The Geographical Bulletin 47: 36-44©2006 by Gamma Theta Upsilon

ABsTRAcTThis paper explores the relationship be-

tween per capita income and the Human Development Index. In an attempt to create a diverse data sample, I examined the states and territories of India, a country that is both culturally diverse and exceedingly diverse in terms of human and economic development. The objective of this study is to determine whether there is a correlation between per capita income and social capabilities—pri-marily access to health care and educa-tion—as measured by the United Nations Human Development Index. Overall, there was a strong correlation between these two variables. The states and territories that did not fit the trend typically had government policies that focused on social equity and restricted free-market economic activity.

Key Words: India, per capita income, Hu-man Development Index, United Nations Development Program, social capabilities

INTRodUcTIoNTheoretically, as a region prospers

economically, its overall level of social wealth—health care and education—will in turn follow (Rostow 1960). This conjecture seems sensible, yet with closer examination of individual case studies, this supposed direct relationship becomes complex. It is the intent of this study to explore the re-lationship between these variables in India. I chose India because of its diverse range of both economic and social development. Similar to many other developing nations, India’s economic structure is a traditional economy, arranged by customary traditions. In traditional economies, the price, exchange, distribution, and income are regulated not by the government or market forces but by the many years of convention, culture and customs (Stutz 1998). Moreover, deeply em-bedded in Indian culture is a clearly defined caste system, in which individuals are born into predefined economic and social roles in accordance with their caste or heredity. Despite this practice being officially outlawed since the nation’s independence in 1947, the

Evaluating development in India: hdI and Per capita IncomeLeah Talaber (student)Department of Geography and

Environmental PlanningElmhurst CollegeElmhurst, Illinois 60126E-mail: talaberl@elmhurst.edu

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practice of economic and social castes is still widespread. Castes innately restrict the initia-tives of individuals among lower castes due to an intrinsic feeling of fatalism. Based on the inherent religious and cultural belief in the caste system, lower castes perceive themselves as locked into the status quo of their current economic conditions—lacking any hope for improvement (Stutz 1998). The caste sys-tems, and the resulting feeling of fatalism, have translated into vast, socially accepted inequalities among the citizens of India.

MEAsURING dEvEloPMENTWhen comparing development levels

among states or regions, the comparison can seem ambiguous, since definitions and methods of measurement are continuously changing. Global organizations such as the United Nations are relentlessly attempting to quantify and relate the advancements, or lack thereof, of states. In the 1960s, at a time when many colonized nations around the world began to break away from their colonizers, intense interest was sparked among the members of UN in aiding those left in a state of extreme poverty, and the UN embarked on the “development decade of the 1960s” (Korff 2004). In 1965, the UN initiated the United Nations Development Program or UNDP, a global development organization.

However, the UNDP has significantly re-defined its outlook on development from the time of the UNDP’s origin. During the initial development work in the 1960s, development was treated purely as an economic issue and assistance was spatially limited to urban areas and plantations. In addition, development was thought to be an issue concerning only certain groups of the populace. Since then, concepts of development have expanded to include aspects of politics, economy, society and culture. Today, the UNDP attempts to examine and analyze development from every possible angle, and promotes the idea that monetary wealth only constitutes a portion of well-being. Instead, items such as sanita-tion and disease control, educational oppor-tunities, diet, and political stability are seen as necessary components of a more complete

appraisal of the welfare of individuals. More recently the focus of development has also shifted to include the bottom strata of societ-ies, including indigenous people and those in remote regions—who were ignored in earlier development efforts.

When development was solely viewed in economic terms, measures of growth and development were based purely on a state’s ability to accumulate capital. Capitalistic so-cieties began to illustrate economic growth by using Gross Domestic Product (GDP), a figure depicting the total value of all goods and services produced within the borders of the country. Today, GDP is a prominent figure, even though it fails to present an accurate appraisal of the variations among states. For instance, India, clearly a “develop-ing” nation, ranked fifth among all nations with a GDP of $3.033 US trillion in 2003, adjusted with Purchasing Power Parity (PPP) (CIA 2004). A major flaw of GDP is that it does not reflect how that money is spent; it indiscriminately lumps together consump-tion, investments, and government spending. Even when GDP is normalized, drawbacks remain apparent. GDP per capita also ignores the distribution of government expenditures and inequalities among the different strata of citizens—failing to illustrate, for example, whether income is spent on universal health-care and education or military expenditures (UNDP 2004). Most importantly, it does not extend to the social and political aspects of development.

