COMMENTARY
the individual members of the group,
Multidimensional Poverty
as an Instrument of
Programmatic Intervention
Amitabh Kundu, P C Mohanan
Conceptual and operational
issues for constructing
multidimensional poverty indices
in India are discussed and the
possibilities of its application
for strategic interventions are
examined in this article. It argues
that questions concerning the
selection of indicators, data
sources, weightages, threshold
limits, etc, have to be addressed
through a consultative process,
keeping it above the short-term
politics of the regime.
Amitabh Kundu (akundu.jnu@gmail.com)
is professor emeritus, L J University,
Ahmedabad. P C Mohanan (pcmohanan@
rediffmail.com) is a former member of the
National Statistical Commission.
18
G
ood news has come, belatedly
though, from the NITI Aayog
that the percentage of the multi-
dimensionally poor in India has gone
down rapidly from 25% to 15%, resulting
in 135 million people exiting the poverty
trap from 2015–16 to 2019–21. Belated,
because the Oxford Poverty and Human
Development Initiative (OPHI)–United
Nations Development Programme (UNDP)
had indicated a similar decline in poverty
for India in its Global Multidimensional
Poverty Index report, released in October
2022, based on the same data set with
similar indicators and methodology
(OPHI–UNDP 2022). It had noted that
about 139 million people got out of pov-
erty and the rate of reduction in poverty
during the period was higher than that
during the preceding decade.
The multidimensional poverty index
(MPI)—computed by multiplying the
headcount ratio of the poor with the in-
tensity of deprivation of the poor—has
come down from 0.117 to 0.066 during
the five-year period as per the national
report, the corresponding figures in the
OPHI–UNDP report being 0.122 and 0.069.
Given the controversy on the poverty
figures computed based on the con-
sumption expenditure and non-availa-
bility of this data from the National
Sample Survey (NSS) for any recent year,
the sharp reduction in MPI is likely to be
a significant evidence of the performance
of the present government.
Theoretical Scepticism
There is scepticism among the econo-
mists in using the MPI in development
planning which can be traced back to
the impossibility theorem of Kenneth J
Arrow which stipulates that the ranking
of alternatives—economic or geographic
states—reflecting the collective preference
of any group, based on the rankings of
AUGUST 19, 2023
would inevitably violate basic principles
of rationality or axioms. This academic
purity of social scientists—forcing them
to be non-judgemental in many situa-
tions demanding immediate interven-
tion—has happily been questioned by
Amartya Sen and Mahbub ul-Haq as
they have ventured into ranking coun-
tries based on their levels of human de-
velopment. One can now see a number
of national and global organisations
coming out with multidimensional indi-
ces, an important one being MPI. Its ap-
plication at global, national, and even
subregional level suggests that policy
planners and administrators are willing
to shake off strict theoretical constraints
in formulating policies and programmes.
Questions have been raised about the
MPI also in the context of the subjectivities
involved in the selection of indicators,
their scaling, and assignment of weight-
ages. The suitability of the indicators in
the OHPI–UNDP report in Indian condi-
tions, even after the modifications as
proposed in the NITI Aayog (2023) re-
port, has been contentious. Achieving
consensus on these issues is a humon-
gous challenge. One must, however, note
that there have been serious questions
raised regarding income/consumption-
based poverty measures relating to the
choice of prices, basket of goods and ser-
vices, discrepancies in the data on con-
sumption expenditure from the NSS and
National Income Accounts, etc. More im-
portantly, these measures have been
criticised for not considering health, ed-
ucation, and physical assets.
Also, in the absence of consumption
expenditure data for recent years, re-
searchers and administrators have been
using other data sets with questionable
validity or have extrapolated household
expenditure using simplistic assumptions.
Understandably, the use of demographic
data that are considered more robust,
for assessing people’s vulnerabilities,
emerges as the second-best solution. It is
in this context that the usage of MPI as
an instrument of intervention gains
importance. The discussion on contex-
tualisation of the indicators or making
them more policy-linked would be endless
and come in the way of MPI becoming a
vol lViii no 33 EPW Economic & Political Weekly

tool, along with consumption expendi-
ture-based poverty measures, for policy
intervention or resource allocation. This,
in fact, can lead to throwing the baby
away with the bathwater. Given the fact
that the MPI indicators cover all the
three dimensions of human develop-
ment and the information base used has
generally been considered robust, it
makes sense to plead for its greater usage
in the policy domain.
It is a matter of some satisfaction that,
despite the criticism of this institutional
database from the highest levels in the
recent months, the NITI Aayog has chosen
to use the National Family Health
Survey-5 (NFHS-5) to compute the MPI.
