Multidimensional Poverty Index

Also called: MPI, Multidimensional poverty · Topic: Poverty and Inequality: Measurement and Policy · NCERT: Beyond NCERT

Meaning

The Multidimensional Poverty Index (MPI) measures how many people are poor and how poor they are. It does this by counting what each person actually lacks in health, education and living standards, and it adds up these gaps when one household faces several of them together (overlapping deprivations).

MPI = H × A

• H (incidence, or headcount ratio) = number of poor people ÷ total population
• A (intensity) = the average deprivation score of the poor only
• The value runs from 0 (nobody lacks anything) to 1 (everybody lacks everything).

It matters because it shows who is poor and in what ways, not just who spends too little money. States can then aim schemes at the exact gap, such as cooking fuel, sanitation or nutrition.

Explanation

Dimensions, indicators and weights (Global MPI)

• The Global MPI began in 2010. UNDP (through its Human Development Report Office, HDRO) and OPHI (Oxford Poverty and Human Development Initiative) publish it.
• It has 3 dimensions. Each has an equal weight of 1/3. Together they hold 10 indicators.

Dimension (weight 1/3)	Indicators	Weight of each indicator
Health	Nutrition, child mortality	1/6 each
Education	Years of schooling, school attendance	1/6 each
Living standards	Cooking fuel, sanitation, drinking water, electricity, housing, assets	1/18 each

• The Global MPI has no income indicator. It counts what people lack, not what they earn.

Who counts as poor: the Alkire-Foster method

• The Alkire-Foster method (named after Sabina Alkire and James Foster) is a counting method with three steps: 1. Check each person against every indicator. The person is either "deprived" or "not deprived" on it. 2. Add the weights of the indicators on which the person is deprived. This total is the deprivation score. 3. If the score crosses a cut-off, the person is counted as poor. Everyone in that household gets the same label.

• Cut-offs:

• Poor: deprived in at least 1/3 (33.3%) of the weighted indicators.
• Severely poor: deprived in at least 1/2 (50%).

• Vulnerable: deprived in 1/5 to 1/3 (20% to 33.3%). These people are not yet poor, but one shock, such as an illness or a crop failure, could make them poor.

• Worked example: one household

• A child in the house has died. That counts as child-mortality deprivation, with a weight of 1/6.
• The family cooks on wood, has no toilet and lives in a kutcha house. Those three indicators give 3 × 1/18 = 1/6.
• Score = 1/6 + 1/6 = 1/3. This reaches the cut-off, so the whole household is MPI-poor.
• Now suppose the house were pucca. The score becomes 1/6 + 2/18 = 5/18 ≈ 0.28. That lies between 1/5 and 1/3, so the household is vulnerable, not poor.

Why H is multiplied by A, and what makes the MPI rise or fall

• Worked example: a whole population
• Out of 100 people, 20 are poor, so H = 0.20.
• The average score of these 20 people is 0.50, so A = 0.50.

• MPI = 0.20 × 0.50 = 0.10.

• Why multiply?

• Suppose a poor person stops lacking one thing but stays above the cut-off, so is still poor.
• → H does not change.
• → A falls, because that person now lacks less.

• → So the MPI falls. The index rewards help given to the poorest, not only to people just below the line.

• The MPI falls when: fewer people cross the cut-off (H falls), or the poor lack fewer things (A falls), or both happen.

• Decomposition: the MPI can be split by indicator, region (state or district) and social group (caste, religion, age). This shows which gap adds most to poverty and where. For example, one state may need cooking fuel and another may need nutrition.
• Origin: the Global MPI replaced the Human Poverty Index (HPI), which was used from 1997 to 2009. The HPI used country averages. The MPI builds up from data on each household.

In India

• Who measures it: NITI Aayog prepares India's national MPI. It is the nodal agency (the lead body responsible) for the MPI under the government's Global Indices for Reform and Growth (GIRG) initiative. Under GIRG, one ministry or body tracks each global index and uses it to push reforms.
• 12 indicators: the 10 global indicators plus 2 more:
• Maternal health, in the health dimension.

• Bank account, in the living-standards dimension.

• Data source: the National Family Health Survey (NFHS), rounds 4 (2015-16) and 5 (2019-21) [2][3]. It does not use NSSO consumption surveys.

• Rule: a person deprived in one-third or more of the 12 weighted indicators is "MPI poor" [1][2].

Release	Data	Key results
Baseline (Nov 2021)	NFHS-4 (2015-16)	25.01% poor. Bihar highest (51.91%), Kerala lowest (0.71%)
Progress Review (July 2023)	NFHS-4 → NFHS-5	24.85% (2015-16) → 14.96% (2019-21). About 13.5 crore people left poverty [3]. Rural 32.59% → 19.28%. Urban 8.65% → 5.27%
Discussion paper (Jan 2024)	2013-14 → 2022-23 (extrapolated)	29.17% → 11.28%. About 24.82 crore people left poverty [1][2]

• Both H and A fell (2015-16 to 2019-21):
• Intensity fell from 47.14% to 44.39% [3].
• The MPI value nearly halved, from 0.117 to 0.066 [3].
• Check: 0.2485 × 0.4714 ≈ 0.117 and 0.1496 × 0.4439 ≈ 0.066.

