New Human Capital Index Irks India

India's middle class is rising but many of its people are left behind.

Are human capital conditions in India really worse than in Bangladesh? The compilers of the World Bank’s newly launched Human Capital Index (HCI) think so. And the Indian government isn’t happy about it.

The HCI measures health and education using parameters including child survival, school environment, quality of learning, healthy growth and adult survival. Published for the first time last month, the HCI ranked India 115th out of 157 countries, trailing Sri Lanka at 74, Nepal at 102, Bangladesh at 106 and Myanmar at 107. India received a performance score of 0.44—substantially below the average of 0.50 for its four neighbors.

The Indian government has rejected the report, saying that it doesn’t reflect current developments in health and education in the country. India has introduced policy measures it anticipates will have far-reaching human-capital benefits, including a series of educational reforms and initiatives that will impact 197 million school children, and Ayushman Bharat, the world’s largest health-insurance program, which will affect care for 500 million people, including children. The new yardstick doesn’t take these developments into account, the government complains.

But the government may be misreading the intentions of the HCI, says Purnima Menon, senior research fellow at the International Food Policy Research Institute in New Delhi. “The HCI captures outcomes and is not a checklist of policy efforts,” she says. “The chosen human capital outcomes in the HCI have a potential impact on a variety of long-term indicators, such as productivity and growth.”

If India’s latest initiatives bear fruit, its standing in the HCI will improve, Menon argues. “Global indices have their own limitations, and HCI is no different, but it is novel in that it links current health and education outcomes to the productivity of future workers,” she says. “It will take some years before the current policies change the HCI score for the better.”

India can take consolation from two other facts: Its human capital performance places it in the second-to-lowest quartile of the HCI, not the lowest; and other large developing economies, such as Brazil and Indonesia, occupy the same station. “This global report is not to put pressure only on India,” notes Menon, “but act as an impetus for future policymaking across the world.”