Multi Dimensional Poverty Index

Multi Dimensional Poverty Index

Subject :Governance

Context: According to the Global Multidimensional Poverty Index report the number of poor people in India dropped by about 415 million over the last 15 years. However, the country still has the highest number of poor people and children worldwide.

Multi Dimensional Poverty Index

• Launched in 2010 by the Oxford Poverty and Human Development Initiative at the University of Oxford and the Human Development Report Office of the United Nations Development Programme, the global MPI is updated annually to incorporate newly released surveys and share fresh analyses.
• In the global MPI, people are counted as multidimensionally poor if they are deprived in one-third or more of 10 indicators (see figure), where each indicator is equally weighted within its dimension, so the health and education indicators are weighted 1/6 each, and the standard of living indicators are weighted 1/18 each.
• It also monitors if a child or adult is underweight or if any child may have died in the past five years.
• Among other factors, it considers access to basic amenities such as access to school, housing material, phone, bicycle, television, health, water and others.
• The MPI is the product of the incidence of multidimensional poverty (proportion of multidimensionally poor people) and the intensity of multidimensional poverty (average share of weighted deprivations, or average deprivation score, 1 among multidimensionally poor people) and is therefore sensitive to changes in both components. The MPI ranges from 0 to 1, and higher values imply higher multidimensional poverty.
• Report uses methodology developed by Oxford Poverty and Human Development Initiative and UNDP.
• The Multidimensional Poverty Index has been used by the United Nations Development Programme in its flagship Human Development Report since 2010. It is the most widely employed non-monetary poverty index in the world

Poverty Measurement

• Economists and policymakers estimate “absolute” poverty as the shortfall in consumption expenditure from a threshold called the “poverty line”.
• The official poverty line is the expenditure incurred to obtain the goods in a “poverty line basket” (PLB).
• Poverty can be measured in terms of the number of people living below this line (with the incidence of poverty expressed as the head count ratio).
• Six official committees have so far estimated the number of people living in poverty in India :
  • The working group of 1962
  • V N Dandekar and N Rath in 1971
  • Y K Alagh in 1979; D T Lakdawala in 1993
  • Suresh Tendulkar in 2009
  • C Rangarajan in 2014
• The government did not take a call on the report of the Rangarajan Committee; therefore, poverty is measured using the Tendulkar poverty line. As per this, 21.9% of people in India live below the poverty line.

Tendulkar committee

• The committee was constituted by the Planning Commission to address the following shortcomings of the previous methods:
• Changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates.
• There were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time).
• It recommended four major changes:
• A shift away from calorie consumption-based poverty estimation to Nutritional outcomes
• A uniform poverty line baskets (PLB) across rural and urban India;
• A change in the price adjustment procedure to correct spatial and temporal issues with price adjustment; and
• Incorporation of private expenditure on health and education while estimating poverty.
• It based its calculations on the consumption of the following items: cereal, pulses, milk, edible oil, non-vegetarian items, vegetables, fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear, education, medical (non-institutional and institutional), entertainment, personal & toilet goods, other goods, other services and durables.
• The Committee computed new poverty lines for rural and urban areas of each state.