National Multidimensional Poverty Index: A Progress Review 2023

Introduction

Poverty is a complex and multifaceted challenge that affects millions of people worldwide. Addressing poverty in all its forms and dimensions is a critical goal in the pursuit of sustainable development.

In 2010, the Multidimensional Poverty Index (MPI), developed by Sabina Alkire and James Foster, was adopted by the United Nations Development Programme (UNDP) in their Human Development Report. It captures overlapping deprivations in health, education and living standards (UNDP, 2010).

NITI Aayog in collaboration with United Nations Development Programme (UNDP), and Oxford Poverty and Human Development Initiative (OPHI) developed the National Multidimensional Poverty Index (MPI) that offers a multi-dimensional perspective on poverty. It complements income poverty measurements because it measures and compares deprivations directly. The National MPI is a robust, and nuanced public policy tool that can be used monitor multidimensional poverty at the national, state, and district levels in India.

India’s National MPI is a contribution towards measuring progress for target 1.2 of the Sustainable Development Goals (SDGs) that aims to reduce “at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions” by 2030.

The National Multidimensional Poverty Index: A Progress Review 2023 provides multidimensional poverty estimates for India’s 36 States & Union Territories, along with 707 administrative districts across 12 indicators of the national MPI. These estimates have been computed using data from the 5th round of the NFHS (NFHS-5) conducted in 2019-21. It also presents the changes in multidimensional poverty between the survey periods of NFHS-4 (2015-16) and NFHS-5 (2019-21). It not only tells us how many are poor, that is the headcount ratio, but also gives us insights into how poor are the poor, that is the intensity of poverty, by following a holistic approach to poverty measurement.

Methodology  


The dual-cutoff approach of the Alkire-Foster (AF) methodology – the one used in the Global MPI Report – was considered suitable for the national context. MPI captures broad qualitative aspects of people’s life across 3 dimensions – Health, Education, and Standard of living. The national MPI largely follows the global methodology. India’s national MPI retained 10 indicators from the Global MPI and has added 2 new indicators, namely Maternal Health (in the dimension of Health) and Bank Account (in the dimension of Standard of Living).
 

Computing the MPI:
 

  1. Building a deprivation profile for each household
    - Each household is assigned a deprivation score based on its deprivation in each of the 12 indicators.
  2. Identifying the poor
    - If the deprivation score of a household is above 33%, they are multidimensionally poor.
  3. Indices of MPI:

i) Headcount ratio (H): How many are poor?
Proportion of multidimensionally poor in the population, which is arrived at by dividing number of multidimensionally poor persons by total population.

ii) Intensity of poverty (A):  How poor are the poor?
Average proportion of deprivations which is experienced by multidimensionally poor individuals. To compute intensity, the weighted deprivation scores of all poor people are summed and then divided by the total number of poor people.

MPI is arrived at by multiplying headcount ratio (H) and intensity of poverty (A).


MPI = H x A

Example: 
 

Therefore, the MPI as a measure of multiple dimensions of poverty complements monetary poverty statistics, enables close monitoring of individual indicators and dimensions which overlap with several SDGs, allows for disaggregation at the levels of States and districts to better inform policy focus, and engenders integrated cross-sectoral policy actions.


Key Results :

India Snapshot: Overview 

YearMPI Headcount Ratio (H)Intensity of Poverty (A)
NFHS-5 (2019-21)0.06614.96%44.39%
NFHS-4 (2015-16)0.11724.85%47.14%

 

  • The NFHS-5 (2019-21) data show that 14.96% of the India’s population are multidimensionally poor compared to 24.85% of the population that was multidimensionally poor based on the 2015-16 (NFHS-4), resulting in 135mn individuals escaping poverty during the 5-year period.  This highlights that India is on track to achieve SDG Target 1.2 that aims to reduce poverty in all its forms by at least half by 2030.
  • The Intensity of poverty, which measures average deprivation among people living in multidimensional poverty, reduced from ~47.14% to 44.39% during the survey period 2015-16 (NFHS-4) and 2019-21 (NFHS-5). 
  • The MPI value, which is the share of the population that is multidimensionally poor adjusted by the intensity of the deprivations, nearly halved – fell from 0.117 to 0.066 – during the survey period 2015-16 (NFHS-4) and 2019-21 (NFHS-5).

