Multidimensional Poverty Index: Eliminating poverty in all its forms

Multidimensional Poverty Index: Eliminating poverty in all its forms

Published on :- May 30th, 2022

Why is it important to measure poverty beyond monetary terms?

For many years, poverty has been measured just in monetary terms, whereas poverty is a complex multidimensional phenomenon. To combat this, a concept called ‘Multidimensional poverty index (MPI)’ was introduced and is a widely employed non-monetary poverty measure in the world. According to Global MPI 2021, released by the United Nations Development Programme(UNDP) and Oxford Poverty and Human Development Initiative(OPHI), India ranks 66 out of 109 countries.

MPI is classified into three thematic areas or three dimensions – Education (2 indicators), Health (3 indicators), and Standard of Living (7 indicators) – altogether a total of 12 indicators. MPI helps identify the percentage share of households who are deprived in each indicator and is an integral part of sustainable development goals (SDG-I) - end poverty in all its forms.

Deprivation of an indicator is the lack or denial of a particular necessity to a household. The significance of MPI is that it not only captures overlapping deprivations but also complements the income poverty measure as it measures and compares deprivations directly.

Let’s look at some key insights emerging from Niti Aayog’s first MPI report based on the NFHS 4 (2015-16) data.

MPI is a score and is measured on a scale of 0 to 1. Based on NFHS 4 data, India’s MPI score is 0.118, which translates to - for every 100 citizens, approximately 12 of them are multidimensionally poor. MPI is calculated based on two factors – Headcount ratio (How many are poor?) and Intensity of poverty (How poor are the poor?).

The headcount ratio is the proportion of the population that lives below the poverty threshold. Approximately 1/4th of India’s total population (~34 crores) and almost 1/3rd of India’s rural population (~29 crores) lives below the poverty threshold.

Among the 1/4th (~34 crores) population identified as poor, ~47.13% are deprived across various indicators marking the depth of poverty which is the intensity of poverty.

MPI provides a high-level view of the level of multidimensional poverty and its change with time due to its robust and dynamic nature. If a multidimensionally poor household overcomes any deprivation, the MPI score comes down even if they are still identified as multidimensionally poor.

India’s rural population is more significantly deprived than the urban population in every indicator. A higher share of the rural population is deprived of some of the basic key indicators such as years of schooling, nutrition, access to clean cooking fuel, drinking water, sanitation, housing and electricity etc.

Which state of India is Performing Better or Worse with respect to MPI?

A closer look into key indicators such as years of schooling, nutrition and cooking fuel shows that the proportion of the population who are multidimensionally poor and are deprived in that indicators at the same time(censored headcount ratio) is lesser in smaller states such as Kerala, Goa and Himachal Pradesh than the large state such as Uttar Pradesh, Madhya Pradesh, Bihar and Jharkhand.

The lowest deprivation in the Years of Schooling indicator is seen in the states of Kerala(0.19%) and Himachal Pradesh(1.47%). The highest deprivation is found in the state of Bihar(24.70%).

For the Nutrition indicator of Health Dimension, States like Kerala(0.56%), Sikkim(2.87%) and Goa(2.97%) are managing their respective states well. Assam (41.70%) is the most deprived state, with 41.60% population being deprived in the Nutrition indicator, followed by Madhya Pradesh(34.42%) and Uttar Pradesh(30.48%).

For the Cooking Fuel indicator, despite the availability of various cooking fuels, Major parts of the states like Bihar(50.20%), Jharkhand(41.25%), Madhya Pradesh(34.90%), Uttar Pradesh(34.26%), and Meghalaya(31.82%) have limited access to cooking fuel.

SDG 2 includes targets aimed at reducing the proportion of men, women and children of all ages living in poverty, by at least half. MPI presents an overall picture of poverty and helps to monitor the state of poverty across states and districts. This helps make informed evidence-based interventions, thereby ensuring no one is left behind.

How do you think India is progressing towards reduced poverty compared to the rest of the world?

For more details, check out the interactive dashboard - Multidimensional Poverty in India

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