Welfare Indicators and Measures of Growth

Welfare Indicators

Welfare Indicators and Measures of Growth

Welfare Indicators and Measures of Growth – UPSC Economics Optional Paper 1

In the study of economic development, it is important to go beyond traditional metrics like GDP and examine how growth translates into human well-being. The topic “Welfare Indicators and Measures of Growth” forms an essential part of the UPSC Economics Optional Paper 1. These indicators help assess the quality, sustainability, and inclusivity of growth in an economy.

📊 Infographic: Welfare Indicators and Growth Measures

 

🧠 Mind Map: Welfare and Growth Indicators

 

1. Introduction

Economic growth is typically measured using indicators like Gross Domestic Product (GDP). However, these fail to reflect the actual well-being of people. Welfare indicators go a step further by capturing social, environmental, and distributional dimensions of development.

2. Traditional Measures of Growth

  • GDP (Gross Domestic Product): Total value of goods and services produced within a country.
  • GNP (Gross National Product): GDP + Net income from abroad.
  • Net Domestic Product (NDP): GDP – Depreciation.
  • Per Capita Income: GDP divided by population, used as a proxy for average income.

These indicators, while useful, do not account for inequality, environmental degradation, or quality of life.

3. Composite Welfare Indices

3.1 Human Development Index (HDI)

Developed by UNDP, HDI includes three dimensions:

  • Life expectancy at birth
  • Education (mean years and expected years of schooling)
  • Gross National Income per capita

3.2 Gender Development Index (GDI)

Measures gender gaps in HDI components. A lower GDI shows greater disparity.

3.3 Multidimensional Poverty Index (MPI)

Identifies deprivations in health, education, and living standards, offering a more granular view of poverty than income measures alone.

3.4 Human Poverty Index (HPI)

Earlier measure that included probability of not surviving till age 40, adult literacy rate, and access to clean water.

Best UPPCS coaching

Best ias coaching in india

Best teachers for upsc exam

Best ias coaching in delhi 

Graduation degree with IAS coaching

 

4. Sustainability and Inclusive Growth Measures

4.1 Green GDP

Adjusts GDP by subtracting environmental costs like pollution and resource depletion.

4.2 Genuine Progress Indicator (GPI)

Includes income distribution, unpaid work, crime, and environmental costs to better reflect social well-being.

4.3 Inclusive Wealth Index (IWI)

Considers produced capital, human capital, and natural capital to assess sustainability.

5. Social Indicators of Welfare

  • Literacy Rate
  • Life Expectancy
  • Infant Mortality Rate (IMR)
  • Access to safe drinking water
  • Female labor force participation

6. Modern and Subjective Measures of Welfare

6.1 World Happiness Report

Ranks countries based on subjective well-being using factors such as social support, freedom, corruption perception, and GDP per capita.

6.2 OECD Better Life Index (BLI)

Measures well-being across 11 dimensions including housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety, and work-life balance.

6.3 Well-being Index

Developed by various organizations (e.g., Gallup), it assesses physical, emotional, and economic wellness.

7. Comparison Table of Key Welfare Indicators

Indicator Components Limitations
GDP Monetary value of goods/services No equity, health, or environment consideration
HDI Health, Education, Income Ignores inequality and environment
MPI Deprivation across 10 indicators Data-intensive, complex
Green GDP GDP adjusted for ecological loss Valuation challenges
Happiness Index Subjective well-being metrics Lacks objectivity

8. India’s Experience

  • India’s GDP growth post-1991 reforms has not translated evenly into HDI improvement.
  • Ranked 134 in HDI 2022 (UNDP Report)
  • High inequality, child malnutrition, and education disparities persist.
  • NITI Aayog publishes SDG Index to monitor welfare-oriented targets.

9. Welfare Indicators in Policy-Making

  • Used to allocate funds (Finance Commission, SDG targets)
  • Influence poverty line debates (Tendulkar vs Rangarajan Committee)
  • Determine regional and gender-based planning priorities
  • Help track outcomes under government schemes like MGNREGA, Ayushman Bharat, Beti Bachao

📚 Previous Year UPSC Questions (PYQs)

  • Critically examine the limitations of GDP as a measure of development. (2018)
  • Discuss the significance of Human Development Index in evaluating economic growth. (2020)
  • Differentiate between Green GDP and traditional GDP. How does it reflect sustainability? (2019)

🔮 Probable Questions for Upcoming UPSC Prelims & Mains

  • Discuss the merits and demerits of using subjective indices like Happiness Index in policy-making.
  • Explain the role of composite welfare indices in achieving sustainable development goals.
  • Do welfare indicators provide a better picture of national development than economic indicators?
  • What lessons can India learn from global experience in measuring well-being?
Tags: welfare indicators, economic growth, HDI, MPI, green GDP, happiness index, per capita income, sustainable development, subjective well-being, genuine progress indicator, UPSC economics optional, UPSC paper 1, economic development, inclusive growth, mind map, infographic

Economic services coaching

best economics optional test series

best teacher of economics optional 

Best economics optional coaching

 

 

No Comments

Post A Comment