World Bank Human Capital Index Plus (HCI+): Unlocking a 23% Earnings Dividend by Bridging Education and Gender Gaps in India
SDG 4: Quality Education | SDG 5: Gender Equality | SDG 8: Decent Work and Economic Growth
Ministry of Education | Ministry of Labour and Employment
The World Bank insights on India’s Human Capital Index Plus (HCI+) note that India’s score of 159 signals substantial scope for long-term productivity gains through improved schooling and labor participation.The newly expanded HCI+ is presented in the World Bank report, Building Human Capital Where It Matters.
While India’s HCI+ is higher than the South Asia regional average, it trails significantly behind peers like China (220), with the gap primarily driven by tertiary completion rates and school quality (Harmonized Learning Outcomes). A critical finding is the 45-point gender gap, with the female HCI+ score at 136 compared to 181 for males, indicating that women’s earning potential is 45% lower due to systemic differences in human capital acquisition. Simulations suggest that increasing Expected Years of Schooling from 10.0 to 12 years could lift expected long-term earnings by 14.9%, while closing the gender gap could increase overall future earnings for the country by 23%.
Key Pillars of India’s HCI+ Profile
Employment Life Stage Deficit: India’s employment score of 23 is the furthest from the global median, matching the South Asia average but trailing lower-middle-income peers.
Youth Employment Challenges: The indicator for Youth in Wage Employment (29.4%) is a major drag on the index, being lower than both the regional (31.8%) and income-group averages (37.7%).
The Education Quality Gap: Harmonized Learning Outcomes (HLO) and tertiary completion are the largest contributors to the HCI+ gap between India and high-performing economies.
Lifelong Earning Potential: The HCI+ specifically identifies that current gaps in skill acquisition during schooling and early career stages are direct constraints on India’s future GDP.
Gender-Driven Economic Loss: The 45-point deficit in female HCI+ represents a massive “forgone earnings” opportunity that, if addressed, would raise the national index to 181.
What is the “HCI+ Simulated Score”? The Simulated HCI+ is a predictive metric used by the World Bank to show how specific policy interventions—such as increasing years of schooling—would impact a country’s future productivity. For India, a simulation of increasing schooling to 12 years raises the HCI+ from 159 to 174. This 15-point increase is not just a statistical change; it represents a tangible 14.9% rise in the lifetime earnings of the next generation, as children stay in the education system longer to acquire the complex skills required for high-value wage employment.
Policy Relevance
The HCI+ data represents a transition from basic literacy targets to “High-Value Human Capital”, providing a clear economic roadmap for the National Education Policy (NEP) 2020 to drive lifetime earnings growth.
Strategic Impact:
Prioritizing Tertiary Completion: The Ministry of Education must address the “Tertiary Completion Rate” as a priority, as it is the single largest indicator (15 pts) responsible for the HCI+ gap with China.
Targeting Youth Wage Employment: Developing specific apprenticeship and bridge-to-work programs is essential to raise the 29.4% youth wage employment rate to meet global middle-income standards.
Unlocking the “Gender Dividend”: Closing the 45-point female HCI+ gap is not only a social imperative but a core economic strategy that could increase India’s long-term earnings by 23%.
Focusing on School Quality (HLO): Beyond just “years of schooling,” improving the quality of learning (HLO) is identified as a 9-point lever for national productivity.
Follow the full report here: Impact of Increased Schooling on HCI+ | Insights | World Bank