Multidimensional Poverty in India, Data, Calculation Method

Context: Finance Minister Nirmala Sitharaman stated that in the last decade, 25 crore people in India have been lifted out of multidimensional poverty.

Multidimensional Poverty: Basis For This Assessment

• Source of Data: NITI Aayog’s discussion paper titled ‘Multidimensional Poverty in India Since 2005-06′ released on January 15 provided the statistics.
• Poverty Decline: India’s multidimensional poverty rate dropped from 29.17% in 2013-14 to 11.28% in 2022-23.
• Number Escaping Poverty: Approximately 24.82 crore individuals emerged from poverty during this period.
• State Contributions: Uttar Pradesh with 5.94 crore people overcoming poverty, followed by Bihar with 3.77 crore, and Madhya Pradesh with 2.30 crore.

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About Multidimensional Poverty Index (MPI)

Traditional Poverty Measurement: Poverty has typically been measured by income or expenditure levels, with “poverty lines” reflecting minimum expenditure thresholds for poverty classification.

MPI’s Unique Approach

• Dimensional Coverage: The MPI assesses poverty through 10 indicators across three dimensions: health, education, and standard of living, each weighted equally in the index.
• Health Indicators: Nutrition and child & adolescent mortality.
• Education Indicators: Years of schooling and school attendance.
• Standard of Living Indicators: Housing, assets, cooking fuel, sanitation, water, and electricity.
• India-Specific Indicators: The Indian MPI includes maternal health and bank account ownership to reflect national priorities.

Multidimensional Poverty Index (MPI) Calculation Method

• Identification of the ‘MPI Poor‘: An individual is considered ‘MPI poor’ if they are deprived in one-third or more of the weighted indicators.
• Calculating Poverty Incidence (H): This represents the ratio of the number of people in multidimensional poverty to the total population, answering “How many are poor?”
• Calculating Poverty Intensity (A): This indicates the average level of deprivation experienced by the poor, answering “How poor are they?”
• Determining MPI Value: The MPI is calculated by multiplying the incidence (H) by the intensity (A) of poverty.
• Result Interpretation: The MPI reflects the proportion of weighted deprivations that MPI poor individuals face in relation to the total population.

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