Multidimensional Poverty Index: A new poverty marker

The government’s jubilation over the ‘economic recovery’ hides the bitter reality of persisting low wages and poverty among a large section of the people.

A slum in Kolkata. NITI Aayog’s Multidimensional Poverty Index aims to capture non-monetary aspects of poverty and the simultaneous and multiple deprivations that households face.

AT 8.4 per cent, the gross domestic product (GDP) of the Indian economy in the second quarter of the fiscal reached pre-pandemic levels. While the government is jubilant at the ‘recovery’, a look at some of the statistics it has released over the past few months warrants a more cautious approach. While the GDP has indeed bounced back, the financial and social indicators for Indians remain far from rosy. The fall in fortunes suffered by scores of Indians during the long COVID-19 lockdown has had repercussions on other aspects of their well-being that might require targeted government interventions over a sustained period of time. Some of these statistics reveal that the upsets in the socio-economic well-being of the people might have been exacerbated by existing government practices around minimum wages and poverty alleviation policies.

Despite the Bharatiya Janata Party (BJP) government’s claim that the States where it rules outdo other States which are run by corrupt politicians, a different story emerges from recent data put out by Central government agencies. Gujarat and Uttar Pradesh, both ruled by the BJP and touted as exemplars of the party’s development model, do not perform that well in the indicators. While the unemployment rates in these States are lower than in most other States, the average daily renumeration across all sectors is extremely low.

Low wages

According to data released by the Reserve Bank of India, the average daily wage rate for a rural worker (male) in Gujarat in the non-agricultural sector was Rs.239.3 during 2020-21. The average daily wage rate for a rural worker in Uttar Pradesh was Rs.286.8 and for a rural worker in Bihar it was Rs.289.3. This was almost half compared with what a rural worker got in non-BJP States. The average daily wage rate of a rural worker in Kerala was Rs.677.6 whereas in Jammu and Kashmir it was Rs.483 and in Tamil Nadu Rs.449.5. The national average is Rs.315.3.

In the agricultural sector, the difference is even more stark. While an agricultural labourer in Kerala got the highest average daily wage rate of Rs.706.5, the same labourer in Gujarat got only Rs.213.1, the lowest in the country, and the one in Uttar Pradesh got Rs.274.5. The rate in Jammu and Kashmir was Rs.501.1 and in Tamil Nadu Rs.434.2.

A look at the construction sector revealed the same disparity in renumeration. In Gujarat, the average daily wage rate for a construction labourer was Rs.285.1, which was only higher than the Rs.263.5 in Madhya Pradesh and the Rs.250 in Tripura. Kerala’s Rs.829.7 a day was yet again the best, followed by Jammu and Kashmir’sRs.492.6 and Tamil Nadu’s Rs.468.3.

The data cited are from the RBI’s Handbook of Statistics on Indian States, which it has been publishing since 2016 “to keep an eye on statistics at sub national levels to understand regional variations and to dovetail aggregate growth models and strategies with regional building blocks”. The Handbook provides State-wise statistics on a wide range of socio-economic indicators such as social and demographic characteristics, State domestic product, agriculture, price and wages, industry, infrastructure, banking and fiscal developments.

On November 26, the NITI Aayog released a report of the country’s first ever Multidimensional Poverty Index (MPI). The aim of the index is to capture non-monetary aspects of poverty and the simultaneous and multiple deprivations that households face. The national MPI measure is constructed by using 12 key components covering areas such as health and nutrition, education and standard of living, clean water, electricity, financial inclusion and antenatal care. The MPI is expected to replace the poverty line as a measure of poverty. This baseline report is based on the reference period 2015-16 of the National Family Health Survey (NFHS). The MPI was conceptualised by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP) in 2010. The 2021 national MPI report was finalised by the NITI Aayog in collaboration with 12 Ministries, State governments, the OPHI and the UNDP.

Bihar, an erstwhile BIMARU State and currently ruled by a coalition headed by the BJP, fared the worst in the report. Over 50 per cent of the State is identified as multidimensionally poor. According to the index, in Bihar 51.91 per cent of the population is poor, followed by Jharkhand (42.16 per cent), Uttar Pradesh (37.79 per cent), Madhya Pradesh (36.65 per cent) and Meghalaya (32.67 per cent). Kerala registered the lowest population poverty level (0.71 per cent), followed by Puducherry (1.72 per cent), Lakshadweep (1.82 per cent), Goa (3.76 per cent) and Sikkim (3.82 per cent). Less than 10 per cent of the population is poor in Tamil Nadu (4.89 per cent), Andaman & Nicobar Islands (4.30 per cent), Delhi (4.79 per cent), Punjab (5.59 per cent), Himachal Pradesh (7.62 per cent) and Mizoram (9.8 per cent).

