The politics and economics of measuring multidimensional poverty

Attempts to operationalise the concept of poverty in independent India can be traced back to the early sixties, when poverty indices figured in the corridors of decision-making. These, however, were fully or largely anchored in calorie deprivation.

Understandably, there was strong criticism for not accounting for essential non-food items like clothing, housing and other assets explicitly in the computation.

More importantly, casualness in treating aspects of education, health and other basic amenities like water, sanitation, electricity etc. came under attack since there was a systematic withdrawal of public agencies in their provisioning.

The approach also faced problems due to judgemental factors involved in determining the poverty basket of goods and services for the poor, given the diverse food habits in the country, choosing their appropriate prices, updating the poverty line and the mismatch between consumer expenditure data from the NSS and national income accounts.

Understandably, there was a chorus from the different branches of social sciences, administrators and, more specifically, grassroot level activists who admonished the experts, largely economists, for not recognising the multidimensional aspect of poverty in their methodology.

Now that a process for measuring poverty covering select dimensions has gotten institutionalised at a global level and several countries and regions, India included, have come forward to undertake this with some modifications of the global methodology, there has been no enthusiastic support, while many have been strongly critical of this approach, debunking its usability in policy-making. 

Apprehensions have been voiced that the construction of MultiDimensional Poverty Index (MPI) is a part of the design to dump the good-old methodology of estimating poverty based on consumption expenditure or income.

Scholars have argued that the substantial fall in MPI in India during the second half of the last decade is at least partly due to tweaking of the data or methodology of measurement, like inclusion of indicators on banking and maternity care, where the government has recently launched missions, but their impacts are not very definitive.

It is extremely easy to find faults with every artifact that supports the MPI. Almost all the indicators identified for the national MPI have been criticised as inadequate or inappropriate with plenty of empirical evidence.

Various alternatives in the numerator and denominator have been proposed for them. Indeed, different countries have modified the framework and methodology differently by suitably altering the indicators, their weight and including new indicators.

Also, for several indicators, there are multiple sources and any choice is fraught with subjectivity. Any researcher can come up with an alternate framework and composition system and there is no way to establish the superiority of the global methodology or that adopted by NITI over the others.

Two points may, however, be made.

The identified indicators, both in the global and national reports, are built around health, education and basic assets or material well-being that are the pillars in the UNDP’s Human Development Report and have large acceptability. No wonder that the trends and patterns emerging from these reports are similar.

Availability of MPI values and their changes at regular intervals from the global report to benchmarking the national pattern is an additional advantage. It is true that the design of MPI is such that the possibility of an increase in it over time is limited.

Indicators pertaining to standard of living, assessed through the access to drinking water, cooking fuel, bank accounts, housing, electricity etc. are likely to only go up over time, unlike income or consumption expenditure-based poverty measure. Only the indicators on nutrition or child/adolescent mortality can show short-term variations.

Scholars like Pranob Sen (Quoted by Dipak Mondal, The New Indian Express August 5, 2023) and Prabhat Patnaik (The Poverty of UN Poverty Estimates, Deshabhimani July 31, 2023) would like to consider MPI as an articulation of modernisation or deprivation and not poverty.

Delinking the denial of access to modern amenities from vulnerability/deprivation and poverty would be dangerous. Also, a measure of poverty that does not capture deprivation is an empty statistical box. It started by focusing on nutritional deprivation and expanded to cover other dimensions that are desirable.

No one can question the relevance of consumption-based poverty or other deprivation indicators in the policy domain (Rangarajan C and Mahendra Dev, The Hindu, August 16, 2023). Any deliberate attempt to not conduct the Consumption Expenditure Survey or postpone it must be strongly resisted.

One serious point noted by Santosh Malhotra (Deccan Herald, August 13, 2023) is regarding not covering the total population under 70 years of age in the nutrition indicator by the NITI, making a departure from the global report.

This can be explained in terms of NFHS not covering the children in the age group of 6 to 14 years and men and women above 55 and 50 years respectively, due to its thrust on reproductive health.

It would be important to bring people in these excluded age groups within the framework of MPI. He, however, questions the figure of 135 million people exiting poverty during 2015-20. He applies the poverty ratios for different years to the estimated population for the corresponding years and argues that actual poverty reduction has been less.

This is based on an erroneous assumption that the number of poor would not change during the intervening period, despite population growth and business as usual scenario. It would, therefore, be appropriate to compute the figure by applying the two ratios to the terminal year population.

This assumes that people have been lifted out of poverty from among those who were in poverty in 2015-16, as also those who could have fallen or fell in poverty in the subsequent five-year period.

Importantly, the global report computes the number of people lifted out of poverty by this method and places absolute poverty reduction in India as 139 million.

There is a case for greater use of the MPI in the policy domain for strategic interventions. A strong political consensus, however, is required for this. Operational issues regarding the change of indicators, their data sources, weights etc. may crop up from time to time. These would have to be addressed through a consultative process. Success will depend on keeping this above the short-term politics in a regime.

(Amitabh Kundu is Professor Emeritus at LJ University, Ahmedabad, and
Mehebub Rahaman is an independent researcher on child poverty and nutrition)