It, however, does not mean that the MPI
represents the ultimate depiction of dep-
rivation. The figures must be compared
and cross-checked with a host of other
socio-economic indicators and one must
be conscious of its different implications
in different regions and for different
strategic interventions. Hopefully, re-
searchers within and outside the gov-
ernment will analyse the trends and
patterns of the MPI emerging from the
NITI Aayog report in the coming days,
focusing on their usability in the policy
domain. This indeed can be a useful tool
to analyse the pattern of backwardness
and deprivation at the district level, con-
sidering it alongside other indicators,
including those of income/consumption
poverty, if available.
Methodological and Operational
Issues for Policymakers
A few methodological issues are, how-
ever, important at this point for the con-
sideration of policymakers at the global
and the national level. It is surprising
that the methodology section in the NITI
Aayog report does not mention with suf-
ficient clarity that although the NFHS-5
data for many dimensions are at the in-
dividual level, it is the household which
gets identified as multidimensionally poor.
Non-attendance of a child in schools
does not simply imply deprivation for
the child but is emblematic of greater
“deprivation being experienced by the
household that acts as an impediment to
the education of the child. Furthermore,
because the child is not attending school,
Economic & Political Weekly EPW AUGUST 19, 2023
the household members will be deprived
of the positive externalities that arise
from having a formally educated child”
(NITI Aayog 2023). Similarly, the death of
a child, women not having antenatal
care for delivery, or their being malnour-
ished are proxy indicators for the health
of the entire household. The question is:
How should we determine the depriva-
tion score for the household when such
proxies are not available? Should we, for
example, assume that in a family, which
has clear manifestation of all-round dep-
rivation based on available information
but had no child born in the last five
years, the mother would have received
the desired antenatal care, if a child was
born? Many of the indicators, particularly
covering the aspects of health and educa-
tion of women and children, would be
applicable to only a segment of the total
households. Would it then be right to as-
sume that a household is non-deprived
in an indicator when it is non-applicable
or information on this is not available?
Would it not be more appropriate to assign
the average derivation score of the house-
hold, computed using information on
available indicators, to the rest of the in-
dicators? Interestingly, both the global
and national reports consider the house-
holds to be non-deprived in such cases,
thereby underestimating poverty.
Moreover, a household is considered
multidimensionally poor (assigned a score
0, if non-deprived and 1, if deprived, for
each indicator) only if its weighted sum
of deprivation scores is more than a
third of the total possible score. The
weights assigned to the 10 indicators,
covering the dimensions of health, edu-
cation, and physical well-being in the
OPHI–UNDP report (12, in the case of the
NITI Aayog report), are such that these
add up to 1. The maximum score possible
when a household is deprived in all dimen-
sions should then be 1, obtained through
weighted aggregation of its deprivation
scores. Is that really the case at the
ground level? Many of the indicators,
such as those related to children and
women, in specific age groups, would not
be applicable to households that do not
have them. Migrant households that do
not have cooking arrangements would
not use primary sources of fuel.
vol lViii no 33
COMMENTARY
The elaboration of the methodology
in the NITI Aayog report unfortunately
creates some confusion which was
avoidable. It is important to state that
the unit of measurement adopted for
computation is the household, although
the person-specific information of the
NFHS-5 is used for this purpose in many
cases, as stated in Section 2.8 of the
report. Section 2.4, however, gives a
different impression while discussing
the identification of the poor at the
individual level and aggregating their
deprivation scores, as reflected in the
following paragraph:
Each individual (and in extension everyone
in the same household), is first marked as
deprived (denoted by 1) or not deprived (de-
noted by 0) in each of the indicators based
on their achievement (or lack thereof) in the
respective first order cutoffs for each indica-
tor. (NITI Aayog 2023: 13)
Section 2.4 elaborates this further by
giving an example of two individuals, A
and B. A is an 18-year-old individual who
has three years of schooling and hence
does not meet the first order cut-off
(six years of schooling for at least one
eligible person).
Therefore, A is considered deprived in the
indicator for years of schooling and assigned
a score of 1 …. Conversely, individual B has 7
years of schooling and is 12 years old, there-
fore, B is assigned a score of 0 for the indicator
on years of schooling (NITI Aayog 2023: 13).
Unfortunately, it fails to mention that
this classification would not be valid,
if both belong to the same household,
since in that case, even A, the deprived
child, would be considered non-deprived.
The global methodology states it clearly
that all individuals within a household
get the same score on every indicator,
which is what has possibly been adopted
in the NITI Aayog report. One can then
define the poverty headcount as the pro-
portion of the population that lives in the
poor households to the total population
in a country or region.
Selection of Indicators
The most important issue is the selection
of the indicators by the NITI Aayog. It
may be noted that this report has two
additional indicators and the high scores
in these two due to the current policy
thrust on them reduce the overall pov-
erty in the country. The argument has
19
COMMENTARY
been that these additional indicators are
not at par with other indicators in the
context of the physical well-being of the
poor. The indicators pertain to maternal
health and bank account. The number of
households reporting deprivation in ma-
ternal health is not very large since the
households that had a childbirth in the
last five years would be small. The other
households would automatically be con-
sidered as non-deprived. The households
with bank accounts are an indicator
where the deprivation would be much
less. The holding of a bank account is not
strongly correlated with economic well-
being, particularly when a large number
of these accounts are non-operational. It
would be important to have some dis-
cussion on whether these two can be
considered at par with other indicators
of physical well-being in the MPI.
