National Multi-Dimensional Poverty Index

Context: 

• The Government think-tank NITI Aayog has released the National Multidimensional Poverty Index (MPI).

Relevance:
Mains: 

• GS I- population and associated issues, poverty and developmental issues
• GS II- Issues relating to the development and management of Social Sector/Services relating to Health, Education, Human Resources; Issues relating to poverty and hunger.

• Multidimensional poverty encompasses the various deprivations experienced by poor people in their daily lives – such as poor health, lack of education, inadequate living standards, disempowerment, poor quality of work, the threat of violence, and living in areas that are environmentally hazardous, among others.
• This baseline report of India’s first-ever national MPI measure is based on the reference period of 2015-16 of the National Family Health Survey (NFHS)- 4.
• It uses the globally accepted and robust methodology developed by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).
• It captures multiple and simultaneous deprivations faced by households.

Parameters used

• The NMPI is calculated using 12 indicators — nutrition, child and adolescent mortality, antenatal care, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets and bank account,
• They have been grouped under three dimensions namely, health, education and standard of living.

How it is computed?

• The index is calculated by first setting the deprivation cut-offs for each indicator, i.e., the level of achievement considered normatively sufficient for an individual to be considered not deprived in an indicator.
• For example, the individual has completed at least six years of schooling. Such a cut off would be applied to determine whether the individual is deprived in each indicator. Weights are added to each indicator and a composite metric is then used to calculate the index.

Why NFHS-4?

• Data collected during the NFHS-4 (2015-2016) corresponds to the period before the full rollout of new governments’ flagship schemes on housing, drinking water, sanitation, electricity, cooking fuel, financial inclusion, and other major efforts towards improving school attendance, nutrition, mother and child health, etc.
• Hence it serves as a useful source for measuring the situation at baseline i.e. before the large-scale rollout of nationally important schemes.

How is the data used?

• The national MPI 2021 is calculated using the household microdata collected at the unit level for the NFHS-4 that is used to derive the baseline multidimensional poverty.
• Further, the country’s progress would be measured using this baseline in the NFHS-5, for which the data was collected between 2019 and 2020.
• The progress of the country with respect to this baseline will be measured using the NFHS-5 data collected in 2019-20.

State-wise performance:

• Wort performing states- 51.91% of the population in Bihar is poor, followed by Jharkhand (42.16%), Uttar Pradesh (37.79%), Madhya Pradesh (36.65%) and Meghalaya (32.67%).
• Best performing states- Kerala registered the lowest poverty levels (0.71%), followed by Puducherry (1.72%), Lakshadweep (1.82%), Goa (3.76%) and Sikkim (3.82%).
• Other States and UTs where less than 10% of the population are poor include Tamil Nadu (4.89%), Andaman & Nicobar Islands (4.30%), Delhi (4.79%), Punjab (5.59%), Himachal Pradesh (7.62%) and Mizoram (9.8%).

UT-wise performance: 

• Among the Union Territories (UTs), Dadra and Nagar Haveli (27.36 per cent), Jammu & Kashmir, and Ladakh (12.58), Daman & Diu (6.82 per cent) and Chandigarh (5.97 per cent), have emerged as the poorest UTs in India.
• The proportion of poor in Puducherry at 1.72 per cent is the lowest among the Union Territories, followed by Lakshadweep at 1.82 per cent, Andaman & Nicobar Islands at 4.30 per cent and Delhi at 4.79 per cent.

Multidimensionally Poor:

• Around 25.01% of the Indian population is multidimensionally poor.
• Bihar has the maximum percentage of the population living in poverty among all the States and the Union Territories, with over 50% of the population in the State identified as “multidimensionally poor”.
• On the other hand, Kerala registered the lowest population poverty levels (0.71%).

Note: The Global MPI had shown 27.9% of India’s population were multidimensionally poor. The country ranked 62nd out of 109 nations on the index. 

Poverty Criteria:

• The report took a person spending less than Rs 47 a day in cities and one spending less than Rs 32 a day in villages as poor.

Health-

• Healthy Nutrition: Some 37.6% of Indian households are deprived of healthy nutrition levels.
• Child and Adolescent Mortality: Some 2.7% of households have reported child and adolescent mortality. A household is deprived if any child or adolescent under 18 years of age has died in the household in the five-year period preceding the survey.

Education-

• At least 13.9% of households have a member aged 10 years or older who has not completed six years of schooling.
• At least 6.4% of households have a school-aged child not attending school up to the age at which he/she would complete class 8.

Standard of Living-

• Source of Cooking Fuel: At least 58.5% of households have dung, agricultural crops, shrubs, wood, charcoal or coal as their primary source of cooking fuel.
• No Access to Drinking water: At least 14.6% of households do not have access to improved drinking water or a safe drinking water facility that is more than a 30-minute walk from home (as a round trip). 
• Inadequate Housing: Some 45.6% of households have inadequate housing. Their floor is made of natural materials, or the roof or walls are made of rudimentary materials.

How is the data used?

• The national MPI 2021 is calculated using the household microdata collected at the unit level for the NFHS-4 that is used to derive the baseline multidimensional poverty. These baselines denote the country’s standings before the full rollout of the aforementioned government schemes.
• Further, the country’s progress would be measured using this baseline in the NFHS-5, for which the data was collected between 2019 and 2020.
• The progress of the country with respect to this baseline will be measured using the NFHS-5 data collected in 2019-20.
• The ability to provide a better depiction of poverty and inform more precise policy actions has been an incentive in every country that has developed a national MPI so far.
• Evidence has shown that people who are experiencing multiple deprivations in crucial areas of their lives, such as education, health, safety, or employment, may not be income poor and policies to reduce income poverty may not affect other deprivations.
• Public action in areas like education, infrastructure, and housing, which might only impact income in the next generation, are not well captured by traditional monetary metrics of poverty estimation, whereas a national MPI can show rapid improvements in these areas, making visible the impact of social policies and interventions more directly.
• The MPI will enable estimation of poverty not only at the level of the states but also for all the 700-plus districts across the 12 indicators, capturing simultaneous deprivations and indicator-wise contribution to poverty.
• It will facilitate the formulation of sectoral policies and targeted interventions that contribute towards ensuring that “no one is left behind”.
• The district-wise estimation of the national MPI will also ensure reaching out to the furthest behind first through focused efforts on specific indicators and dimensions.

Conclusion

• The development of the National Multidimensional Poverty Index of India is an important contribution towards instituting a public policy tool that monitors multidimensional poverty, informs evidence-based and focused interventions, thereby ensuring that no one is left behind.