Human development index as an indicator of development was developed by the United Nations Development Programme (UNDP).

It has been used in Human Development Report Published since 1989.

Human development Index (HDI) is a composite criterion consisting of three indicators of development to measure the level of welfare of the people of the country:

1. Life Expectancy Indicators (LEI)

2. Educational Attainments Indicators (EAI)

3. Standard of Living Indicators (SLI)

These indicators have been explained below:

1. Life Expectancy Indicators:

It refers to the life expectancy at birth which implies that number of years a newly born baby is expected to live. High life expectancy at birth indicates a high level of development and vice versa.

2. Educational Attainment:

It refers to the level of education attained by the people of the country on an average basis.

The constituents of educational attainments are:

(b) Gross enrolment ratio

While the former represents the percentage of people aged 15 and above who can understand read and write a short and simple statement in their everyday life. The latter shows the percentage of population enrolled at primary, secondary and university level. Higher gross enrolment ratio represents higher level of development.

3. Standard of Living of the People:

Real GDP per capita is considered as the indicator of the standard of living of the people. When we divide the GDP at constant price by the total population of the country, we get real GDP per capita. Real GDP per capita is also known as real per capita income. Higher per capita real income usually represents a higher standard living.

Construction of HDI:

Human development index can be constructed by first constructing the individual indices of the above three components and then taking the simple average of the indices. To construct the relevant indices, the UNDP first fixes the maximum and minimum values of each indicator for a particular year and then with the help of the following formula, one can arrive at the achievement level of the country concerned in respect of a particular indicator.

For example the life expectancy at birth of a particular country is 65 years. Assuming maximum value and minimum value of life expectancy to be 80 and 20 respectively for a particular year, the life expectancy index can be calculated as follows:

As calculated above, the individual indices of educational attainments and adjusted real GDP per capita can be found out for a particular year. Then by taking simple arithmetic average of all the three indices, we can get human development index for the country concerned.

Where LEI = Life Expectancy Index

EAI = Educational Attainment Index