Both the national and global reports
are making big news for announcing sig-
nificant reductions in poverty. It may,
however, be argued that the design of
the MPI is such that the possibility of an
increase over time is limited. The values
of the indicators pertaining to the stand-
ard of living, assessed through access to
drinking water, cooking fuel, bank ac-
counts, housing, electricity, etc, are likely
to only go up over time, unlike income
or consumption expenditure-based pov-
erty indicators. A household having
these would generally not let it go. A
similar trend is expected in the indica-
tors of education as well. Only the indi-
cators on nutrition or child/adolescent
mortality can show up short-term varia-
tions. It would, therefore, be normal to
see people being lifted out of poverty
rather than falling into it. One can, how-
ever, argue that a household which has
good education and health, besides access
to the basic amenities and assets, would
not suddenly become vulnerable simply
because of a fall in its current income.
A slow movement in and out of poverty
can, therefore, be considered as a better
reflection of the ground reality. Delinking
vulnerability or deprivation from poverty
would be dangerous. Any measure of
poverty which does not capture depri-
vation is an empty statistical box. The
non-availability of information at shorter
intervals would, however, reduce the
20
applicability of MPI in monitoring devel- Drèze that a household, deprived in any
opment or welfare programmes. single indicator, must be considered poor,
Interestingly, at the district level, one one can argue that a certain specific
observes the MPI going up for a very few indicator may be considered critical for
districts between 2019 and 2021. This a decent human living and any deficit in
can happen if the districts had a huge that cannot be compensated by other in-
inflow of migrants. In three districts of dicators. This criticality can be built into
Delhi, for example, the MPI values have the MPI so that those deprived in terms
gone up. In most such cases, the primary of this indicator are counted as poor,
cause of change in the wrong direction even if their deprivation scores are much
could be sampling variations. Survey- below the threshold level in other indi-
based indicators are unlikely to include cators. The emphasis on nutritional defi-
the migrant population (living at the ciency in both the national and global
worksite, camps or are homeless) and reports suggests that this could be a pos-
more importantly, there has been a de- sible indicator. This would then address
cline in migration to Delhi from other the criticism that the MPI does not
states in the recent decades. exhibit a short-term variation in well-
A real concern regarding the survey being, unlike consumption poverty.
estimates at the district level is their The greater use of the MPI in the policy
statistical robustness. The NFHS-5 cov- domain for certain strategic interventions
ered around six lakh households cover- and resource allocation at the state- and
ing 707 districts. Though the sample size district-level appears to be desirable. A
is much larger than other national-level strong political consensus is required for
surveys like the NSS, all modules are not this purpose. There would, however, be
canvassed in every household but only several operational issues regarding the
to a subsample of households. Incidenc- change of indicators, their data sources
es like childbirth or child/adolescent and weightages that may crop up from
deaths are somewhat rare and estimates time to time. These would have to be ad-
based on information from a small num- dressed through a consultative process.
ber of households would not have statis- The success will depend on keeping this
tical robustness. The poverty estimates above the short-term politics in a regime.
based on these in the case of many dis-
tricts are likely to have a high standard References
error and hence low reliability and Drèze, Jean (2022): “Recent Claims of Spectacular
cross-sectional comparability. Poverty Decline under the Modi Government
Miss the Plot,” Indian Express, https://indian-
express.com/article/opinion/columns/pover-
Concluding Remarks ty-decline-modi-government-8286210/.
The final point is about censoring of pov- NITI Aayog (2023): “National Multidimensional
Poverty Index: A Progress Review 2023,” htt-
erty in the methodology. Scholars like ps://niti.gov.in/sites/default/files/2023-07/
Jean Drèze (2022) have argued that cen- National-Multidimentional-Poverty-Index-
2023-Final-17th-July.pdf.
soring—excluding the people with the
OHPI–UNDP (2022): “Global Multidimensional
deprivation score of less than 33% of the Poverty Index 2022: Unpacking Deprivation
maximum possible value—results in an Bundles to Reduce Multidimensional Poverty,”
https://hdr.undp.org/system/files/docu-
underestimation of poverty. Instead of ments/hdp-document/2022mpireportenpdf.
taking the extreme implicit position of pdf.
EPW Index
An author-title index for EPW has been prepared for the years from 1968 to 2012.
The PDFs of the Index have been uploaded, year-wise, on the EPW website. Visitors
can download the Index for all the years from the site. (The Index for a few years is
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AUGUST 19, 2023 vol lViii no 33 EPW Economic & Political Weekly