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National Multidimensional Poverty Index (MPI)

GS II >> Social Justice >> Poverty

Context: The National Multidimensional Poverty Index (MPI) report for 2023 released by NITI AAYOG offers comprehensive estimates of multidimensional poverty, covering 36 States & Union Territories and 707 administrative districts.

• The data is derived from the 5th round of the National Family Health Survey (NFHS-5) conducted between 2019-21.

Key highlights of MPI report 2023:

• Significant reduction in Multidimensional Poverty: 135 million individuals escaped multidimensional poverty between 2015-16 and 2019-21. India’s national MPI value nearly halved, decreasing from 24.85% to 14.96%.
• Positive impact of government interventions: Improved indicators suggest the increasing visibility of government interventions. Progress in nutrition, years of schooling, sanitation, and cooking fuel contributed to reducing the MPI value.
• Intensity of poverty improvement: The Intensity of Poverty, measuring average deprivation, improved from 47.14% to 44.39%. Nutrition, schooling, sanitation, and cooking fuel improvements played a significant role.
• Disparities Across Rural and Urban Areas: Rural areas experienced a faster reduction in MPI value compared to urban areas. Proportion of multidimensional poor in rural areas: 19.28%, urban areas: 5.27%.
• State-wise Progress: Uttar Pradesh, Bihar, Madhya Pradesh, Odisha, and Rajasthan recorded the steepest decline in the number of MPI poor.
• Fastest Absolute Reduction in MPI: Bihar showed the fastest reduction in MPI value in absolute terms. Uttar Pradesh had the most significant number of people escaping multidimensional poverty (3.43 crore).
• State and UT Performance: States and UTs displayed notable improvements in MPI scores from 2015-16 to 2019-21.
• District-level Analysis: Disaggregated estimates at the district level showed the most rapid reduction in MPI in districts of Madhya Pradesh, Gujarat, Uttar Pradesh, and Rajasthan.

National Multidimensional Poverty Index (National MPI):

• Initiative by NITI Aayog: NITI Aayog, serving as the nodal agency, takes responsibility for constructing an indigenized index to monitor States and Union Territories (UTs) in addressing multidimensional poverty.
• MPI Coordination Committee (MPICC): NITI Aayog establishes the MPICC, an inter-ministerial committee, including relevant ministries and departments.
• The committee spans areas such as health, education, nutrition, rural development, drinking water, sanitation, electricity, and urban development.
• Technical rigor and robustness: MPICC collaborates with survey implementers, including the International Institute for Population Sciences (IIPS) of the Ministry of Health and Family Welfare.
• Technical partners, such as OPHI and UNDP, contribute expertise, ensuring the technical rigor and robustness of the national MPI.
• Cross-sectoral perspectives: The composition of MPICC, enriched by experts from the Ministry of Statistics and Programme Implementation (MoSPI), brings cross-sectoral perspectives.

Dimensions of the National MPI:

• Health dimension: Includes specific health-related indicators.
• Education dimension: Comprises indicators related to educational well-being.
• Standard of Living dimension: Encompasses indicators reflecting the living conditions of households.
• Sub-indices of the National MPI:
• Headcount Ratio (H): Measures how many individuals in the population are considered multidimensionally poor. Proportion of multidimensionally poor individuals divided by the total population.
• Intensity of Poverty (A): Assesses the by multidimensionally poor individuals. Sum of the weighted deprivation scores of all poor individuals divided by the total number of poor individuals.
• Purpose of the Sub-indices: Provides information on the percentage of the population living in multidimensional poverty. It offers insights into the depth or severity of poverty experienced by individuals.

Challenges in India:

• Data reliability and source concerns: Reliance on National Family Health Survey (NFHS) 4 and 5 data for MPI estimation raises questions about reliability, especially considering the controversies surrounding NFHS 5, which was blocked for alleged unreliability.
• Impact of COVID-19 pandemic: The MPI estimates do not fully account for the severe economic impact of the COVID-19 pandemic in 2020-21, including loss of livelihoods, reverse migration, and disruptions in health and education services.
• GDP decline and economic shock: The MPI reduction contrasts with a significant decline in GDP growth from 8% in 2015-16 to 3.78% in 2019-20, and a slump of -6.60% in 2020-21.
• Limited coverage of variables: Aggregation with uniform weighting in MPI overlooks nuances. Factors like criminality among State MPs, which correlates with higher MPI, point to the need for a more comprehensive set of variables.
• Rural-Urban dynamics: While urbanization is associated with higher MPI, the impact is less than proportionate, potentially due to reverse migration during the pandemic. Understanding rural-urban dynamics is crucial for accurate poverty assessments.
• Education and health expenditure decline: State-level decline in educational expenditure raises concerns as education spending correlates with lower MPI. Health expenditure, while rising, may not have met the demands of the pandemic.
• Criminal involvement in governance: The rising share of Members of Parliament with criminal backgrounds, associated with higher MPI, indicates governance challenges. Corrupt practices diverting funds from social safety nets may hinder poverty alleviation efforts.

Government measures:

• Poshan Abhiyan: Reduce deprivations in health, particularly addressing issues related to nutrition.
• Anaemia Mukt Bharat: Combat and reduce instances of anaemia, contributing to improved health outcomes.
• Swachh Bharat Mission (SBM): Enhance sanitation facilities nationwide, resulting in a swift 21.8 percentage points improvement in sanitation deprivations.
• Jal Jeevan Mission (JJM): Improve access to clean drinking water, contributing to the overall reduction in multidimensional poverty.
• Pradhan Mantri Ujjwala Yojana (PMUY): Provide subsidized cooking fuel to households, leading to a significant 14.6 percentage points improvement in cooking fuel deprivations.
• Saubhagya: Ensure electrification of households, contributing to low deprivation rates in electricity access.
• Pradhan Mantri Jan Dhan Yojana (PMJDY): Promote financial inclusion by increasing access to bank accounts, aligning with the broader goal of poverty reduction and the SDG target.

Way forward:

• Significant decline: India witnessed a substantial 9.89 percentage points reduction in multidimensional poverty from 2015-16 to 2019-21.
• Rural impact: Rural areas experienced the fastest decline, from 32.59% to 19.28%, contributing significantly to overall poverty reduction.
• State-wise progress: Uttar Pradesh recorded the highest decline, with 3.43 crore people escaping poverty, followed by Bihar and Madhya Pradesh.
• Sectoral contributors: Improvements in nutrition, schooling, sanitation, and cooking fuel played pivotal roles in driving down poverty levels.
• SDG target achievement: India is on track to achieve SDG Target 1.2, aiming to reduce multidimensional poverty by at least half, well before the 2030 deadline.