Concept of poverty and critiques
UNDP seized upon capabilities to construct an overall measure of human development with uniform weights of the three components:
Health,
Education
Standard of living and their sub-indices.
NITI Aayog and the UNDP released recently a National Multidimensional Poverty Index/MPI,
MPI is a Progress Review of 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 .
These reports suffer from the same flaws as the UNDP human development index: aggregation with uniform weighting.
But, the MPI story is further distorted, as elaborated on below.
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.
The intensity of poverty, which measures the average deprivation among the people living in
multidimensional poverty, reduced from 47.14% to 44.39%.
But these estimates — especially the rapid reductions in MPI — cannot be taken at face value for various reasons.
The Rapid reduction in MPI , cannot be taken at face value
These are misleading and ill-informed.
First, the MPI relies upon National Family Health Survey (NFHS) 4 and 5, which are not detailed enough for its estimation.
NFHS 5 is blocked as its estimate of open defecation contradicted exaggerated official claim of its complete elimination.
Intriguingly, while the survey was blocked for its alleged unreliability, NITI Aayog and the UNDP had no qualms about using it.
NFHS 4 and 5 should have been combined with the 75th Round of the NSS on household consumption expenditure.
Unfortunately, this was abandoned too, as leaked poverty estimates indicated a rise.
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.
As a consequence of this epidemic, there was a huge economic shock from which the Indian economy has been struggling to recover.
To illustrate, 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.
Not just bare subsistence turned into a daunting challenge for millions but, equally seriously, public funding for maintenance and expansion of health and education and social safety nets suffered an irreparable blow.
The methodology used in the National MPI to measure poverty reduction in India
Our recent analysis focuses on covariates of the MPI that include per capita state income.
Its square, share of criminals among State MPs, share of urban population, and health and education expenditure and unobserved state fixed effects.
If we compare elasticities of MPI with respect to each covariate the largest reduction in MPI is due to higher State per capita income.
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.
Reverse migration during COVID-19 may explain why the effect on MPI is less than proportionate.
As State-level estimates suggest a decline in educational expenditure, a rise in MPI is likely.
If the share of Members of Parliament with criminal cases in total State MPs exceeded 20%, the higher was the MPI.
Their rising share,24% of the MPs in Lok Sabha election in 2004 had a criminal background, it rose to 30% in the 2009 general election, 34% in the 2014 election, and 43% in the 2019 election.
If we go by our estimates of MPI, the reduction between 2015 and 2019-21 is considerably lower than the official estimate: 4.7 percentage points compared with 9.89 percentage points.
Our selective review of MPI estimates shows that poverty rose in India’s most populous State, Uttar Pradesh, by over seven percentage points.
In conclusion, not only does the MPI exaggerate the NDA’s success in fighting deprivation but also perhaps more seriously obfuscates conventional measures of it which may unravel a contradictory story of poverty.
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