India 2025: Not GDP, focus on HDI.

GDP (Gross Domestic Product) is misleading!

Let's face it. Indian economy is not in its perfect shape, rather is much distorted. While India celebrates and boasts of becoming the fifth largest economy of the world after USA, China, Germany and Japan; the harsh truth (which they don't shout out loud) is that India ranks 144th globally in GDP/capita. This rank is out of a total of 195 countries recognized globally by the United Nations. These numbers are perplexing and insane!

With an ambitious aim of climbing the ladder and becoming the third largest economy by year 2030, the real emphasis should be on UPLIFTING ALL as we grow. As per the International Monetary Fund estimates, the GDP/capita in 2024 in India is $2,940 whereas for the USA (world's largest economy) it is $89,690. It is important to understand here that GDP/capita is a measure of economic output of a country per person and is calculated by dividing the national GDP by its population.

With more than 60% of India's population in the working age group of 15-64 years, which is similar to that of USA, why is it that USA is 30 times more productive than India? Well, there are multiple reasons for this discrepancy and the first one to come to mind is India's 75 years of independence compared to the 250 years of independence of America. However, if this was a reason enough, Vietnam (which became war-free only 50 years ago) would not have a GDP/capita of $4,990, double that of India. And if we consider population as the culprit, we ought to look at China, with similar population yet a GDP/capita of $13,870 (four times that of India). In a nutshell, the excuses can be many, but opportunities are limitless. It is time to concentrate inside and thoughtfully design a sustainable solution for the nation.

Human Development Index (HDI), a development metric designed by the United Nations in 1990, surpasses the GDP growth rate, since it includes not only the economic aspect, but three parameters in total- education, income and longevity. The HDI 2024 for India is medium (0.644), for USA it is very high (0.927), and is highest for Nordic countries (0.967). Denmark, one of the five Nordic countries, also topped the list of 'Best Quality of Life 2024'. Remember, Denmark is not the richest economy, has a GDP/capita of $71,970, charges 50% income tax and offers free healthcare, subsidized childcare, and free university education. The elderly are also well cared for, receiving pensions and support from care workers. Moreover, Denmark secured a second rank on the list of Happiest Country.

India needs to adapt best practices, learn from failed examples, and set its own path to overall human development for 2025 and beyond.

Here are some simple yet crucial steps India needs to take right away, to ensure better utilization of its capable human resource and thus increase productivity -

1. Educate all. Train all. There is no development route which can escape that.
2. Increase outreach to rural areas. If given due attention, facilitated with infrastructure, and treated inclusively, they can be sustainable. There will be lesser out migration, reducing pressure on already crowded cities. We must admit that upwards of 60% India is still rural and work towards that.
3. Practice localization in conjunction with globalization. Global trade is inevitable today. However, it is both beneficial (for better opportunities) and harmful (for the local economy). We need to keep a check.

Development undoubtedly is a complex subject and easier said than done. However, unless we initiate dialog and face the reality, India will remain a rich country with poor people.