Multidimensional Poverty Index

Origin

• The Multidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).
•  The MPI is a global measure of poverty that considers a person’s health, education, and standard of living. 

About

• The NITI Aayog is the nodal ministry for the Multidimensional Poverty Index (MPI) in India. 
• The Multidimensional Poverty Index (MPI) is a tool used to measure poverty beyond income and wealth.
• Unlike traditional poverty measures, which primarily focus on income levels, the MPI recognizes that poverty has multiple dimensions that affect an individual’s quality of life. These dimensions include health, education, and living standards.
• India has adopted the MPI through the NITI Aayog, which is a government think tank, to provide a more comprehensive measure of poverty.
• The index provides a nuanced understanding of the multifaceted nature of poverty and helps in framing more effective policies for its alleviation.
• The National MPI covers 12 indicators while global MPI covers 10 indicators.

Global MPI Indicators

National MPI Indicators

Concept of MPI

The MPI measures poverty through 10 indicators that are grouped into three main dimensions:

• Health (2 indicators):
  • Nutrition:
    • Whether any member of the household is malnourished.
  • Child Mortality:
    • Whether any child has died in the household.
• Education (3 indicators):
  • Years of Schooling:
    • Whether any household member has completed at least six years of schooling.
  • School Attendance:
    • Whether any school-age child is not attending school.
  • Literacy:
    • Whether any household member is illiterate.
• Living Standards (5 indicators):
  • Cooking Fuel:
    • Whether the household uses clean cooking fuel (like LPG, biogas, etc.) or not.
  • Sanitation:
    • Whether the household has access to improved sanitation facilities.
  • Drinking Water:
    • Whether the household has access to clean drinking water.
  • Electricity:
    • Whether the household has electricity.
  • Flooring and Housing:
    • Whether the household lives in a durable and well-constructed house with proper flooring (not mud or sand).

Measurement and Calculation

• The MPI uses a cut-off score for each indicator to decide if a person is considered deprived in that indicator. A person is considered multidimensionally poor if they are deprived in at least one-third of the weighted indicators.

• The MPI score for each individual is calculated based on the percentage of deprivation they face across these dimensions. The formula involves a composite index, where the overall deprivation is calculated by aggregating the deprivations across the 10 indicators.

NITI Aayog’s Role in India’s MPI

• NITI Aayog plays a significant role in monitoring and implementing the MPI framework in India. The government of India first adopted the India Multidimensional Poverty Index (IMPI) based on the global MPI, with the Indian version being more contextually relevant to India’s socio-economic conditions. It was launched as part of the National Multidimensional Poverty Index in 2021.
• The NITI Aayog’s report on the MPI presents a detailed analysis of multidimensional poverty at the national and state levels. It offers data on the percentage of people living in multidimensional poverty and helps in comparing regions to identify where poverty alleviation programs need more attention.

Key Findings of NITI Aayog’s MPI Report

According to NITI Aayog’s report on the MPI:

• Over 25% of Indians were multidimensionally poor as of the most recent data available. This means that more than a quarter of India’s population faced significant deprivations across multiple dimensions of well-being.
• Poverty in rural areas is more pervasive, with a higher proportion of people facing multidimensional poverty as compared to urban areas.
• Regional Variations:
  • The incidence of multidimensional poverty varies significantly across states, with states like Bihar, Uttar Pradesh, Madhya Pradesh, and Jharkhand having the highest levels of multidimensional poverty.
• Trends over time:
  • The report also highlights that the number of multidimensionally poor people in India has decreased over the years, showcasing the effectiveness of government policies and welfare programs aimed at reducing poverty.

Impact on Policy and Programs

• More comprehensive policymaking:
  • It allows for a better understanding of the factors contributing to poverty. For example, improving access to education and healthcare is just as critical as raising income levels in addressing poverty.
• Targeted Interventions:
  • The index helps identify specific areas where interventions are most needed, such as in improving sanitation, nutrition, or access to electricity.
• Monitoring and Accountability:
  • The MPI serves as a tool for monitoring the progress of poverty alleviation programs. Policymakers can track which areas are improving and where efforts need to be ramped up.

For instance, programs such as the Pradhan Mantri Awas Yojana (housing for all), Swachh Bharat Abhiyan (clean India mission), and PM Jan Dhan Yojana (financial inclusion) are directly aligned with improving the indicators covered by MPI, especially in terms of sanitation, housing, and access to financial services.

Challenges and Criticisms

While the MPI has gained importance in shaping India’s poverty alleviation efforts, it is not without its challenges:

• Data Availability:
  • Accurate and timely data is crucial for calculating MPI. Disparities in data collection across states and regions can lead to inconsistencies in reporting.
• Complexity:
  • The multidimensional approach may sometimes be seen as complex or difficult to translate into policy decisions, particularly for quick interventions.
• Subjectivity in Indicators:
  • Some critics argue that some of the indicators (like nutrition and education) might not be universally comparable across diverse regions and communities.

Conclusion

• The Multidimensional Poverty Index (MPI) is a significant step forward in how poverty is understood and tackled in India. By considering multiple aspects of well-being beyond income, it provides a fuller picture of poverty.
• The NITI Aayog has played a pivotal role in adopting and refining this framework to suit India’s unique needs.
• The MPI not only provides insights into poverty reduction efforts but also highlights areas where the country must focus its resources to ensure that every citizen has a chance at a decent standard of living.

This more holistic understanding of poverty has the potential to guide India’s development policies in a way that addresses the root causes of poverty and fosters sustainable, inclusive growth for all.