Multidimensional Poverty Index Reduction Under the NDA is Flawed

Why in News?

• Critics say that the NDA's initiatives might not have adequately addressed the multidimensional aspects of poverty,also the MPI may not accurately reflect the ground reality of deprivation despite reported successes.
• It is important to understand a deeper examination of the methodologies and criteria used in measuring multidimensional poverty and whether these align with the nuanced challenges faced by the population.

Multidimensional Poverty Index (MPI)

• The Multidimensional Poverty Index (MPI) is a measure of poverty that considers multiple dimensions of well-being, beyond just income or monetary measures.
• It was developed by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).
• The MPI provides a more comprehensive understanding of poverty by considering various factors that contribute to deprivation.
• The MPI identifies individuals or households as multidimensionally poor if they are deprived in multiple indicators across different dimensions of well-being.
• These dimensions typically include health, education, and standard of living.

Understanding The Concept of Capability

• It was introduced by Nobel Laureate Amartya Sen which offers a nuanced and comprehensive perspective on well-being.
  • Sen's approach emphasises capabilities, defined as the abilities to engage in various activities, within a context of freedom and fairness.
  • In contrast, functioning represents the actual achievements resulting from these capabilities.
• Sen's framework challenges simplistic notions of well-being tied solely to material affluence.
  • For instance, the ability to lead a healthy life, a capability, does not inherently correlate with wealth, as it could lead to conditions like obesity and susceptibility to non-communicable diseases.
  • On the other hand, achieving health, a functioning, involves access to a nourishing diet and engagement in physical exercise.
• Despite the richness of Sen's capability approach, he has been cautious about aggregating these diverse capabilities into a single measure of overall well-being.
  • According to Sen, each capability holds intrinsic importance, and their individual significance should not be overshadowed by a consolidated measure.

The Current Situation of MPI

• Unfortunately, the United Nations Development Programme (UNDP) opted for using capabilities to create a comprehensive measure of human development, assigning uniform weights to the three components: health, education, and standard of living, along with their sub-indices.
• Following this methodology, NITI Aayog and the UNDP released recently a National Multidimensional Poverty Index/MPI: A Progress Review 2023, also replicated in the UNDP Report, Making Our Future: New Directions for Human Development in Asia and the Pacific, released on November 7, 2023.
• Hence, these reports suffer from the same flaws as the UNDP human development index: aggregation with uniform weighting. But, the MPI story is further distorted.
• Astonishingly, the MPI 2023 estimates show a near-halving of India’s national MPI value and a decline from 24.85% to 14.96% between 2015-16 and 2019-21. This reduction of 9.89 percentage points implies that about 135.5 million people have exited poverty between 2015-16 and 2019-21.
• Besides, the intensity of poverty, which measures the average deprivation among the people living in multidimensional poverty, reduced from 47.14% to 44.39%.

Why the Numbers of MPI Reduction Under the Current Government is Flawed

• Misleading and Ill-informed
  • The MPI relies upon National Family Health Survey (NFHS) 4 and 5, which are not detailed enough for its estimation.
  • Moreover, NFHS 5 is blocked as its estimate of open defecation contradicted exaggerated official claim of its complete elimination.
  • Ideally, NFHS 4 and 5 should have been combined with the 75th Round of the NSS on household consumption expenditure and this was abandoned too, as leaked poverty estimates indicated a rise.
  • What casts further doubts is the havoc caused by the COVID-19 pandemic in 2020-21.
  • Millions lost their livelihoods, thousands died in reverse migration and from a lack of access to vaccines and medical care.
  • In fact, because of this epidemic, there was a huge economic shock from which the Indian economy has been struggling to recover.
  • For example, GDP growth has declined from 8% in 2015-16 to 3.78 % in 2019-20 and slumped -6.60 in 2020-21,as also per capita income.
• More Focus on Covariates
  • If a comparison is drawn between elasticities of MPI with respect to each covariate (i.e., proportionate change in MPI due to a proportionate change in a covariate such as State per capita income), the largest reduction in MPI is due to higher State per capita income.
  • But since income decreased drastically, MPI spiked.
  • The next in order of importance is urban location. A 1% increase in urban location results in a 0.90% increase in MPI. 
  • This is not surprising as rural-urban migration is associated with growth of slums and sub-human living conditions.
  • However, reverse migration during COVID-19 may explain why the effect on MPI is less than proportionate.
  • Both health care and education expenditure are associated with lower MPI — the elasticity of the latter is higher (in absolute value), implying that a 1% increase in the latter reduces MPI more than the same increase in the former.
• Reduction Between 2015 and 2019-21 is Considerably Lower than the Official Estimate.
  • According to some research, the reduction between 2015 and 2019-21 is considerably lower than the official estimate: 4.7 percentage points compared with 9.89 percentage points.
  • The selective review of MPI estimates shows that poverty rose in India’s most populous State, Uttar Pradesh, by over seven percentage points.
  • Of the States that went to the elections in November (Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan and Telangana), the MPI fell in Chhattisgarh (by over six percentage points), in Rajasthan (by two percentage points) and, most strikingly, in Madhya Pradesh (by about eight percentage points).

Conclusion

• The Multidimensional Poverty Index (MPI) not only amplifies the success of the current government in combating deprivation but also, perhaps more critically, obscures conventional measures of it which may potentially reveal a conflicting narrative on poverty.
• Some research challenges the effectiveness of the National Democratic Alliance (NDA) in combatting deprivation by suggesting that the Multidimensional Poverty Index (MPI) is flawed and exaggerates the success of their efforts.

Q1) What is OPHI (Oxford Poverty and Human Development Initiative)? 

The Oxford Poverty and Human Development Initiative (OPHI) is an economic research and policy centre within the Oxford Department of International Development at the University of Oxford. Established in 2007, the centre is led by Sabina Alkire. OPHI aims to build and advance a more systematic methodological and economic framework for reducing multidimensional poverty, grounded in people’s experiences and values. 

Q2) What is UNDP (United Nations Development Programme?

As the United Nations lead agency on international development, UNDP works in 170 countries and territories to eradicate poverty and reduce inequality. UNDP helps countries to develop policies, leadership skills, partnering abilities, institutional capabilities, and to build resilience to achieve the Sustainable Development Goals. UNDP’s work is concentrated in three focus areas; sustainable development, democratic governance and peace building, and climate and disaster resilience.

Source: The Hindu