By Vedika Inamdar.
This is a reaction piece to the announcement of the 2018 Multidimensional Poverty Index (MPI) data for India.
The Multidimensional Poverty Index (MPI) is lauded as being a comprehensive index for not only counting the poor, but also measuring how poor they are. The MPI is based on a more holistic approach to understanding poverty, based on the capabilities approach. It is seen by some as better than income-based measures of poverty, because it captures the multiple dimensions of poverty people may face. Often, income and multidimensional measures of poverty seem to be saying two completely different things, therefore both must be used for better policy insights. However, our understanding of poverty remains far from perfect, as a recent example in India illustrates.
When the Oxford Poverty and Human Development Initiative (OPHI) published the most recent MPI-data for India, it stirred significant reservations. Between 2005 and 2015, OPHI 2018 reports a reduction in the share of multidimensionally poor people from 55 percent to 28 percent. Critics have pointed out that the same timespan was a period of notorious ‘jobless growth,’ with job creation being below two percent per annum. The same time span saw an agrarian crisis that lead to a wave of farmers’ suicides. Various official surveys, including Census 2011 and NSSO Surveys recorded growth of marginalisation of work, an increase in agricultural labour, a decline in cultivators, and a stagnation in wages of industrial workers. Yet, despite all of this, the MPI figures point towards an unprecedented decline in poverty. Although, the MPI revelation is not new because according to expenditure-based poverty measures derived from the Tendulkar and the Rangarajan committee methodology, claim that the number of poor have reduced.
As the Indian example shows, there is often divergence when it comes to the income and multidimensional poverty estimates. This is further highlighted by the fact that in Bangladesh, the Sylhet region shows a huge variation between the MPI and the percentage of poor people according to the Bangladesh Household Income and Expenditure survey. Income poverty measurement and MPI are too far apart and neither tell the entire story of poverty in India.
There has been criticism that the MPI is flawed because it does not take into account income/consumption spending data at all. Another criticism the MPI faces is the problem with aggregating multiple deprivations into one index. Martin Ravallion of the World Bank lists some criticisms of the MPI, one of the concerns of the MPI measurement is that data on all the indicators need to come from the same sampled household, hence they must come from one survey. This greatly constraints the MPI exercise as there is better data available on all of the indicators of the MPI. A second, and perhaps greater, concern with the MPI is that there is no theoretical backing for the weightage assigned to the multiple indicators. Third, there are critical value judgements made in the case of the MPI's weighting system when it compares the death of a child with not having a radio, telephone etc. However, these value judgements need to be made but they must be debated openly and not hidden in an aggregate index.
Neither income poverty measures nor the MPI alone can capture the full scope of poverty. Thus, poverty needs to be defined in terms of both income, or expenditure if adequate data on income is not available, and multidimensional indicators. Although, it must be noted that income measurement is difficult in India due to the informal economy and the various sources of income people have, non-wage/monetary sources of income, seasonal income etc.
Therefore, in India aspects like unemployment or underemployment, low incomes, low female work participation are not represented in the MPI. Some claim that India would have truly made progress in poverty alleviation if the same people who have been lifted out of poverty in a decade had also seen their incomes rise to acceptable levels. India must also concentrate on lowering inequality in the country along with poverty reduction, since often they can move in opposite directions especially in the case of high growth as experienced in India.
By Vedika Inamdar
Vedika is from India, where she completed an undergraduate degree in sociology. She worked at an academic research organisation between finishing her undergraduate degree and starting her Masters in Poverty and Development at IDS. She is interested in the anthropological and sociological sides of development and the application of social theory in the field of development.
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