As many countries have experienced and the Inclusive Development Index data illustrate, growth is a necessary but not sufficient condition for robustly rising median living standards.
Most citizens evaluate their respective countries’ economic progress not by published GDP growth statistics but by changes in their households’ standard of living — a multidimensional phenomenon that encompasses income, employment opportunity, economic security, and quality of life. And yet, GDP growth remains the primary focus of both policymakers and the media, and is still the standard measure of economic success.
GDP growth is best understood as a top-line measure of national economic performance, in the sense that it is a means to the bottom-line societal measure of success: broad-based progress in living standards. Areas as skills development, labor markets, competition and rents, investor and corporate governance, social protection, infrastructure, and basic services play an important role in shaping the pattern of economic activity and particularly the breadth of social participation in the process and benefits of growth.
The World Economic Forum System Initiative on Shaping the Future of Economic Progress last year introduced a new economic policy framework and performance metric in its Inclusive Growth and Development Report 2017. The framework identifies 15 areas of structural economic policy and institutional strength that have the potential to contribute simultaneously to higher growth and wider social participation in the process and benefits of such growth.
India & the Inclusive Development Index 2018
India, with an improving trend, ranks 62nd out of 74 emerging economies. The country performs best (44th) in terms of Intergenerational Equity and Sustainability, profiting from a low dependency ratio that is set to further decline as the economy reaps the dividends of an extremely young population. Though the incidence of poverty has declined in India over the past five years, 6 out of 10 Indians still live on less than $3.20 per day. Given the prevalence of inequality both in terms of both income and wealth, there is substantial scope for improvement for India in this aspect. Both labor productivity and GDP per capita posted strong growth rates over the past five years, while employment growth has slowed. Healthy life expectancy also increased by approximately three years to 59.6.
The Inclusive Development Index (IDI) is an annual assessment of 103 countries’ economic performance that measures how countries perform on eleven dimensions of economic progress in addition to GDP. It has 3 pillars; growth and development; inclusion and; intergenerational equity – sustainable stewardship of natural and financial resources.