Multidimensional Poverty Index (MPI) 2023 : Daily News Analysis

Date : 17/07/2023

Relevance –

GS Paper 1 – Population and Associated Issues, Poverty and Developmental Issues
GS Paper 2 – Government policies and interventions

Keywords – United Nations agency, BPL, NSSO, Planning Commission

Context –

Estimates of poverty reduction by a United Nations agency offer cause for satisfaction.

About the Global Multidimensional Poverty Index (MPI)

This report offers a concise update regarding the current state of multidimensional poverty on a global scale.
It consolidates data from 110 developing nations, encompassing a population of 6.1 billion individuals, which corresponds to 92 percent of the population in developing countries.
It presents a significant and enduring narrative that sheds light on the widespread presence of poverty in the world.
Moreover, it provides valuable insights into the experiences of impoverished individuals, their hardships, and the severity of their poverty.
The primary aim is to raise awareness and expedite endeavors aimed at eradicating poverty in all its manifestations.
The Multidimensional Poverty Index (MPI) is published annually by the UN Development Programme (UNDP) in collaboration with the Oxford Poverty and Human Development Initiative.

Calculation of Poverty in India –

In India, the widely used method for estimating poverty is based on calculating income or consumption levels. If a household's income or consumption falls below a predetermined minimum level known as the Poverty Line, it is considered to be below the poverty line (BPL).

The calculation of the Poverty Line in India is carried out by NITI Aayog, under the Ministry of Statistics and Programme Implementation (MOSPI), using data from the National Sample Survey Office (NSSO). Previously, this responsibility was held by the Planning Commission.

When evaluating poverty, both income and consumption levels are taken into account. However, it's important to note that the primary criterion for identifying the poor in India is consumption expenditure rather than income level.

The use of consumption level as the valid criterion is based on several reasons. Firstly, individuals who earn regular wage income may also have additional sources of income, making it challenging to accurately assess their total income. Secondly, self-employed individuals or daily wage laborers often experience variable income, while their consumption patterns remain relatively stable.

To estimate poverty based on consumption, data is collected through surveys during a reference period. The household is asked questions about their consumption during that specific period, such as the past 30 days, providing a snapshot of their consumption patterns.

Different Committees on poverty in India –

Post-independence, several committees were established in India to estimate poverty using different criteria. Here are the details of some prominent poverty estimation committees:

1. VM Dandekar and N Rath Poverty Committee:

Set up before 1971, it suggested that the poverty line should be determined based on the spending value that could provide 2250 calories per day in rural and urban areas.

2. Alagh Committee:

Established in 1979 by the Planning Commission, led by YK Alagh.
Developed a poverty line based on dietary needs and linked consumption expenditure for urban and rural areas.

3. Lakdawala Committee:

Formed an expert group for the estimation of the proportion and number of poor.
Recommended the use of a fixed consumption basket based on calorie consumption for the Poverty Line approach.
Proposed the construction of state-specific poverty lines, updating them using Consumer Price Index-Agricultural Labourers (CPI-AL) for rural areas and Consumer Price Index-Industrial Workers (CPI-IW) for urban areas.
Advised against using National Accounts Statistics and recommended reliance on National Sample Survey (NSS) data.

4. C Rangarajan Committee on Poverty:

Created by the Planning Commission to review international poverty estimation methods, propose alternative methods, and link them with government poverty alleviation schemes.
Submitted a final report in 2014, which challenged the poverty estimation in India by the Tendulkar Committee.

5. Tendulkar Committee of Poverty Estimation:

Established in 2009, with Suresh Tendulkar as the chairperson.
Shifted from calorie consumption level to a mixed reference period for poverty estimation.
Recommended a uniform poverty line basket for rural and urban areas.
Proposed changes in price adjustment methods to address temporal and spatial issues.
Advocated incorporating private expenditure on education and health in poverty estimation.

Data highlights of MPI 2023

Reduction in global MPI values:

As per the report, 25 nations, including India, have achieved the remarkable feat of reducing their global Multidimensional Poverty Index (MPI) values by half within a span of 15 years. This progress serves as evidence that rapid advancements in poverty reduction are indeed feasible. Among the countries that have achieved this milestone are Cambodia, China, Congo, Honduras, India, Indonesia, Morocco, Serbia, and Vietnam.

