MULTIDIMENTIONAL POVERTY INDEX Syllabus GS Paper 3 – Economy)

Context: Finance Minister, in her Interim Budget speech, recently declared that 25 crore Indians had been lifted out of poverty over the past decade, emphasizing the government's commitment to the inclusive principle of 'Sabka ka Saath'.

Multidimensional Poverty Index

• About: The index is a key international resource that measures acute multidimensional poverty across more than 100 developing countries.
• Produced by: United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI)
• Calculation of MPI: Multiplying the incidence of poverty and the average intensity of poverty.
• MPI Ranges: From 0 to 1, and higher values imply higher poverty.
• 10 Indicators: covering three main areas: (i) health, (ii) education, and (iii) standard of living. These three dimensions have one-third weight each in the final index.
• The Indian MPI has two additional indicators: maternal health (under the health dimension) and bank accounts (under the standard of living dimension). 

oThis has been done, according to the NITI Aayog, to align the MPI with India’s national priorities.

How is MPI calculated?

• According to the MPI method, if a person is deprived in a third or more of 10 (weighted) indicators, they are identified as “MPI poor”.
• The first calculation involves finding out the “incidence of multidimensional poverty” (denoted by the symbol H). The incidence essentially refers to the proportion of multidimensionally poor in the population, and it is arrived at by dividing the number of multidimensionally poor persons by total population. More simply, it answers the question: How many are poor?
• The second calculation involves finding out the “intensity” of poverty (it is demoted by the symbol A). This answers the question: How poor are they?
• More technically, this refers to the average proportion of deprivation that is experienced by multidimensionally poor individuals. 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).