Wednesday, Oct 04, 2023

Measuring Poverty: How This Process For Gauging Poverty In India Has Been Institutionalised

Economics/Multi-Dimensional Poverty Index

Measuring Poverty: How This Process For Gauging Poverty In India Has Been Institutionalised

A process for gauging poverty in India covering select dimensions has been institutionalised, but many are critical of this approach

The Homeless: An estimated 100,000 people sleep on the streets of Kolkata
The Homeless: An estimated 100,000 people sleep on the streets of Kolkata Photo: Getty Images

Attempts to operationalise the concept of poverty in Independent India can be traced back to the early sixties when the poverty indices figured in the corridors of decision making. These, however, were fully or largely anchored on calorie deprivation. Understandably, there was strong criticism for not accounting for essential non-food items like clothing, housing and other assets explicitly in the computation. More importantly, casualness in treating aspects of education, health and other basic amenities like water, sanitation, electricity, etc., came under attack, particularly as there was systematic withdrawal of public agencies in their provisioning. The approach also faced problems due to judgemental factors involved in determining the poverty basket of goods and services for the poor, given the diverse food habits in the country, choosing their appropriate prices, updating the poverty line and the mismatch between consumer expenditure data from  NSS and national income accounts. Understandably, there was a chorus from the different branches of social sciences, administrators, and more specifically, the grassroots level activists, admonishing the experts, largely economists, for not recognising the multi-dimensional aspect of poverty in their methodology.

Now that a process for measuring poverty covering select dimensions has been institutionalised at the global level and several countries and regions, India included, have come forward to undertake this with some modifications of the global methodology, there has been no enthusiastic support, while many have been strongly critical of this approach, debunking its usability in policy making. Apprehensions are voiced that the construction of the Multi-dimensional Poverty Index (MPI) is a part of the design to dump the good old methodology of estimating poverty based on consumption expenditure data from NSS. This has been linked to the scepticism expressed by the members of the prime minister’s Economic Advisory Council regarding the reliability of the NSS data. Scholars have argued that the substantial fall in the MPI in India during the second half of the last decade, is at least partly due to tweaking of the data or methodology of measurement, like inclusion of indicators on banking and maternity care where the government has recently launched missions, but their impacts are not very definitive.

It is extremely easy to find fault with every artefact that supports the MPI. Almost all the indicators identified for the national MPI have been criticised as inadequate or inappropriate with plenty of empirical evidence. Various alternatives in the numerator and denominator have been proposed for them. Indeed, different countries have modified the framework and methodology differently by suitably altering the indicators, their weight and including new indicators. Also, for several indicators, there are multiple sources and any choice is fraught with subjectivity. A researcher can come up with an alternate framework and composition system and there is no way to establish the superiority of the global methodology or that adopted by NITI over the others. Two points may, however, be made. The identified indicators, both in the global and national reports, are built around health, education and basic assets, or material well-being that are the pillars in UNDP’s Human Development Report, having large acceptability. No wonder that the trends and pattern emerging from these reports are similar. Availability of MPI values and their changes at regular intervals from the Global Report to benchmark the national pattern is an additional advantage. It is true that the design of the MPI is such that the possibility of an increase in it over time is limited. Indicators pertaining to standard of living, assessed through the access to drinking water, cooking fuel, bank accounts, housing, electricity, etc., are likely to only go up over time, unlike income- or consumption expenditure-based poverty measure. A household having these would lose them only in calamitous situations. A similar trend is expected in the indicators of education as well. Only the indicators on nutrition or child/adolescent mortality can show up short term variations.

There is a case for greater use of the MPI in the policy domain for strategic interventions. A strong political consensus, however, is required for this.

The MPI methodology has been criticised for considering a zamindar living in an ancestral house with all amenities but having no current income as non-poor. A woman not being able to put her land assets into proper use or an art lover unwilling to part with precious paintings or jewellery despite no current earning will be similar extreme cases. However, a household which has good education and health, besides access to the basic amenities and assets, would not suddenly become socio-economically vulnerable simply because of a fall in its current income. A slow movement in and out of poverty can, therefore, be considered as a better reflection of the ground reality.

Scholars like Pranob Sen (quoted by Dipak Mondal, New Indian Express, 5 August, 2023) and Prabhat Patnaik (The Poverty of UN Poverty Estimates, Deshabhimani, 31 July, 2023) would like to consider the MPI as an articulation of modernisation or deprivation and not poverty. Delinking denial of access to modern amenities from vulnerability/deprivation and poverty would be dangerous. Also, a measure of poverty which does not capture deprivation is an empty statistical box. It had started by focusing on nutritional deprivation and expanded to cover other dimensions that are desirable. No one can question the relevance of consumption-based poverty or other deprivation indicators in the policy domain (Rangarajan C and Mahendra Dev, The Hindu, 16 August, 2023). Any deliberate attempt not to conduct the Consumption Expenditure Survey or postponing it must be strongly resisted.

One serious point is regarding not covering the total population under 70 years of age in the nutrition indicator by the NITI, making a departure from the global report. This can be explained in terms of NFHS not covering the children in the age group of 6–14 years and men and women above 55 and 50 years respectively, due to its thrust on reproductive health. It would be important to bring people in these excluded age groups within the framework of the MPI.

A small point regarding 135 million people exiting poverty during the period in between the fourth and fifth NFHS Survey. A few (Malhotra S, Deccan Herald, 13 August, 2023) suggest applying the poverty ratios for different years to the estimated population for the corresponding years, the decline in the number being the correct figure, and argued that actual poverty reduction has been less than 135 million. This is based on an erroneous assumption that the number of poor would not change during the intervening period, despite population growth and the business-as-usual scenario. It would, therefore, be appropriate to compute the figure by applying the two ratios to the terminal year population. This assumes that people have been lifted out of poverty from among those who were in poverty in 2015–16 as also those who could have fallen or fell in poverty in the subsequent five-year period. Importantly, the Global Report computes the number of people lifted out of poverty by this method and places absolute poverty reduction in India as 139 million.

There is a case for greater use of the MPI in the policy domain for strategic interventions. A strong political consensus, however, is required for this. Operational issues regarding the change of indicators, their data sources, weights, etc., may crop up from time to time. These would have to be addressed through a consultative process. Success will depend on keeping this above the short-term politics in a regime.

(Views expressed are personal)
(This appeared in the print as 'Measuring Poverty')

Amitabh Kundu is Professor Emeritus,  L J University, Ahmedabad

Mehebub Rahaman is an independent researcher on nutrition and child poverty


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