Data on India:

The most recent update of the global Multidimensional Poverty Index reveals that a significant milestone has been achieved in India. During the period from 2005-06 to 2019-21, a staggering 415 million individuals in India were lifted out of poverty. This figure represents a substantial proportion of the country's population, which is currently estimated to be over 1.4 billion. The report highlights remarkable improvements in key indicators of poverty. The percentage of individuals lacking access to cooking fuel decreased from 52.9% to 13.9%, while those without proper sanitation decreased from 50.4% to 11.3%. It is noteworthy that deprivation across all indicators has declined in India, particularly among the poorest states and disadvantaged groups, including children and individuals belonging to disadvantaged caste groups. These groups have witnessed the most significant progress in terms of absolute poverty reduction.

Lack of data during COVID:

The report demonstrates that poverty reduction is achievable. However, the lack of comprehensive data during the period of the COVID-19 pandemic poses challenges in assessing immediate prospects.

Regions with existing poverty:

According to the 2023 report, out of the total population of 6.1 billion people covered across 110 countries, approximately 1.1 billion individuals, which is slightly over 18%, live in acute multidimensional poverty. Sub-Saharan Africa accounts for 534 million of these individuals, while South Asia is home to 389 million, collectively representing around five out of every six poor people globally.

Interestingly, middle-income countries are home to a significant majority of the global poor, with nearly two-thirds, or 730 million people, residing in these nations. This emphasizes the crucial importance of taking action within middle-income countries to effectively reduce poverty on a global scale. It is worth noting that despite low-income countries constituting only 10% of the population included in the Multidimensional Poverty Index (MPI), they house 35% of all poor individuals. This highlights the concentration of poverty within low-income countries and the need for targeted efforts in addressing their specific challenges.

Significance of India’s success:

It is noted that certain advancements in poverty reduction may be attributed to the social development schemes implemented by the current government. Despite criticisms that rapid economic expansion has not adequately benefited the poor, the estimates presented in the report indicate that fast growth is indeed making a positive impact on the lives of the most disadvantaged individuals.

Although the COVID-19 pandemic may have hindered progress in poverty reduction, it is difficult to draw definitive conclusions due to insufficient data. However, it is crucial for India to maintain its efforts in direct poverty relief, even as it continues to pursue economic growth.

It is essential to ensure that the initiatives and programs aimed at alleviating poverty remain robust and continue to support those in need, as economic growth alone may not suffice in addressing the challenges faced by the impoverished population.

Challenges for India

Levels of nutrition:

Although poverty levels have not worsened, the prevalence of under-nutrition remains alarmingly high in India. The rate of improvement in nutrition levels has not shown significant acceleration between the periods of NFHS-3 and NFHS-4, as well as between NFHS-4 and NFHS-5 surveys. It is important to note that the Multidimensional Poverty Index (MPI) primarily reflects the pre-COVID situation, given that 71% of the interviews for NFHS-5 were conducted prior to the pandemic.

Focussing on existing vulnerable population:

The focus should be on addressing the needs of the existing vulnerable population in India, as there are still over 230 million individuals living in poverty. The MDI report emphasizes the significance of considering the population classified as "vulnerable" to multidimensional poverty, which refers to those who are not officially classified as poor but experience deprivations in 20-33.3 percent of the weighted indicators. In India, approximately 18.7% of the population falls under this category of vulnerability, highlighting the need for targeted interventions to address their specific challenges.

Way Forward

India is currently confronted with three significant and escalating challenges: widespread unemployment, widening inequalities, and deepening poverty. It is worth noting that India has surpassed China to become the world's most populous nation, with approximately 1.4286 billion people, as per UN data.

To effectively address these issues, India requires concrete policy solutions. Without appropriate policies and interventions, the demographic dividend that India possesses, which refers to the potential economic advantage of having a large and youthful population, may turn into a demographic burden or "demographic bomb." It underscores the importance of implementing well-designed policies and strategies to harness the potential of the country's population and ensure inclusive growth, equitable distribution of resources, and poverty alleviation.

Probable Questions for UPSC Mains Exam –

Analyze India's progress in reducing poverty based on the Multidimensional Poverty Index (MPI) data. Discuss the challenges in addressing under-nutrition and the importance of targeting the vulnerable population for poverty alleviation. (10 Marks, 150 Words)
Assess the role of different committees in poverty estimation in India, their recommendations, and impact on policy interventions. Evaluate the significance of using consumption levels as a criterion for poverty identification and the challenges posed by the COVID-19 pandemic. (15 Marks, 250 Words)

Source – Indian Express