Uttar Pradesh ranked the worst in the child and adolescent mortality category, followed by Bihar and Madhya Pradesh. Jharkhand performed the worst when it came to the percentage of population without access to sanitation, followed by Bihar and Odisha.

Less than 10 per cent of the population are poor in Tamil Nadu (4.89 per cent), Andaman & Nicobar Islands (4.30 per cent), Delhi (4.79 per cent), Punjab (5.59 per cent), Himachal Pradesh (7.62 per cent) and Mizoram (9.8 per cent).

Social marginalisation and poverty

According to the Global MPI 2021, India ranked 66 out of 109 countries. Furthermore, social marginalisation and financial deprivation more often than not overlapped in the Indian population. In a sub report “Unmaking disparities by ethnicity, cast and gender”, the Global MPI 2021 found that in India, the Scheduled Tribe group is the poorest. More than half of the population of Scheduled Tribes, who account for 9.4 per cent of the population, live in multidimensional poverty. This number adds up to a whopping 65 million people They account for about one-sixth of all people living in multidimensional poverty in India. They are followed by the Scheduled Castes group with 33.3 per cent—94 million of 283 million people—living in multidimensional poverty. In the Other Backward Classes group, 27.2 per cent, or 160 million of 588 million people, live in multidimensional poverty. Overall, five out of six multidimensionally poor people in India live in households whose head is from a Scheduled Tribe, a Scheduled Caste or Other Backward Classes. This underlines the point that affirmative action is still an important and necessary part of the economy and cannot be done away with despite what the naysayers of caste-based reservation propagate.

Gendered analysis

A gendered analysis of the data throws up even more disappointing but not totally unexpected trends. India holds the top position in the number of households where women have not completed schooling beyond class 6. Among the 1.3 billion multidimensionally poor people studied across the globe, almost two-thirds, 836 million, live in households in which no female member has completed at least six years of schooling. These 836 million people live mostly in Sub-Saharan Africa (363 million) and South Asia (350 million). Seven countries account for more than 500 million of them: India (227 million), Pakistan (71 million), Ethiopia (59 million), Nigeria (54 million), China (32 million), Bangladesh (30 million) and the Democratic Republic of the Congo (27 million). This exclusion of women from education has far-reaching impacts on societies around the world, states the report.

The intent behind the MPI is notable. In a foreword to the report, NITI Aayog Vice Chairperson Dr Rajiv Kumar said: “The Sustainable Development Goals framework, adopted by 193 countries in 2015, has redefined development policies, government priorities, and metrics for measuring development progress across the world. The SDG framework, with seventeen Global Goals and 169 targets, is significantly wider in scope and scale relative to the Millennium Development Goals, its predecessor. The expansion of scope includes the significant development of recognising the need to address poverty in all its forms and dimensions. This has been articulated in the SDG framework through target 1.2—which is aimed at reducing ‘at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions’. The development of the National Multidimensional Poverty Index of India is an important contribution towards instituting a public policy tool which monitors multidimensional poverty, informs evidence-based and focussed interventions, thereby ensuring that no one is left behind.”

Rich-poor gulf

India is counted among the most unequal countries in the world. According to the World Inequality Report 2022, India stands out as a poor and very unequal country with an affluent elite. The top 1 per cent of the population holds more than one-fifth or 22 per cent of the total national income in 2021, while the bottom half’s share has gone down to just 13 per cent. Authored by Lucas Chancel, co-director of the World Inequality Lab, and coordinated by several experts, including the French economist Thomas Piketty, the report points out that the average national income of the Indian adult population is Rs.2,04,200. While the bottom 50 per cent earns Rs.53,610, the top 10 per cent earns more than 20 times at Rs.11,66,520.

According to the report, the deregulation and liberalisation policies implemented since the mid 1980s have led to one of the most extreme increases in income and wealth inequality observed in the world. Commenting on gender inequalities in India, the report said that the female labour income share is equal to 18 per cent, which is significantly lower than the average in Asia (excluding China), which is at 21 per cent. This value is one of the lowest in the world, slightly higher than the average share in West Asia at 15 per cent.

The COVID crisis has exacerbated inequalities between the very wealthy and the rest of the population. In rich countries, government intervention prevented a massive rise in poverty, which was not the case in poor countries. This showed the “importance of social states in the fight against poverty”, according to the report.

Yet another report, the Global Hunger Index 2021, rated India behind Pakistan (92), Sri Lanka (65), Bangladesh (76), Nepal (76) and Iraq (86) at 101 and described the level of hunger in India as serious. According to the report, 15.3 per cent of the Indian population is undernourished, 34.7 per cent of children under five are stunted and 3.4 per cent die before their fifth birthday. Rather than address such data seriously, the Indian government has refuted the report by finding fault with its methodology, rankings and data. Is this a case of a bad workman blaming his tools? Only time will tell.