HDI (IHDI) discounts the HDI for inequality in each dimension; the gap between HDI and IHDI is a 'loss' due to inequality. The Gender Development Index (GDI) is the ratio of female to male HDI. The Gender Inequality Index (GII), introduced in 2010, measures loss in achievement across reproductive health (maternal mortality ratio, adolescent birth rate), empowerment (parliamentary seats, secondary education) and the labour market. The Multidimensional Poverty Index (MPI), produced by UNDP and OPHI since 2010, counts deprivations across health, education and living standards using the Alkire-Foster method.

India publishes its own National MPI through NITI Aayog (baseline report 2021, progress reports thereafter), drawing on NFHS data and adding indicators such as maternal health and bank accounts to the global 10. NITI Aayog's January 2024 discussion paper estimated that about 24.8 crore Indians escaped multidimensional poverty between 2013-14 and 2022-23, with the national MPI headcount falling from 29.17% to 11.28%.

Why the distinction matters

The capability lens reframes policy: a state may have high per-capita income yet poor capabilities (the 'Gulf' pattern), or modest income yet strong human development (Kerala, Sri Lanka, Costa Rica). Sen's contrast between income-mediated and support-led security underpins arguments for public provisioning of health and schooling. For India this is the analytic root of debates over whether growth alone reduces malnutrition — the 'Asian enigma' of persistent child undernutrition despite rising incomes that Sen, Drèze and others highlighted.

Health economics: market failure and the public role

Health is a classic case of market failure: positive externalities (immunisation, disease control are merit goods and near-public goods), asymmetric information between provider and patient, and uncertainty that creates a demand for insurance. These justify public financing and regulation. India's public health spending has long lagged: the National Health Policy 2017 set a target of raising public health expenditure to 2.5% of GDP by 2025, from roughly 1.1–1.3% historically. The Economic Survey 2020-21 and 2023-24 reiterated the climb toward 2.5%, with combined Centre-plus-state spending reaching about 1.9% of GDP by 2023-24.

India's hallmark is high out-of-pocket expenditure (OOPE) — long above 60% of total health spending and a major cause of catastrophic health expenditure and impoverishment. National Health Accounts data show OOPE falling to about 39.4% in 2021-22, partly reflecting expanded public schemes. Ayushman Bharat (2018) comprises Health and Wellness Centres (now Ayushman Arogya Mandirs) for primary care and PM-JAY, a tax-financed insurance cover of ₹5 lakh per family per year for the bottom 40% of the population (about 12 crore families). In 2024 the scheme was extended to all citizens aged 70 and above.

Education economics: human-capital returns

Schultz and Becker's human-capital theory treats education as investment yielding private and social returns. Education also carries large positive externalities, justifying public provision and the constitutional commitment in Article 21A (inserted by the 86th Amendment, 2002) and the Right to Education Act, 2009, guaranteeing free and compulsory schooling for ages 6–14. The Kothari Commission (1964–66) recommended public education spending of 6% of GDP — a target reaffirmed by the National Education Policy 2020 but still unmet, with actual outlay around 2.9–3.1% of GDP.

The binding problem is the learning crisis: ASER reports consistently show that a large share of Class 5 children cannot read a Class 2 text, signalling a gap between enrolment (a flow input) and learning (the outcome). The Foundational Literacy and Numeracy (FLN) mission, NIPUN Bharat (2021), targets universal basic literacy and numeracy by 2026-27.

The demographic dividend

India's working-age population (15–64) share is rising, opening a demographic window estimated to last until roughly 2055. The dividend is conditional, not automatic: it materialises only if the cohort is healthy, educated and employed. Failure to invest converts the dividend into a demographic burden — the link that ties health, education and skilling (the Skill India Mission, 2015) into a single growth argument for Mains GS-3.

Why this matters for the exam

This topic sits at the intersection of Prelims GS and Mains GS-3 (growth, development, inclusive growth) and bleeds into GS-2 (governance, schemes, social-sector policy) and GS-1 (population, society). Prelims tests it through precise factual hooks: which index uses the geometric mean (HDI since 2010), what GII measures versus GDI, which body publishes the National MPI (NITI Aayog), the cover under PM-JAY (₹5 lakh per family), and the constitutional anchor of education (Article 21A, 86th Amendment 2002, RTE 2009). Memorise the spending targets — 2.5% of GDP for health (NHP 2017) and 6% for education (Kothari Commission, reaffirmed by NEP 2020) — and the gap between them and actual outlays.

How it is tested in Mains

Mains demands argument, not recall. A 2019 GS-3 question asked candidates to examine the difference between economic growth and economic development and the role of education and health in development — pure capability-approach territory. The high-yield framing is: growth is necessary but insufficient; capabilities require public provisioning because health and education are merit goods with externalities and market failures. Marshal the data spine — HDI rank 134 (2023/24), OOPE trajectory, the learning crisis from ASER, and the conditional demographic dividend — to convert a generic answer into an evidence-led one.

High-yield retention list

Retain: HDI dimensions and the 2010 methodology change; the IHDI/GDI/GII/MPI family and what each captures; the Alkire-Foster method behind the MPI; Sen's capability approach versus the growth view; the 'Asian enigma' of undernutrition; OOPE and catastrophic health expenditure; Ayushman Bharat's two pillars and the 2024 extension to those 70+; Article 21A and RTE 2009; NIPUN Bharat and FLN; and the demographic-dividend window to ~2055. Link every scheme to its market-failure rationale — examiners reward candidates who explain why the state intervenes, not merely that it does.