In 1975, the UNDP began to move away from solely economic measurements and became devoted to the notion of sustain-able human development—a concept that sets individuals’ needs and aspirations as its foremost concern, while simultaneously ensuring that the needs and aspirations of future generations will be able to be met. The agency identifies sustainable human develop-ment as the essential component in eradicat-ing poverty, largely because the “poor and vulnerable…are at the center of the devel-opment process” (Cheema 1997). This shift from exclusively economic measurements was instituted to focus global attention on the idea of “enlarging individuals’ choices,”

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which the founder of the UNDP, Mahbub ul Haq, describes as “the basic purpose of devel-opment” (UNDP 2004). Enlarging people’s choices at an individual level is achieved by expanding human capabilities. The UNDP considers three indispensable capabilities for human development (found in all stages of development) to be “for people to lead long and healthy lives, to be knowledgeable and to have access to the resources needed for a decent standard of living” (UNDP 2004). It is when these basic capabilities are realized, that individuals at the lowest level in societies will have the greatest choices and opportuni-ties—fostering true development. Moreover, on the reverse side, if many opportunities are simply not available or remain inacces-sible, individuals’ choices are restrained. Prior to the 1970s—before the creation of the UNDP—individual choices were not taken into consideration with other conventional indices; not until the creation of the Hu-man Development Index in 1975 were social and cultural aspects taken into account with development measurements.

The Human Development Index (HDI), calculated by the UNDP, attempts to com-bine variables such as life expectancy, literacy rates, and per capita GDP to more accurately denote the welfare of citizens. For each of these variables or dimensions, an index is cre-ated setting minimum and maximum values or goalposts for each indicator. Performance in each dimension is expressed as a value between 0 and 1 by simply applying the fol-lowing formula:

Dimension index = (actual value – minimum value) / (maximum value – minimum value)

After the dimension index is calculated for each of the three aspects of development, the three dimension indices are simply aver-aged (UNDP 2004). The average of these three aspects of development are placed on a scale ranging from zero to one (one being the highest level of development), present-ing a simplified summary of socioeconomic assessments.

Human development is perpetuated by a variety of means. An increase in economic

development can initiate an increase in human development, if implemented by a given government through an enhancement of social programs or subsides, via taxes. However, without the support of government expenditures, an overall rise in economic de-velopment can translate into an increase in personal development for only a small minor-ity of the population. If the government does not take a key role in providing education and health care services, typically only those individuals with available disposable income benefit—unlike with a government-funded project.

The HDI enables a distinction to be made between variables that may not always be related. There is no doubt that the HDI provides a more well-rounded indication of the overall level of development than aver-age income. However, by comparing the per capita income to the HDI, we can illuminate the level of effectiveness of government social initiatives.

dEvEloPMENT MEAsUREs IN INdIA

The discrepancy between using HDI and per capita income as development indica-tors is palpable when comparing two Indian states, Haryana and Kerala. For instance, while the state of Haryana has a per capita income of seventy-five dollars more than the state of Kerala, Kerala has a 20 percent higher literacy rate and a life expectancy of eight years longer (UNDP 2004). Clearly, it would seem inappropriate to consider the state of Haryana more “developed,” as it would be if economic indicators were the sole measures (Fig. 1). By examining per capita income and HDI simultaneously, however, we are able to see multiple dimensions of development.

To those living in affluent countries, the direct correlation between one’s income and one’s social capabilities—access to health care, education, and so forth—seems un-doubtedly clear. With higher levels of discre-tionary income in more developed countries, it becomes feasible for individuals to either purchase adequate social services or for the government to provide these services to even the poorest citizens. Thus, regardless of the

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level of government involvement in provid-ing social services, the overall level tends to be high.

Conversely, in India, where the per capita income amounts to only $451 (US) annu-ally, this assumption is dubious. Developing countries, such as India, suffer from a lack of capital investment, particularly in rural and semi-urban areas. Unless subsidized by the government, little to no economic devel-opment will take place. By extension then, without government intervention, no social development will occur either. Therefore, to measure human development it is vital to view both social and economic development indicators to gain a truer sense of the nature of development in the area.

The rate at which social opportunities expand does not always vary directly with economic expansion. For instance, Madhya Pradesh has a per capita income of $267 USD in comparison to Manipur’s $253 USD, yet Madhya Pradesh scores two whole decimal points lower on the HDI (Fig. 1). The differ-ence between the HDI of Madhya Pradesh and Manipur is especially noteworthy when evaluated against all of the states of India.