Multidimensional Poverty in India's Rural and Urban Areas

YearRuralUrban
 MPIHeadcount Ratio (H)Intensity of Poverty (A)MPI Headcount Ratio (H) Intensity of Poverty (A)
NFHS-5 (2019-21)0.08519.28%44.55%0.0235.27%43.10%
NFHS-4 (2015-16)0.15432.59%47.38%0.0398.65%45.27%

 

  • While disparities in multidimensional poverty still exist between rural and urban areas, with the proportion of multidimensional poor in 2021 being 19.28% in rural areas compared to 5.27% in urban areas, the reduction in the MPI value has been pro-poor in absolute terms. 

  • The rural areas saw the fastest reduction in the MPI value, with the incidence of poverty  falling from 32.59% to 19.28% compared to a reduction in the incidence of poverty from 8.65% to 5.27% in urban areas during the 2015-16 and 2019-21 period.

    Indicator wise comparison of deprivations 

  • The graph below displays the percentage of India's population experiencing deprivation in various indicators. All 12 indicators across the three dimensions - Health, Education, and Standard of living - experienced statistically significant reductions over the two time periods.
  • The most notable reductions were observed in the following indicators: Sanitation (reduction by 21.8% points) and cooking fuel (reduction by 14.6% points) during the period from 2015-16 to 2019-21. These positive changes highlight the success of targeted policies and interventions aimed at addressing specific challenges in health, education, and living standards in India. 

     
 
Headcount Ratio

The graph below illustrates the proportion of population living in multidimensional poverty in each state and UT during two different time periods. It highlights that Bihar, with 33.76%, followed by Jharkhand with 28.81%, are the states with the highest proportion of population experiencing multidimensional poverty.
 

Additionally, the subsequent graph highlights the percentage point change in the incidence of poverty between 2015-16 and 2019-21. Notably, Bihar (reduction by 18.13 % points) experienced the most substantial decline in the incidence of poverty between the two time periods, followed by Madhya Pradesh (reduction by 15.94 % points) and Uttar Pradesh (reduction by 14.75 % points). 

Bihar, the state with the highest MPI value in NFHS-4 (2015-16), saw the fastest reduction in MPI value in absolute terms. The MPI value fell from 0.265 in NFHS-4 (2015-16) to 0.160 in NFHS-5 (2019-21). The proportion of multidimensional poor reduced from 51.89% to 33.76% during the same period. The next fastest reduction in the MPI value was seen in Madhya Pradesh and Uttar Pradesh. The proportion of multidimensional poor in Madhya Pradesh and Uttar Pradesh in NFHS-5 (2019-21) are 20.63% and 22.93% respectively.

District-level insights
 

The disaggregation of national Multidimensional Poverty Index (MPI) estimates at the district level provides valuable and detailed information that can facilitate targeted interventions and informed actions to alleviate poverty effectively. By examining the MPI estimates at the district level, policymakers, governments, and organizations can gain a deeper understanding of the specific challenges and deprivations faced by different regions within the country and states.

Appendix:


Definitions of Indicators in India’s National MPI:

  1. Nutrition: A household is considered deprived if any child between the ages of 0 to 59 months, or woman between the ages of 15 to 49 years, or man between the ages of 15 to 54 years -for whom nutritional information is available - is found to be undernourished.
  2. Child-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.
  3. Maternal Health: A household is deprived if any woman in the household who has given birth in the 5 years preceding the survey has not received at least 4 antenatal care visits for the most recent birth or has not received assistance from trained skilled medical personnel during the most recent childbirth.
  4. Years of Schooling: A household is deprived if not even one member of the household aged 10 years or older has completed six years of schooling.
  5. School attendance: A household is deprived if any school-aged child is not attending school up to the age at which he/she would complete class
  6. Cooking Fuel: A household is deprived if a household cooks with dung, agricultural crops, shrubs, wood, charcoal, or coal.
  7. Sanitation: A household is deprived if the household has unimproved or no sanitation facility or it is improved but shared with other households.
  8. Drinking Water: A household is deprived if the household does not have access to improved drinking water or safe drinking water is at least a 30-minute walk from home (as a round trip).
  9. Housing: A household is deprived if the household has inadequate housing: the floor is made of natural materials, or the roof or wall are made of rudimentary materials.
  10. Electricity: A household is deprived if the household has no electricity.
  11. Assets: A household is deprived if the household does not own more than one of these assets: radio, TV, telephone, computer, animal cart, bicycle, motorbike, or refrigerator; and does not own a car or truck.
  12. Bank Accounts: A household is deprived if no household member has a bank account or a post office account.

 

National Multidimensional Poverty Index- A Progress Review 2023

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