Tackling poverty

Better job prospects will improve outcomes

India has made significant progress in reducing multidimensional poverty. According to the National Multidimensional Poverty Index: A Progress Review 2023, prepared by the NITI Aayog, along with the United Nations Development Programme and the Oxford Poverty and Human Development Initiative, the share of the population classified as multidimensionally poor declined from 24.85 per cent to 14.96 per cent between 2015-16 and 2019-21. In absolute terms, 135 million people are estimated to have exited multidimensional poverty during this period. Compared to the conventional measure of using income in estimating poverty, the Multidimensional Poverty Index (MPI) captures aspects like health, education, and living standards. The national MPI is a vital indicator in measuring the progress towards Sustainable Development Goals, which include reducing the proportion of people living in poverty by half “in all its dimensions”. The baseline report by the NITI Aayog was published in 2021, which was based on the 4th round of the National Family Health Survey (NFHS-4), conducted in 2015-16. The latest report is based on NFHS-5, conducted in 2019-21.

In terms of indicators, the national MPI has 10 of those that form the global MPI and, in line with national priorities, it includes maternal health and bank accounts. The health dimension includes indicators such as nutrition and maternal health. The education dimension captures school attendance and years of schooling, while the standard of living includes broad indicators such as sanitation, drinking water, housing, and assets. The report is fairly comprehensive and covers all 36 states and Union Territories. All 12 indicators are covered for 707 administrative districts. In this context, the report underscores the significant difference in the level of poverty in urban and rural areas. While only 5.27 per cent of the people are classified as multidimensionally poor in urban areas, the number is 19.28 per cent for rural areas. States with a higher proportion of people living in rural areas thus will have to work more to improve the standard of living. Bihar, for instance, has seen the sharpest decline but still has about 34 per cent of the population classified as multidimensionally poor. The number for Kerala is 0.55 per cent.

The substantial decline in the level of multidimensional poverty, based on the NFHS data, must be welcomed. Since India, according to estimates, now has the largest population in the world, progress here will be critical. However, the improvement thus far should not in any way divert policy attention from the impending challenges. India, for instance, still has a large number of people in absolute terms with multidimensional poverty. As the data shows, there are also material regional differences, which could lead to socio-political tensions. While it’s encouraging that more people are coming out of multidimensional poverty with the given parameters, it is not enough. For example, the index captures years of schooling, but it is well known that the quality of education in the majority of Indian schools is far from the level desired. Another major aspect that has impeded India’s development is the lack of quality jobs for its rising workforce. While the state has a role in providing public goods such as sanitation, better jobs enable people to spend more on nutrition, health, and education. Thus, along with strengthening the provision of public goods, the policy focus should be on improving job prospects. The combination will lead to a faster and more meaningful reduction in multidimensional poverty.