Article Title: Why India Must Rethink Progress Through the Lens of Happiness, beyond GDP

Author(s): Sachin Rathour¹, Saket Kushwaha², Virendra Kamalvanshi³

Doctoral fellow in Agricultural Economics, Banaras Hindu University¹,
Vice chancellor at University of Ladakh²,
Head Of the department at Agricultural Economics, Banaras Hindu University³

India recently surpassed Japan to become the world’s fourth-largest economy, a milestone that may instill national pride but also prompts a crucial reflection: does economic size truly reflect national well-being? Increasingly, the answer appears to be no. While GDP remains a dominant metric of development, it often fails to capture the everyday realities of citizens—whether their basic needs are met, whether they feel secure, healthy, and fulfilled. India’s economic ascent has been paralleled by deepening inequalities, raising concerns about the quality and inclusiveness of its growth. A 2024 Reuters study revealed that the top 1% of India’s population controls over 40% of the nation’s wealth—the highest level of concentration since colonial times. The Gini coefficient, a standard measure of income inequality, surged from 0.371 in the 1950s to 0.73 in 2024, positioning India among the most unequal major economies globally. In contrast, nations such as Japan (0.54), China (0.60), and Germany (0.68) exhibit relatively lower inequality, highlighting that national well-being hinges not solely on economic growth, but on its equitable distribution.

India also faces a significant quality of life deficit, with nearly half of its adult population (46.2%) reporting poor living conditions, underscoring the widening gap between economic progress and the lived experiences of its citizens. Key contributing factors include poor air quality, insufficient infrastructure, and unequal access to basic amenities like sanitation, clean water, and electricity—disparities that are particularly pronounced between urban and rural areas. A study conducted by Danone India and the Confederation of Indian Industry (CII), surveying over 2,700 adults, found that Kolkata had the highest percentage of adults (65%) with poor quality of life scores, followed by Chennai (49.8%), Delhi (48.5%), Patna (46.2%), Hyderabad (44.4%), Lucknow (40%), and Indore (39.2%). In contrast, Mumbai was the only city where a majority (68%) of adults reported a good quality of life. The study also revealed gender-based disparities, with 50.4% of women experiencing poor quality of life compared to their male counterparts.

Despite India’s affordability—reflected in a low Cost of Living Index of 25.0 (Numbeo, 2025)—its Quality of Life Index remains a modest 121.0, significantly lagging behind countries like Germany (190.2), Japan (185.2), and the United States (188.8). Furthermore, India’s Human Development Index (HDI) stands at just 0.633 (UNDP, 2023), placing it below several lower-middle-income nations. These findings highlight a sobering reality: low cost does not equate to high well-being, and millions of Indians continue to lack access to quality healthcare, clean air, secure livelihoods, and the dignity of a decent life.

Moreover, India’s healthcare and education systems also reflect persistent structural shortcomings that continue to hinder the nation’s overall well-being, despite some signs of progress. Public expenditure on healthcare remains critically low at just 2.1% of GDP—significantly below the global average and far behind nations like Germany (11.7%) and the UK (10%) (Legatum Prosperity Index, 2024). This underinvestment translates into poor health outcomes, with India ranking 102 out of 167 countries. Although the current doctor-population ratio stands at 1:836—surpassing the World Health Organization’s recommended 1:1,000 ratio—regional disparities remain stark. Many rural and remote areas still lack access to registered and authorized doctors, severely limiting healthcare delivery. A 2018 report by the National Medical Journal of India noted that while India boasts the highest number of medical colleges globally, the density of physicians in rural areas is just 3 per 10,000 people, compared to 13 per 10,000 in urban regions. Additionally, gender disparities in physical health are evident, with women recording lower physical health scores, largely due to limited physical activity influenced by personal and environmental constraints.

In the realm of education, India has achieved near-universal school enrollment, yet the quality, accessibility, and affordability of education remain critical concerns. According to the Annual Status of Education Report (ASER) 2023, only 43% of rural Class 5 students can read a Class 2-level text, revealing significant gaps in foundational literacy. While India’s literacy rate stands at 77.7%, it still trails behind developed countries like Japan and France, which boast literacy rates of 99%. Moreover, education in India is still unaffordable for a significant portion of the population, especially in rural areas where disparities in access to quality education persist. The urban-rural divide continues to affect the learning ecosystem, with rural students often lacking the infrastructure, resources, and qualified teachers necessary for effective learning.

