Multidimensional Poverty in India: A Decade of Progress

Introduction

• Finance Minister Nirmala Sitharaman announced in her Interim Budget speech that 25 crore Indians were lifted out of poverty over the past decade.
• This remarkable achievement reflects the government’s commitment to inclusivity.

Data from NITI Aayog’s Discussion Paper

• NITI Aayog’s Insight: The data comes from a discussion paper titled “Multidimensional Poverty in India Since 2005-06,” authored by Ramesh Chand and Yogesh Suri from NITI Aayog, with inputs from the UNDP and OPHI.
• Decline in Multidimensional Poverty: The paper reveals that multidimensional poverty in India reduced from 29.17% in 2013-14 to 11.28% in 2022-23, with around 24.82 crore individuals escaping poverty during this period.
• State-Level Impact: Uttar Pradesh topped the list with 5.94 crore individuals escaping poverty, followed by Bihar at 3.77 crore and Madhya Pradesh at 2.30 crore.

Understanding the Multidimensional Poverty Index (MPI)

• A Novel Approach: MPI differs from traditional poverty measures, incorporating health, education, and living standards. These three dimensions each hold one-third weight in the index.
• Indicators: MPI uses 10 indicators, including nutrition, child mortality, education, housing, and access to basic amenities, offering a comprehensive view of poverty.
• India’s Unique MPI: India’s MPI includes additional indicators focusing on maternal health and access to bank accounts, aligning it with national priorities.

Calculating MPI

• Identifying “MPI Poor”: If an individual is deprived in at least one-third of the 10 weighted indicators, they are considered “MPI poor.”
• Three Key Calculations: MPI requires three calculations:

• 1. Incidence of Multidimensional Poverty (H): The proportion of MPI poor individuals in the population.
  2. Intensity of Poverty (A): The average proportion of deprivation experienced by MPI poor individuals.
  3. MPI Value: Obtained by multiplying H and A, revealing the share of weighted deprivations faced by MPI poor individuals.

Data Sources and Estimations

• Health Metrics: Data for health indicators relies on the National Family Health Survey (NFHS), conducted every five years. The last round covered the 2019-21 period.
• Calculating MPI for 2012-13 and 2022-23: The paper used interpolation for 2013-14 estimates and extrapolation for 2022-23, enabling a comparison of poverty and deprivation trends.

Conclusion

• The reduction in multidimensional poverty over the last decade signifies the government’s dedication to inclusive development, improving the lives of millions of Indians.