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.
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.
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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).