Although the two states have comparable per capita incomes, nearly sixty percent of all the Indian states fall between the HDI rankings of Madyha Pradesh (.328) and Manipur (.538).

The percentage of revenue a state reserves for social expenditures is often shaped by the cultural beliefs and societal norms sanctioned by a certain group of individuals. As in any society, policies and procedures are typically implemented by governing bodies based on the cultural norms of a society that incremen-tally evolve over the years. The percentage of revenue a state reserves for social expenditures often reflects the cultural beliefs sanctioned by the ruling authorities. The resulting dif-ferences in policies can explain the immense inconsistency among some states with similar incomes per capita but vast disparity between HDIs.

In the case of the Indian state, Kerala, the people (numbering over three million) have been successful in reducing poverty by drasti-cally increasing literacy rates and expanding life expectancies. Kerala underwent rapid changes in policy “through the action of mass organizations and movements against social, political and economic oppression” (Ramachandran 1995, 20). Kerala’s national-ist struggle to be inaugurated as a new state happened not long after the India gained its independence from the British in 1947. Within a year after Kerala’s admittance in 1956, Kerala elected a communist govern-ment—creating a progressive political cli-mate. Today, Keralites are viewed as one of the most politically conscious people in India (Mathew 2005). Despite Kerala’s immense achievements in raising the standards of liv-ing by means of social capabilities, per capita income has failed to keep pace. For compari-son, Goa, a state just north of Kerala, has a comparable value to Kerala’s in the HDI, yet its per capita income is more than double that of Kerala (Figs. 1, 2, 3).

It is an impressive accomplishment that Kerala is almost on par with the most ad-vanced countries of the world in terms of literacy rates; despite low per capita in-comes, Keralites also have achieved long life expectancy and high access to medical care

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Figure 2: Human Development Index values by state for India

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Figure 3: Per Capita Income by state for India.

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(Mathew 2005). Nobel Prize winner Amartya Sen describes this comparatively opposite course of development as a “support-led” process—a process by which a program of social support is provided, as opposed to a narrow focus on rapid economic growth (Sen 1999). In other words, the enhancement of Keralites’ living standards occurs through government expenditures, without a parallel rise in economic growth or industrialization. While Sen applauds the Keralites’ achieve-ments, he also notes:

Support-led success does, in this sense, remain shorter in achievement, where the increase in economic opulence and enhancement of quality of life tend to move together… [however], the success of the support-led process as a route does indicate that a country need not wait until it is much richer before embarking on rapid expansion of basic education and health care (Sen 1999, 48).

While the enhancement of social op-portunities typically induces an increase in a region’s capacity to produce goods and services and thus individual incomes, “anti-market policies” created the existing situation of a low-growth economy (Sen 1999, 91). Al-though Kerala has not attained substantially higher levels of income, it most certainly could be argued that a government focus on social development can be more beneficial to the public than one that emphasized only economic growth, since social development also enhances the opportunities of individu-als (Sen 1999).

Clearly, it is important to consider the history and culture of a region to under-stand what lies beneath the statistics. No index can fully encompass the policies and circumstances that have led to the current level of development within a state or region. By examining multiple statistics, as we see with the example of Kerala, we gain a more well-rounded and fuller understanding of the multiple dimensions of development.

ANAlysIsWhile attempting to conceptualize de-

velopment, the only means to determine

if a measure of development is useful is to examine the various dimensions of a concept through a wide range of case studies. The au-thor selected the diverse state of India to ac-quire a clearer understanding of the relation-ship between social capabilities (represented through the HDI) and average income. After examining the results of the two choropleth maps, it became clear there is a weak direct correlation between the HDI and per capita income. Along the south, northeast and west shores of India, both variables were, in gen-eral, higher than those along the east coast (Figs. 2 & 3). This pattern tends to correlate with areas that have more advanced infra-structure and higher urbanization rates. Many have made the argument that this pattern is the direct result of the British occupancy (Derbyshire 1987; Morris 1963). While the British colonial occupation was hardly a positive experience, the more sophisticated transport network left behind by the British in these regions has enabled more commerce to take place —translating into a rise in eco-nomic growth. The transportation network, built by the British to move Indian goods, connected ports to inland resources. Even though the British occupation ended over sixty years ago, this transportation network creates higher opportunities for production through increased mobility. The four major ports established by the British—Surat, Mumbai (Bombay), Chennai (Madras) and Kolkata (Calcutta)—are all located within Indian states that rank higher in terms of HDI and income (Gujart, Maharashta, Tamil Nadu, and West Bengal).