• So fewer people were poor, and those still poor lacked fewer things.

• State-wise exits, 2013-14 to 2022-23: Uttar Pradesh 5.94 crore (the largest), Bihar 3.77 crore, Madhya Pradesh 2.30 crore, Rajasthan 1.87 crore [1]. The poorest states had the biggest exits, so the gap between states is narrowing.

• Faster decline: the headcount fell by 10.66% a year in 2015-16 to 2019-21, compared with 7.69% a year in 2005-06 to 2015-16. The paper also covers the 2005-06 NFHS round for this longer comparison [2].
• SDG link: SDG Target 1.2 asks countries to cut poverty "in all its dimensions" by at least half by 2030. NITI Aayog says India is on track to meet it well before 2030 [3][4].
• India in the Global MPI: the Global MPI 2023 found that 415 million Indians left multidimensional poverty between 2005-06 and 2019-21. The headcount fell from 55.1% to 16.4%. A new edition comes out around 17 October each year (the International Day for the Eradication of Poverty), so check the latest edition before quoting India's figure.

Don't confuse with

• Poverty-line (income) headcount ratio: asks only whether a person's spending falls below a fixed rupee amount. The MPI asks what the person actually lacks, such as food, schooling, water or a toilet.
• Human Poverty Index (HPI, 1997–2009): was built from country-level averages. The MPI (2010) is built from household data, so it can show who is poor.
• World Bank Multidimensional Poverty Measure (MPM):
• It puts money inside the index. Its monetary dimension counts people living on less than $3.00 per person a day (2021 PPP). PPP (purchasing power parity) adjusts money for price differences between countries [5].
• Its other dimensions are education and basic infrastructure (water, sanitation, electricity). It has no health dimension [5].

• The UNDP-OPHI MPI has health but no income indicator.

• Human Development Index (HDI): measures a country's average achievements. The MPI counts the deprivations of each poor household and how they overlap.

Prelims Hooks

• MPI = H × A. H is the headcount ratio (incidence) and A is the average intensity among the poor. The value lies between 0 and 1.
• The Global MPI (2010) comes from UNDP HDRO and OPHI. It uses the Alkire-Foster method: 3 equally weighted dimensions and 10 indicators (health 2, education 2, living standards 6).
• Cut-offs: poor ≥ 1/3; severely poor ≥ 1/2; vulnerable 1/5 to 1/3.
• NITI Aayog's national MPI has 12 indicators. The two extra ones are maternal health and bank account. Its data come from NFHS, and NITI Aayog is the nodal agency under GIRG.
• 2015-16 → 2019-21: headcount 24.85% → 14.96%, MPI value 0.117 → 0.066, intensity 47.14% → 44.39% [3]. 2013-14 → 2022-23: 29.17% → 11.28%, with 24.82 crore exits; UP had the most (5.94 crore) [1].
• Trap: the World Bank MPM includes monetary poverty and has no health dimension [5]. Worldwide (around 2023), it puts monetary poverty at 11.2% and multidimensional poverty at 16.7%, which is about 51% higher [5].

Mains Points

• Income measures and the MPI answer different questions (GS-III).
• Poverty-line methods measure means: can the person afford a basket of goods?
• The MPI measures outcomes: does the person actually have food, schooling, water and a toilet?

• Using both gives a fuller picture. The World Bank MPM shows that adding non-money needs raises measured poverty by about 51% [5].

• The MPI as a policy tool (GS-II, governance).

• It can be broken down by indicator and district, so it tells each state which gap to close, such as cooking fuel, sanitation or nutrition.
• This supports cooperative and competitive federalism and helps track SDG 1.2 [3][4].

• Intensity is still about 44% (2019-21) [3]. The poor who remain lack many things at once, so policy must reach the hardest-to-reach households, not only those just below the cut-off.

• The credibility debate.

• Credit: the steep fall since 2015-16 matches the spread of household schemes (toilets, LPG, electricity, bank accounts).
• Extrapolation: there was no NFHS survey in 2013-14 or 2022-23, so the "24.82 crore" figure is a projection, not a survey result [2].
• Access, not use or quality: a latrine counts even if nobody uses it, an LPG connection counts even if the family cannot afford refills, and a dormant (long unused) bank account still counts.
• Judgement calls and gaps: the equal weights and the 1/3 cut-off are choices, not scientific facts. Money income, learning outcomes and quality of care are all left out.
• Balanced answer: credit the progress, but call for newer surveys and outcome-based indicators, such as learning levels and actual LPG refills.

Read more

• Multidimensional poverty: Global MPI and NITI Aayog's national MPI