135 million fewer multidimensional poor in 2021 compared to 2015: NITI Aayog index

Multidimensional poverty in India has decreased from 24.85% in 2015-16 to 14.96% in 2019-21, according to a report on National Multidimensional Poverty Index (MPI) released by the NITI Aayog on July 17. This is equivalent to lifting an estimated 135 million people out of multidimensional poverty according to population projections used by the report. The intensity of deprivation that the poor experienced has also come down in the five years, according to the report, adding that these improvements are likely a result of government support on various kinds of household amenities.

Also read: India has almost wiped out extreme poverty: International Monetary Fund

“The remarkable progress achieved through extremely low deprivation rates especially for electricity, access to bank accounts and drinking water, reflects the Government’s unwavering commitment to improving citizens’ lives and creating a brighter future for all”, NITI Aayog said in a press release, underlining the importance of welfare schemes launched by the Modi government in bringing down multidimensional poverty, which measures access to basic utilities and services. The parameters considered are aligned with the sustainable development goals (SDGs, which have a deadline of 2030); they span three dimensions, health (three indicators), education (two), and standard of living (seven). The report said that India is on target to meet its SDG for multidimensional poverty.

To be sure, a fall in multidimensional poverty may not necessarily mean an increase in income or wealth and the findings are on expected lines as they are based on the results from the fifth round (2019-21) of National Family and Health Survey, which shows an improvement on all indicators compared to its previous round in 2015-16.

The MPI report released on July 17 uses the National Family Health Survey (NFHS) to create an index of poverty that gives the same weightage to health and education in measuring poverty as it does to standard of living. A person is considered poor if they don’t meet the benchmark for a weighted 33% of the 12 indicators MPI uses across health, education, and living standards. It is the share of such multidimensionally poor people that has decreased to 14.96%. MPI, by its definition does not count the number of people who might be earning below a particular threshold, which is the conventional approach to measure poverty . Anyway, because India does not have a consumption expenditure survey after 2011-12 -- the 2017-18 findings were junked by the government -- it does not have a poverty line-based headcount ratio after 2011-12.

The decrease in proportion of poor Indians under MPI is largely on account of rural areas, where a majority of poor Indians live. The share of multidimensionally poor has decreased from 32.59% to 19.28% in rural India. The share of such poor people was already relatively small in urban areas in 2015-16 (8.65%). This decreased further to 5.27% in 2019-21, according to the MPI report.

The countrywide trend does not have big outliers at the level of states. All states have decreased the headcount ratio of poor between 2015-16 and 2019-21. As is expected, the states where the headcount ratio was very big in 2015-16 have decreased it the most. For example, Bihar, where 51.89% were multidimensionally poor (highest for any state) in 2015-16 has decreased this number by 18 percentage points to 33.76%. Kerala, where just 0.70% were multidimensionally poor in 2015-16, had decreased this further to 0.55%.

To be sure, the MPI report does not just count the number of people who are poor on multiple dimensions. It also counts the intensity of poverty. This intensity is simply the average share of deprivations multidimensionally poor people are suffering from. According to the new report, the average poor person fails to fulfil the benchmarks for a weighted 44.39% indicators, somewhat lower than the 47.14% figure in 2015-16. To be sure, this level of deprivation is still more than the 33% deprivation that qualifies one as multidimensionally poor.

The latest findings from the report are on expected lines as all 12 indicators used for the MPI showed an improvement in the 2019-21 NFHS data. However, the data for the MPI report must not be taken as indicating a wholesale improvement in life of everyone in the country. For example, the 2019-21 NFHS showed that the proportion of stunted and wasted children increased in a third of the states even as the national average improved. Experts have called for a bigger focus on fighting malnutrition in the country while acknowledging the progress in eradicating multidimensional poverty. “It is clear that success in increasing access to sanitation, drinking water and electricity may have contributed to reducing multidimensional poverty, but these appear to have limited impact in combating malnutrition. This fight will also require increasing incomes for the poorest along with strengthening direct interventions such as the Integrated Child Development Services and mid-day-meal schemes, both of which suffered due to pandemic-led disruptions”, Himanshu, an associate professor of economics at Jawaharlal Nehru University, wrote in his Mint column in October 2022 when UNDP’s multidimensional poverty report was released.

The 12 parameters considered for MDI are: nutrition, child and adolescent mortality, and maternal health (all under the health dimension); years of schooling and school attendance (under education): and access to cooking fuel, sanitation, drinking water, housing, electricity, assets and bank accounts (under standard of living).