With only a few exceptions, Indian states showed a direct correlation between the HDI and per capita income (Fig. 1). In each in-dividual state, however, economic and social policies determine the extent of this relation-ship. The Indian states that take a market-based approach, such as Tamil Nadu, West Bengal, and Gujarat tend to show a high level of correlation between the two variables, whereas the Indian states with higher levels of government intervention tend to be the out-liers or the skewed data points that deviate from the overall trend (Fig. 1). This deviation from the overall trend provides evidence that

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government policies in a state can improve the welfare or social well-being of its citizens beyond that of a state with similar average income but which chooses to adopt a more laissez-faire approach to the economy.

In states like Kerala, where the level of per capita income and HDI rank does not follow the overall trend, a closer look at governmen-tal policies is necessary. The state of Manipur, located on the northeast perimeter of India, represents another example of this situation. With an HDI level of 0.563 and a per capita income of only $254 (US), Manipur ranks significantly lower in per capita income than states with similar HDIs. Part of the reason the citizens of Manipur, the Meiteis, are not able to raise their level of monetary income is due to heavy restrictions on the border crossings with Burma and neighboring states. The Manipur government has enacted these restrictions because Manipur is a main drug trafficking route into India. Furthermore, with its close geographical proximity to Burma, a major opiate producing country, the people of Manipur have a high level of drug use among the younger generations. While the restrictions have no doubt created tighter financial strains due to impediments to logistics and transport, Manipur has still fostered a higher level of social development than many other Indian states with compa-rable per capita incomes. In an address to the Manipur University, the Prime Minister praised the people of Manipur for “making rapid strides in human development” but notes: “The fight against poverty and disease must be combined with the fight against drugs and the illegal and dastardly trade of narcotics” (Singh 2004). It is also interest-ing to note that next to Kerala, Manipur has ranked the highest on the gender equal-ity index, GEI—demonstrating Manipur’s strong pursuit of social empowerment among all citizens (Hindu 2002). In essence, this is precisely the sort of insight the UNDP hopes to foster.

These two variables have been effective in highlighting the differences between Indian states in government policies and their impact on different facets of development. States that follow a more government-supported

approach as opposed to a market-based ap-proach – or what Amartya Sen describes as a traditional “growth-mediated” process – typically show much higher rankings on the HDI than a simple per capita income/Hu-man Development Index correlation would predict. The policies implemented by each state’s government have led some states to develop at faster or slower rates than others. Further analysis of why and how each state or territory has evolved to this current condition is crucial to fully understanding the entire picture. It is recommended to further ana-lyze the history and current condition of the implementation of state polices in order to evaluate the possible association with social and economic conditions. Based on these observations, it might be beneficial to also examine alternative aspects that influence these two variables—such as the formation and structure of governments.

sUMMARy ANd coNclUsIoNsAs definitions, perspectives, and assess-

ments of development have incrementally evolved, the quest and passion to close in-equalities remains persistent. Currently, the UN is pursuing eight specific development goals under the Millennium Development Goals Declaration (MDG). This new ap-proach, implemented in September 2000, outlines individual freedoms as the foremost concern. This pronouncement, which all member nations ratified, calls on states to do more to bind together to fight poverty, illiteracy, hunger, lack of education, gender inequality, child and mother mortality, dis-ease, and environmental degradation—as they specifically relate to the impediments placed on lower class citizens (UNDP 2004). The UN hopes to fulfill these goals by the year 2015, to attain peace and security, hu-man rights and sustainable development throughout the world (UNDP 2004).

Examining and questioning past approach-es to development has led many to recognize the complex, interrelated nature of different facets of development. No longer is devel-opment narrowly viewed in black-and-white terms, defined through a single simplistic formula. This change has produced a more

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well-rounded notion of development, one not solely focused on economic measures. As highlighted in this analysis of Indian states, government policies play a large role in shap-ing the different development measures; it is possible to make notable distinctions sta-tistically between states, such as Kerala and Mainpur, that are more focused on social de-velopment, to other Indian states with more conventional economic policies. Without a strong understanding of the history and cul-ture of a region, economic indicators alone will lead to huge misconceptions about hu-man progress. By taking multiple measures into account, however, governments can de-vise plans and initiatives that foster a whole range of development for their citizens.

AckNowlEdGMENTsThank you to the entire Elmhurst Col-

lege Geography Department and especially Dr. Schultz for teaching me the concepts of GIS.

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Leah Talaber