World Bank’s Human Capital Index & India #47

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What is the difference between HDI and HCI? What are the major concerns raised by India with the methodology used to calculate HCI?

Why in news?

The World Bank has released a Human Capital Index (HCI) as part of the World Development Report 2019.

Human Capital Project

As part of this World Development Report (WDR), the World Bank has launched a Human Capital Project (HCP). The HCP programme is claimed to be a program of advocacy, measurement, and analytical work to raise awareness and increase demand for interventions to build human capital. There are three components of HCP:

1. A cross-country human capital measurement metric called the Human Capital Index (HCI),

2. A programme of measurement and research to inform policy action

3. A programme of support for country strategies to accelerate investment in human capital.

Human Capital Index (HCI)

The HCI has been constructed for 157 countries. It claims to seek to measure the amount of human capital that a child born today can expect to attain by age 18. The HCI has three components:

[1] Survival: as measured by under-5 mortality rates

[2] Expected years of Quality-Adjusted School:which combines information on the quantity and quality of education

[3] Health environment:Using two proxies of (a) adult survival rates and (b) the rate of stunting for children under age 5.  

Key observations in HCI for India 

  • [] Human Capital Index: A child born in India today will be only 44 per cent as productive when she grows up as she could be if she enjoyed complete education and full health.
  • [] Probability of Survival to Age 5: 96 out of 100 children born in India survive to age 5.
  • [] Expected Years of School: In India, a child who starts school at age 4 can expect to complete 10.2 years of school by her 18th
  • [] Harmonized Test Scores: Students in India score 355 on a scale where 625 represents advanced attainment and 300 represents minimum attainment.
  • [] Learning-adjusted Years of School: Factoring in what children actually learn, expected years of school is only 5.8 years.
  • [] Adult Survival Rate: Across India, 83 per cent of 15-year olds will survive until age 60.
  • [] Healthy Growth (Not Stunted Rate): 62 out of 100 children are not stunted. 38 out of 100 children are stunted, and so at risk of cognitive and physical limitations that can last a lifetime.
  • [] Gender Differences: In India, HCI for girls is marginally higher than for boys.

However, India has decided to ignore the HCI owing to following factors:

(A) Discontent with the Methodology

  • 1. Education quality is gauged using harmonized test scores from major international student achievement testing programs.
  • 2. The lack of availability of an authoritative and uniform test score, about 9 different test scores and systems using varying methodology have been claimed to have been harmonized by the World Bank.
  • 3. None of the 9 systems cover more than 100 countries, with some have very limited regional coverage.
  • 4. This makes the methodology quite complex and non-uniform.
  • 5. For some countries, average national scores in a particular year and in some cases in selected cities or states have been used as predictors of education potential and future economic growth.

(B) Assessment lacking Global Standard

  • 1. For India, the data for quality of education pertains to 2009 assessment by PISA, which was conducted for only two states, namely Himachal Pradesh and Tamil Nadu.
  • 2. The use of PISA and TIMSS scores is the methodology for testing is largely controlled by non UN agencies.
  • 3. It is not globalized unlike the methodology of UNICEF and WHO that are used for health and survival indicators.

(C) Gross negligence of important measures

  • 1. The differences in development outcomes arising from governance issues, political systems, socio-cultural context, and legacy issues have been totally ignored.
  • 2. The metric of HCI is too simplistic at one level and too ignorant of development realities at another.
  • 3. Various initiatives such as SBM, Samagra Shiksha, PMJDY, and ABP etc. are transforming human capital in India at rapid pace.
  • 4. The HCI score for India does not reflect the key initiatives that are being taken for developing human capital in the country.

Way Forward

  • [] The qualitative aspects of improved governance that have a strong correlation with human capital development have not been captured by the way the HCI has been constructed.
  • [] The gap in data and methodology overlook the initiatives taken by a country and, in turn, portray an incomplete and pre-determined picture.
  • [] This infact makes the case for an adoption of the Index by more countries somewhat remote.
  • [] With the emphasis on country scores and rankings, the HCI could trivialize the importance of the Human Capital Project.
  • [] Hence the Government of India has decided to ignore the HCI and will continue to undertake its path breaking programme for human capital development.

** Side Note: HDI vs. HCI

  • [] UNDP constructs Human Development Index (HDI) for several years.
  • [] The HCI uses survival rates and stunting rate instead of life expectancy as measure of health, and quality-adjusted learning instead of merely years of schooling as measure of education.
  • [] HCI also excludes per capita income whereas the HDI uses it.

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Hemant Bhatt
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