Central Idea

PM highlighted a significant milestone achieved during his government’s first 5-year term – the liberation of 13.5 crore Indians from the clutches of multidimensional poverty.
This achievement, as substantiated by the National Multidimensional Poverty Index (MPI) report, reflects the government’s commitment to improving the lives of millions across various dimensions of well-being.

Understanding Multidimensional Poverty Index (MPI)

Holistic Evaluation: The MPI gauges deprivations across health and nutrition, education, and standard of living, offering a comprehensive assessment of poverty that extends beyond traditional monetary measures.
Three Dimensions: Health is evaluated through nutrition, child and adolescent mortality, and maternal health. Education encompasses years of schooling and school attendance. The standard of living is assessed through variables like sanitation, drinking water, and access to financial services.
Technical Collaborators: The methodology behind India’s MPI draws inspiration from the Oxford Poverty and Human Development Initiative (OPHI) and the UN Development Programme (UNDP), with OPHI and UNDP collaborating to formulate the national index.

Decline in Poverty: The poverty headcount ratio – the proportion of multidimensionally poor individuals – witnessed a remarkable drop from around 25% to under 15% between the periods of National Family Health Survey (NFHS)-4 (2015-16) and NFHS-5 (2019-21).
Significant Impact: This reduction signifies that a staggering 13.5 crore Indians liberated themselves from multidimensional poverty during this period.

poverty

Historical Context: The MPI’s multidimensional nature makes direct comparisons with India’s traditional poverty estimations challenging. However, the Global MPI 2023 report underscores that 415 million Indians emerged from poverty between 2005-06 and 2019-21.
Distribution over Time: Economists elucidate that out of the 415 million, 270 million transitioned out of poverty from 2005-06 to 2015-16, with the remaining following thereafter.
Discrepancies in Ratio: The Global MPI cites India’s poverty ratio as 16.4%, while Niti Aayog’s MPI places it at 14.96%, due to variations in metrics and definitions.

Historical Monetary Measure: Since 1901, poverty in India has been estimated using monetary measures that ascertain the income needed for subsistence or a minimum standard of living.
Creation of Poverty Line: Expert committees headed by D T Lakdawala (1993), Suresh Tendulkar (2009), and C Rangarajan (2014) established a poverty line based on consumption expenditure data.
Unresolved Data Issues: The absence of updated consumption data since 2011 has led to economists using alternative sources like NFHS data and CMIE data to estimate poverty, which has introduced uncertainty.

Ambiguity in Classification: India lacks an official middle-class definition, making it challenging to ascertain whether those emerging from poverty automatically join the middle class.
Income Disparity: Private research by PRICE categorizes the middle class based on annual income between ₹5 lakh and ₹30 lakh, a considerable jump from the income levels of individuals transitioning from poverty.
Survey Insights: As per PRICE’s survey, out of India’s population of 1,416 million, 432 million fall under the “Middle Class” category, while 732 million are classified as “Aspirers.”

The reduction of 13.5 crore individuals from multidimensional poverty is a testament to India’s commitment to holistic development.
While multidimensional poverty indices gauge well-being across dimensions, traditional poverty estimation methods use monetary measures.
India’s achievements reflect its focus on inclusive growth, emphasizing improvements in health, education, and living standards.
As the nation continues its journey, these achievements illuminate the path towards building a more prosperous, equitable, and resilient society.