News Excerpt:

In her Interim Budget speech, the Finance Minister said 25 crore Indians had been pulled out of poverty over the past decade.

Basis for the assessment:

• The number, i.e. 25 crore Indians, appeared in a discussion paper, Multidimensional Poverty in India Since 2005-06, published by NITI Aayog in January this year.
• The paper had technical inputs from the United Nations Development Programme (UNDP) and the Oxford Policy and Human Development Initiative (OPHI).
• It says that multidimensional poverty in India declined from 29.17% in 2013-14 to 11.28% in 2022-23, with about 24.82 crore people escaping poverty during this period.
• At the state level, Uttar Pradesh topped the list with 5.94 crore people escaping poverty, followed by Bihar at 3.77 crore and Madhya Pradesh at 2.30 crore.

What is the Multidimensional Poverty Index (MPI)?

• Traditionally, poverty is calculated based either on income levels or expenditure levels if income data are unavailable.
• The so-called “poverty lines” are actual expenditure levels considered minimum enough for someone to be called poor.
• The MPI approaches poverty differently. Globally, the MPI uses 10 indicators covering three main areas, and these three dimensions have one-third of the weight of each in the final index.
• Health: It includes nutrition and child & adolescent mortality indicators. 
• Education: It includes years of schooling and school attendance indicators.
• Standard of living: It includes six household-specific indicators - housing, household assets, type of cooking fuel, access to sanitation, drinking water, and electricity.
• The Indian MPI has two additional indicators, according to the NITI Aayog, this has been done to align the MPI with India’s national priorities.
• Maternal health (under the health dimension)
• Bank accounts (under the standard of living dimension)

How is MPI calculated?

• According to the MPI method, if a person is deprived of a third or more of 10 (weighted) indicators, they are identified as “MPI poor”.
• However, to calculate the index value, three separate calculations are needed.
• The first calculation involves finding out the “incidence of multidimensional poverty” (denoted by the symbol H).
• The incidence refers to the proportion of multidimensionally poor in the population.
• It is arrived at by dividing the number of multidimensionally poor persons by the total population.
• It answers the question - How many are poor?
• The second calculation involves finding out the “intensity” of poverty (denoted by the symbol A).
• This answers the question - How poor are they?
• This refers to the average proportion of deprivation that is experienced by multidimensionally poor individuals.
• To compute intensity, the weighted deprivation scores of all poor people are summed and then divided by the total number of poor people.
• Finally, the MPI is arrived at by multiplying the incidence of multidimensional poverty (H) and the intensity of poverty (A).
• Therefore, the MPI value for a given population is the share of weighted deprivations faced by multidimensionally poor individuals divided by the total population.

How did the data for 2013-14 and 2022-23 arrive?

• Typically, the health metrics depend on data from the National Family Health Survey (NFHS) rounds.
• The NFHS is conducted every five years; the last round refers to the 2019-21 period.
• How were the MPI for 2012-13 and 2022-23 calculated?
• According to the paper, this required interpolation of estimates for 2013-14 and extrapolation for 2022-23.

Conclusion:

A better understanding of the impact of various initiatives launched during the previous decade on poverty and deprivation can be obtained by comparing the estimates of poverty and deprivation in the year 2013-14 with the year 2022-23, even though the actual estimates for 2015-16 and 2019-21 point to an acceleration in the rate of reduction in MPI after 2015-16 compared to 2005-06 to 2015-16.

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