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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.

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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.

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National Multidimensional Poverty Index (National MPI)

  • 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.

How is Poverty calculated?

  • 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).

How MPI is calculated?

  • 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).
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