HDI and Union Budget 2015

The topic seems a bit strange but when at international level, development of a country is measured through indices prepared by various world organizations like UN, World Bank etc. And Union Budget is an exercise (planning exercise) by union government of India regarding growth of economy and benefitting every citizen of India. Then why not, judging the decisions taken under Union Budget in the light of those indices. And how the steps taken under union budget umbrella will make us improve our indices (representing growth and prosperity)

Now, Human Development Index (HDI) is one such index calculated by United Nation Development Programme (UNDP) that not only measures the economic growth of a country but also emphasize on people and their capabilities. HDI is the aggregator of health of an individual, knowledge level of people and standard of living of the citizens. They are calculated through:

1. Health is assessed through the life expectancy at birth (minimum value of 20 and maximum of 85 years)
2. Education is assessed through average year of schooling for adults till 25 years and expected years of schooling for children entering in school.
3. Standard of living is assessed through gross national income per capita adjusted for their PPP (Purchasing power parity). Logarithm of income is taken to take into account of diminishing importance of income with increasing GNI

Now judging the Union budget decisions under the light of these three criteria:

Health: Health of an individual is dependent upon sanitation, water, healthcare facilities and nutrition. Now, there is no need to mention the Swachh Bharat Mission, AYUSH, ASHA (Accredited Social health activists). However, government steps in budget regarding Swachh Bharat is commendable with 100% tax benefit in contribution to Swachh Bharat fund (susceptible to corruption and lackluster use) and high duty on polymer bags. Government has also emphasized on the construction of toilets with target of 6 crore units and health insurance through PMSBY (Pradhan Mantri Suraksha Bima Yojana) and establishment of more AIIMS and research institutions in medical field. As it seems government has lost its will to renovate the public health care system and trying to cover private health expenditure bill. 

On comparison at international level, India is still spending only 1% of its GDP on health while countries like China spend 3% and US spend more than 8% of its GDP on healthcare.

Education: Education requires infrastructure both in form of schools, colleges and in form of trained teachers and professors. Besides this, it requires social security to families that enable children to attend schools (MGNREGA is one such example in places where it has been successful). This year budget has led to opening of IITs, IIMs, AIIMS and other educational and research institutions with few in north Indian states (institute for film in Arunachal Pradesh), increased expenditure on MGNREGA by additional 5000 crore INR and allocated approx 68000 crore to education.

But the main problem of Indian education is its quality (highlighted in ASER report by Pratham NGO) and it has not even been addressed in budget. In fact, regarding the educational infrastructure the problem is regarding the governance rather than funding and resources. Also reviving the syllabus, making it more close to job skills are few of important concerns to be taken into account by government rather than just increasing numbers (either of colleges, schools and universities)

Living Standard: This is dependent more on the earning potential and actual earning of the individual. Regarding the potential which is more dependent on skill level and for actual earning the requirement is available of opportunities in industries, production, infrastructure and entrepreneurship. This budget seems to have a lot in this direction from encouraging entrepreneurship and MSME through MUDRA bank, incubator with 1000 crore under NITI for startups and easy availability working capital finance; to emphasis on developing skills of the youth through Deen Dayal Grameen Kaushal Yojana, National Skill Mission and scholarships. The budget has incentivized private corporate to invest through reduction in corporate tax and generate employment (what happens if they spend on labor reducing technology as usual since 1991).

The budget seems to prioritize growth through industries over education and health. May education and health find its true worth in next year budget or in governance improvement initiative throughout the year. And only then, we can expect of improving our HDI rank with respect to other nations.