EXPLAINER: National Multidimensional Poverty Index --How Niti Ayog Uses MPI To Measure Poverty In India

New Delhi: With an attempt to study the decline in poverty rates and the number of multidimensionally poor people over different periods, the  National Multidimensional Poverty Index of NITI Aayog employs the widely recognized Alkire Foster methodology. However, the National MPI covers 12 indicators, whereas the global MPI covers 10 indicators. 

In the past, poverty has been measured by determining a person's or household's financial resources. The commonly used financial metrics were consumer expenditures or household income. However, for failing to account for the multiple deprivations that people may experience during their lifetimes, this method of calculating poverty has come under fire.
 
The approach developed by Alkire and Foster (AF), which uses a dual-cutoff counting method to determine whether an individual is considered poor or not, is the foundation of the global Multidimensional Poverty Index (MPI). This approach adheres to the widely accepted measure intended for evaluating cases of acute poverty and offers an alternative viewpoint to traditional monetary measures of poverty assessment.

Ten indicators from three categories—standard of living, education, and health—are used by Global MPI. The education dimension comprises years of schooling and school attendance, whereas the health dimension includes nutrition and child and adolescent mortality indicators. The standard of living dimension includes six household-specific indicators: housing, household assets, cooking fuel type, access to sanitation, drinking water, and electricity.

Poverty is evaluated individually by the MPI. A person is classified as "MPI poor" by the global MPI if they are deprived in three or more of the ten (weighted) indicators.

Over time, both NITI Aayog and its predecessor, the Planning Commission, have methodically produced estimates of poverty in their efforts to address the complexities of poverty. Furthermore, as part of the Global Indices for Reform and Action (GIRG) effort, NITI Aayog has been tasked with creating an indigenous index for gauging estimates of multidimensional poverty.

In line with the global MPI report's methodology, the national MPI uses the dual-cutoff approach of the AF methodology. Under India's national priorities, the national MPI adds two new indicators, maternal health, and bank accounts, to the ten indicators from the global MPI.