Before claiming victory, let’s measure and meet India’s poverty challenge

The transition of 135 million people out of multidimensional poverty is certainly creditable. However, is this an exceptional achievement?

‘India lifts 135 million people out of multidimensional poverty’ is the talking point in the media and prime-ministerial pronouncements since mid-July, giving the impression that India has trumped poverty.

The transition of 135 million people out of multidimensional poverty is certainly creditable. However, the questions to ask are: is this an exceptional achievement? Does this rid India of poverty? Are we even measuring levels of poverty in India correctly?

Steady decline, large pool

As per the UNDP multidimensional poverty index (MPI) reports, the poor people in India were 645.7 million in 2005-06, 370.5 million in 2015-16, and 230.7 million in 2019-21.

The number of MPI poor reduced by 275.6 million between 2005-06 and 2015-16, and by 139.8 million between 2015-16 and 2019-20. The poverty reduction in both the periods was remarkably similar at about 27.5-28 million per annum.

Thus, there is nothing exceptional about the MPI poverty reduction during the Bharatiya Janata Party (BJP)-led Union government’s period.

The NITI Aayog report does not highlight the number of remaining MPI poor in India. The UNDP report does. There were 270.7 million (over 16.39 per cent of India’s population) multi-dimensionally poor in 2021. This is an uncomfortably large number of poor people — showing that the war on poverty is far from over.

Three measures of poverty

Poverty, in simple terms, is the inability of a person or a household to consume adequate goods and services to attain a minimum standard of living. Poverty can be measured in terms of — consumption, income, and deprivation.

The consumption method measures the consumption of requisite goods and services directly. India last measured consumption in 2011-12 (the 68th round of national sample survey).

The income method determines the monetary value of the requisite consumption of goods and services to arrive at the poverty cut-off. India’s income poverty estimates were last worked out in 2012. As per the World Bank income poverty cut-off of $2.15 per capita in 2017 PPP terms, equals Rs 44.4, 10 per cent of India’s population was poor in 2019.

The UNDP measures poverty based on 10 ‘deprivations’ persons/households face, organised in three groups of health, education, and standard of living. The Indian MPI adds two more deprivations. About 16.39 per cent (14.96 per cent as per the Indian MPI report) of India’s population was poor in 2019-21.

Actual MPI much higher

About 31.52 per cent of people surveyed (approximately 445 million of 1.4 billion population) were found to be nutritionally poor in the NFHS survey, on which the MPI poor count is based. Likewise, 43.9 per cent of the those surveyed were found deprived on the cooking fuel, and 41.37 per cent on housing indicators.

The MPI methodology does not consider any individual/household poor unless a household scores minimum 33.33 per cent score taking all the MPI deprivations put together. The fact is that a household found deprived on any of these three parameters is in reality poor. If done so, 445 million to 618 million Indians would be considered MPI poor in India.

Not all the poor are included

The government runs numerous programmes to overcome poverty, which can be clubbed into broadly three types.

The first type targets a specific deprivation — like a free food programme targets nutritional deprivation. Many of these programmes have successfully eliminated the deprivation concerned — like the Jan-Dhan programme has eliminated the lack of a bank account. Some programmes have not made a desirable difference — like giving free food for 810 million Indians has failed to make difference to nutritional deprivation in India.

The second type of programme delivers cash or a cash equivalent directly to individual/household — like the PM KISAN delivers Rs 6,000 to each farm household. The beneficiaries may or may not spend the cash to meet a deprivation.

The third type of programme is an indirect delivery programme. The government-run schools to provide education to poor students and the government hospitals for those who cannot afford access to private healthcare are ready examples of this type of deprivation targeting.

The challenge here is that governments function in a highly compartmentalised manner where they do not aggregate the benefits delivered through these various programmes at the household level.

Measurement systems

The most reliable method of measuring individual/household income, consumption, deprivation, and the delivery of government benefits is to collect the requisite data for each household.

The irony here is that the government spends lakhs of crores of rupees on poverty programmes, but does not see merit in spending a few thousand crores of rupees to bring a universal household data collection system!

A comprehensive system of annual universal household survey will help the government and people in getting reliable information about each household and its income, consumption, deprivation, and poverty status. With data inferred from this reliable information, the government will be able to accurately identify the poor and their deprivations, and design and implement general and customised poverty-alleviation programmes for all the genuine poor.

Only when we have such an institutionalised system, when we regularly measure the actual status and intensity of poverty, when we design and deliver customised services to all the genuine poor, and when we monitor the outcomes of these interventions made, can we be in position to confidently talk about the real difference made to the extent and intensity of fighting poverty in India.

(Subhash Chandra Garg is former Finance & Economic Affairs Secretary, and author of ‘The Ten Trillion Dream’ and ‘Explanation and Commentary on Budget 2023-24’.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.