Multidimensional Poverty

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Context (IE): In the Interim Budget speech, Finance Minister said 25 crore Indians had been pulled out of multi-dimensional poverty over the past decade.

Multidimensional Poverty Index (Global MPI)

Global MPI is a measure of multidimensional poverty covering 107 developing countries.
It was first developed in 2010 by Oxford Poverty and Human Development Initiative (OPHI) and United Nations Development Programme (UNDP) for UNDP’s Human Development Reports.
Global MPI uses three dimensions and ten indicators.

It is published by NITI Aayog using the methodology in consonance with the global methodology.
Like the global MPI, India’s national MPI has three equally weighted dimensions – Health, Education, and Standard of living, but represented by twelve (10 in Global MPI) indicators.
National MPI model = (10 indicators of the global MPI model retained + 2 new indicators (Maternal Health and Bank Accounts)) in line with national priorities.

Poverty is calculated based either on income levels or on expenditure levels.

The international poverty line (set by World Bank), which is currently $2.15 per person per day, is the threshold that determines whether someone is living in poverty.
India has not declared its poverty figures since 2011, measured based on consumer expenditure surveys by the National Sample Survey Organisation (NSSO).

According to the MPI method, if a person is deprived of a third or more of 10 (weighted) indicators, they are identified as MPI poor.
However, to calculate the index value, three separate calculations are needed.
First, need to find out the incidence of multidimensional poverty (denoted by the symbol H). It answers the question – How many are poor?
The incidence refers to the proportion of multidimensionally poor in the population.
It is arrived at by dividing the number of multidimensionally poor persons by the total population.
Second, need to find out the intensity of poverty (denoted by the symbol A). This answers the question – How poor are they?
To compute intensity, the weighted deprivation scores of all poor people are summed and then divided by the total number of poor people.
Finally, the MPI is arrived at by multiplying the incidence of multidimensional poverty (H) and the intensity of poverty (A).