The Poverty Debate in India

Context

Recent estimates show a substantial decline in monetary and multidimensional poverty in India, yet indicators such as child stunting and women’s anaemia remain high. This has renewed debate over whether poverty should be assessed through consumption capacity, actual deprivations, or a combination of both.

Evolution of Monetary Poverty Measurement

1. Early calorie approach: Dandekar and Rath’s 1971 study influenced poverty measurement, while the Y. K. Alagh Task Force (1979) established official rural and urban poverty lines linked to minimum consumption requirements.
2. Lakdawala Committee (1993): It used state-specific poverty lines and consumer price indices, allowing poverty estimates to better reflect differences in prices across States.
3. Tendulkar Committee (2009): It moved away from directly fixing poverty lines to calorie norms but retained household consumption expenditure as the basis, while better accounting for spending on health and education.
4. 2011–12 estimate: Under the Tendulkar methodology, 21.9% of India’s population was below the poverty line—the latest official national poverty ratio based on this methodology.
5. Rangarajan Committee (2014): It proposed revised food and essential non-food requirements and generated a higher poverty estimate, but its methodology was not adopted as the official poverty series.

Shift towards Multidimensional Poverty

1. National MPI: NITI Aayog measures deprivation across health, education and standard of living through 12 indicators, recognising that poverty extends beyond insufficient consumption.
2. Measured decline: Multidimensional poverty declined from 24.85% in 2015–16 to 14.96% in 2019–21, based on NFHS data.
3. Projected decline: NITI Aayog estimated multidimensional poverty at 11.28% in 2022–23; this figure is projected from earlier trends rather than derived from a fresh NFHS round.
4. Measurement approach: A person is classified as multidimensionally poor when the household experiences at least one-third of the weighted deprivations, allowing MPI to capture both incidence and intensity of poverty.

Why the Poverty Debate Continues

1. Resources versus outcomes: Monetary poverty measures whether households possess adequate consumption capacity, while MPI measures realised deprivation in areas such as nutrition, schooling and basic services. Thus, the two measures capture different aspects of poverty rather than substitutes for each other.
2. Deprivation beyond the poverty line: A household may cross a monetary poverty threshold yet continue to face deficiencies in nutrition, health, sanitation or education, showing why expenditure alone cannot capture overall well-being.
3. Persistent nutritional deprivation: NFHS-5 reported 35.5% of under-five children as stunted and 57% of women aged 15–49 as anaemic. These outcomes are influenced by several social and health factors, indicating that falling poverty does not automatically remove all human-development deficits.
4. Threshold limitation: National MPI identifies people as poor only when weighted deprivation reaches the 33.33% cutoff; households below this threshold may still experience important individual deprivations.
5. Core implication: India therefore needs monetary and multidimensional indicators together to distinguish lack of purchasing power from deprivation in capabilities and public services.

Significance for Policy

1. Better identification: Monetary measures reveal households facing resource constraints, while MPI identifies the specific dimensions in which deprivation persists, improving diagnosis of poverty.
2. Targeted interventions: Income deficiency may require cash, employment or livelihood support, whereas poor nutrition, schooling or sanitation require sector-specific public services.
3. Tracking depth of deprivation: MPI combines the number of poor with the intensity of their deprivation, helping policymakers assess not only how many are poor but also how many disadvantages they face simultaneously.
4. SDG alignment: A multidimensional approach supports SDG 1.2, which calls for reducing poverty in all its dimensions according to national definitions.

FAQs

Q1. Which methodology underlies India’s latest official poverty-line estimate?
The Tendulkar methodology, applied to 2011–12 consumption data.

Q2. What was India’s poverty ratio in 2011–12 under the Tendulkar method?
It was 21.9%.

Q3. Who publishes India’s National MPI?
The NITI Aayog.

Q4. What are the three dimensions of National MPI?
Health, education and standard of living.

Q5. Why do monetary poverty and MPI give different results?
Because monetary poverty measures consumption capacity, while MPI measures simultaneous deprivations in basic capabilities and living conditions.