National Multidimensional Poverty Index: Explained, pointwise

Introduction

India has made significant progress in reducing multidimensional poverty. According to the National Multidimensional Poverty Index: A Progress Review 2023, prepared by the NITI Aayog, the share of the population classified as multidimensionally poor declined by almost 10 per cent between 2015-16 and 2019-21. In absolute terms, 135 million people are estimated to have exited multidimensional poverty during this period. The national MPI (Multidimensional Poverty Index) is a vital indicator in measuring the progress towards Sustainable Development Goals, which include reducing the proportion of people living in poverty by half “in all its dimensions” (SDG 1.2). The second edition of MPI is based on the National Family Health Survey (2019-21) but it doesn’t capture the impact of the pandemic.  

What is multidimensional poverty? 

Historically, poverty estimation was done by mainly focusing on one-dimensional measures – usually based on income. However, there was criticism that monetary and consumption-based poverty measures fail to capture the impact of lack of other non-monetary factors on standard of living. 

It has been recognized that poverty has multiple dimensions that affect individuals’ experiences and quality of life. Qualitative aspects of life such as access to basic services like water and sanitation that may not be directly related to household income, constitute an important part of poverty measurement. 

This realization has led to a growing consensus that non-monetary measures must complement monetary measures, and that income is only one aspect of well-being and not its sole determinant.  Multidimensional poverty includes the various deprivations experienced by poor people in their daily lives – such as poor health, lack of education etc. 

Niti Aayog’s national Multidimensional Poverty Index is based on the global Multidimensional Poverty Index. It captures overlapping deprivations in three equally weighted dimensions – health, education, and living standards. While the global MPI considers 10 indicators across health, education, and living standards, Niti Aayog’s national MPI adds two more indicators to the list – maternal health and bank account. 

How is it different from normal measures of poverty? 

Simple headcount ratios or poverty rates do not provide any insights on the depth of poverty. 

It is possible that while the number of poor individuals captured by the headcount ratio reduces, the poorest may, in fact, get even poorer. Alternatively, gains among the poor may be completely missed unless they cross the ‘poverty line’ or exit poverty.  

To address this, the MPI presents not just the extent of poverty (the headcount ratio), but also the depth of poverty captured by the ‘MPI value’. 

What are the findings of Niti Aayog on multi-dimensional poverty in India? 

All 12 indicators saw improvement. India’s national MPI value has nearly halved from 0.117 to 0.066. 

The proportion of population in multidimensional poverty reduced from 24.85 per cent to 14.96 per cent between 2015-16 and 2019-21.  

This reduction of 9.89 percentage points indicates that about 135.5 million (13.5 crore) people have been pulled out of poverty during this five-year period. 

Read more: What are the key findings of the National Multidimensional Poverty Index 2023? 

Does the Global MPI report corroborate Niti Aayog report? 

Findings from the UNDP’s Global MPI report released earlier corroborate the Niti Aayog report. 

The UNDP report noted the following: 

1. 415 million poor people moved out of poverty from 2005/2006 to 2019/2021. 
2. Incidence fell from 55.1 percent to 16.4 percent. 
3. Deprivation in all indicators declined. 
4. The poorest states and groups, including children and people in disadvantaged caste groups, had the fastest absolute progress. 

What are the government initiatives for elimination of multidimensional poverty and how effective have they been? 

The Government focused on improving access to sanitation, nutrition, cooking fuel, financial inclusion, drinking water, and electricity. 

Initiatives such as Swachh Bharat Mission (SBM) and Jal Jeevan Mission (JJM) have improved sanitation across the country. This led to an almost 22 percentage points improvement in sanitation deprivations.  

The provision of subsidized cooking fuel through the Pradhan Mantri Ujjwala Yojana (PMUY) led to about 15 percentage points improvement in cooking fuel deprivations.  

Flagship programs like the Poshan Abhiyan and Anemia Mukt Bharat have contributed to reduced deprivations in health.  

Initiatives like Saubhagya, Pradhan Mantri Awas Yojana (PMAY), Pradhan Mantri Jan Dhan Yojana (PMJDY), and Samagra Shiksha have also played a role in significantly reducing multidimensional poverty in the country.  

What are the remaining challenges in tackling multi dimension poverty? 

Health: Within the health category, three sub-indicators — nutrition, child and adolescent mortality, and maternal health — showed only moderate improvement. Nutrition deprivation decreased by 6 per cent, maternal health deprivation improved by 3.3 per cent, and child and adolescent mortality deprivation declined by only 0.6 per cent. Lack of proper nutrition contributed nearly one-third to India’s MPI. 

Standard of living: While there has been a significant improvement in access to cooking fuel, still close to 44 per cent of India’s population is still deprived of it. Similarly, while sanitation has improved, more than 30 per cent of the population is deprived when it comes to sanitation services. Access to housing also saw only marginal improvement. More than 41 per cent Indians still did not have access to housing. 

Education: Though schooling years are considered, the quality of education in many Indian schools remains unsatisfactory. Also, insufficient years of school education contributed about 17 percent to the total national MPI, and less-than-desired school attendance contributed 9 per cent to the index.  

Rural-urban divide: Although rural areas witnessed the fastest decline in poverty, there continues to be a major disparity between the number of people in poverty in rural and urban areas. While the incidence of multidimensional poverty is close to 20 percent in rural areas, the incidence in urban areas is a little more than 5 per cent. 

What should be done? 

The findings should be utilized by States and Union Territories to identify and enhance initiatives that have facilitated progress. This will aid in evaluating the advancements in vulnerable regions and identifying specific areas that demand targeted policy interventions to further accelerate development. 

An analysis shows that the biggest improvements were made in fields of mission-mode state action like sanitation (SBM) and access to cooking fuel (PMUY). Similar programmes should also be launched for other indicators, especially for improving nutrition and the quality of school education. 

One crucial factor hindering India’s development is the scarcity of quality jobs for its growing workforce. While the government plays a vital role in offering public goods like sanitation, enhancing job opportunities enables individuals to allocate more resources to nutrition, health, and education. Therefore, alongside reinforcing the provision of public goods, policymakers should prioritize the enhancement of job prospects. 

The progress made so far should not make policymakers complacent as India continues to face a significant number of people living in multidimensional poverty. Therefore, continued attention and efforts are required. 

  Sources: The Hindu Businessline, Indian Express, Niti Aayog Report, PIB, Business Standard