Another critical issue plaguing the Indian education system is its excessive reliance on high-stakes examinations. This exam-centric model promotes rote learning over conceptual understanding and places immense psychological pressure on students, often leading to disinterest in learning and burnout. A shift toward continuous assessment and skill-based evaluation methods is urgently needed to foster critical thinking, creativity, and long-term academic engagement. Furthermore, the use of outdated curricula in many schools and colleges hampers students’ readiness for contemporary challenges. The disconnect between educational content and the demands of a rapidly evolving, technology-driven society limits students’ employability and career prospects. To address these gaps, the education system must undergo comprehensive reforms, including curriculum modernization, teacher training, and policies that ensure affordability, accessibility, and equity across all regions.

Workforce well-being in India presents another critical dimension of the country’s development paradox. According to a 2024 Indeed India survey, only 47% of Indian employees reported being satisfied with their jobs—substantially lower than the job satisfaction levels in countries such as Germany (74%), the United States (71%), and Japan (68%). This dissatisfaction is driven by structural issues such as underemployment, long and often unregulated working hours, inadequate job security, and limited opportunities for upward mobility. These challenges are especially pronounced among young workers in Tier 2 and Tier 3 cities, where economic growth has not translated into meaningful employment opportunities.

Compounding the issue is the growing unemployment among educated youth. Data from the International Labour Organization indicates that the share of educated young people among the unemployed rose from 54.2% in 2000 to 65.7% in 2022, reflecting a mismatch between education and employability. This growing segment of educated yet jobless individuals poses a serious challenge to India’s demographic dividend. Moreover, renowned developmental economist Jean Drèze has pointed out that there has been virtually no real wage growth in India since 2014, further eroding worker morale and economic resilience. These trends highlight that economic expansion without corresponding improvements in labor conditions, wage growth, and job quality risks creating a workforce that is increasingly disillusioned, underutilized, and economically insecure. Addressing this will require urgent policy attention to job creation, skill development, labor rights, and income equity.

The missing dimensions of freedom, security, and dignity further complicate the narrative of India’s developmental progress. While the country continues to function as an electoral democracy, its global standing on civil liberties and political freedoms has deteriorated in recent years. The V-Dem Institute (2024) classified India as an “electoral autocracy,” citing concerns over shrinking civic space, media restrictions, and democratic backsliding. Similarly, Freedom House (2024) rated India as “partly free,” highlighting growing limitations on freedom of expression, assembly, and minority rights. These concerns are echoed in India’s position on the Global Peace Index (2023), where it ranks 126 out of 163 countries, pointing to persistent internal conflicts, communal tensions, gender-based violence, and general societal insecurity.

Perhaps most indicative of the country’s democratic deficit is the everyday erosion of dignity faced by millions—particularly informal workers, women, and members of marginalised communities. Despite constitutional guarantees of equality and justice, widespread discrimination, caste-based exclusion, and lack of legal or social protections for vulnerable populations continue to undermine the lived experience of freedom. Informal workers, who comprise over 90% of the workforce, often endure hazardous working conditions, wage theft, and absence of social security. Women face not only unequal pay and underrepresentation in decision-making roles but also systemic barriers to safety, mobility, and respect. These enduring deficits reveal that development cannot be measured solely through economic or institutional indicators—true progress must also account for the quality of democratic life, the security of individuals, and the assurance of dignity for all citizens.

Lessons from Global Peers, India can and must learn from global exemplars. Countries such as Bhutan, Finland, Denmark, and New Zealand consistently top the World Happiness Report, despite moderate GDP growth. Their success lies not in sheer economic output, but in robust public services, environmental stewardship, trust in governance, and holistic well-being. Bhutan, for instance, prioritizes Gross National Happiness (GNH) over GDP, focusing on cultural preservation, environmental conservation, social equity, and mental health. For a diverse and populous country like India, Bhutan’s model offers a vital lesson: development should serve human welfare, not just economic metrics.

India’s future lies in adopting multidimensional indicators of progress such as Bhutan’s GNH, the OECD’s Better Life Index, and the UN’s Sustainable Development Goals (SDGs). These frameworks offer a more comprehensive picture of well-being, emphasizing equity, health, education, environmental quality, and social inclusion. Importantly, India’s own ancient traditions—rooted in balance, compassion, and collective welfare—offer a philosophical foundation for such a humane development model. In conclusion, India’s economic accomplishments, while impressive, must serve a higher purpose: or human flourishing. As the world’s largest democracy, India has the opportunity and the responsibility to redefine what progress means. True development is not about becoming a $5-trillion economy where citizens feel insecure and dissatisfied. It is about building a society where every individual—regardless of caste, class, or geography—can live with dignity, purpose, and well-being. Policymakers must move beyond GDP and embrace a ‘Humane Economy’ that integrates human values, ethics, and social well-being into its functioning, rather than focusing solely on profit maximization, growth, or efficiency. It is a people-centered and morally grounded approach to economics that promotes dignity, justice, sustainability, and inclusiveness. Development must not only be about rising incomes, but about rising humanity.