There are multiple ways to define and measure poverty. Conventionally, poverty has been defined as percentage of population below a poverty line, the so-called head-count ratio. The current official poverty line is still the Tendulkar one. The Rangarajan one wasn’t formally accepted. Since there aren’t any NSSO (National Sample Survey Office) surveys on consumption expenditure after 2011-12, we are stuck with the incongruous situation of no head-count ratios after 2011-12. Meanwhile, down the years, developmental economists have argued poverty is multi-dimensional. Hence, we transited through physical quality of life indicators and the human development index (HDI), before zeroing in on the currently favoured MDPI (multi-dimensional poverty index).
MDPI is more like a development index. It is based on three dimensions of poverty – health, education and living standards. Health (nutrition, child and adolescent mortality, maternal health) and education (years of schooling, school attendance) are important objectives of development and undoubtedly influence the future poverty of the individual. However, these should be on a somewhat different footing from living standards (cooking fuel, sanitation, drinking water, electricity, housing, assets, bank accounts). Living standards do reflect poverty. The inclusion of health and education makes the word “poverty” elastic. But, when the poor have cried, many who are not Caesars have also wept. Therefore, we have this broad notion.
Following UNDP’s global report, Niti Aayog recently brought out India’s MDPI report for 2023. In both cases, improvements are primarily driven by NFHS-5. The UNDP report said 415 million people moved out of poverty between 2005-06 and 2019-21 and incidence of poverty declined from 55.1 per cent to 16.4 per cent. With no consumption expenditure data after 2011-12, different people have tried to estimate head-count ratios in various ways with varied assumptions. The modal value will be between 15 per cent and 20 per cent, though some outliers have a lower number. In other words, no matter how much sophistication one brings in head count versus MDPI, the poverty number will be around 15 per cent of the population. In passing, UNDP makes the comment that the fastest declines have been in poorer states. But UNDP’s report is for all of India, in the aggregate. With inter-regional and inter-state differences, the Niti report disaggregates. Poverty ratios declined from 24.85 per cent in 2015-16 to 14.96 per cent in 2019-21. (The slight difference in the 2019-21 numbers between the two reports is because of minor differences in indicators.) Between those two end-points, an estimated 135.5 million Indians exited poverty. That’s a huge number, and extrapolated, has implications not only for India achieving the relevant SDG target (specifically target 1.2), but also for the world as a whole. Of that, 34.3 million was the figure in UP alone.
Many years ago, the demographer Ashish Bose coined the acronym BIMARU, for the then undivided states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. BIMARU was a metaphor for much that was wrong with India. Understandably, India’s development, employment and poverty reduction are largely a function of what happens in these states, now divided. This is because of large populations, as well as the large poverty base. In addition, poverty reductions are never linear. Sharper reductions occur when base poverty levels are high. Thereafter, reductions become more difficult and poverty numbers tend to be sticky. Poverty lines in advanced countries will indeed be different. Having said this, those numbers get stuck at around 10 per cent.
The Niti Aayog report tells us that the fastest reductions in poverty happened in UP, Bihar, MP, Odisha and Rajasthan. Bihar is now at 33.8 per cent, MP at 20.6 per cent, Odisha at 15.7 per cent and Rajasthan at 15.3 per cent. UP is at 22.9 per cent, with a base of 37.7 per cent in 2015-16, roughly similar to the base in MP. (Odisha and Rajasthan had lower bases in 2015-16.) Subject to the usual caveats about surveys like NFHS, these are remarkable improvements in four years. (NFHS-5 was right in the middle of Covid and both MP and UP are phase-II states, with surveys in April 2021.)
What explains these improvements in UP? Depending on how poverty is defined and measured, reductions can be a function of income (or consumption) growth, such as with HDI. But that’s not the MDPI design. MDPI is built around what the Economic Survey calls basic necessities — Awas Yojana, Jal Jeevan Mission, Swachh Bharat, Saubhagya, Ujjwala Yojana, Jan Dhan Yojana, Poshan Abhiyaan, Ayushman Bharat and Samagra Shiksha. These are essentially implemented by states and it is better delivery in these that have led to such declines in poverty, concentrated more in rural India than urban. If one counts the number of indicators under those three heads of health, education and living standards, the aggregate is 12. While UP registered improvements under all 12, especially on three, the reductions in deprivation are remarkable.
For cooking fuel, deprivation dropped from 68.85 per cent to 52.92 per cent; for sanitation, it dropped from 63.65 per cent to 31.61 per cent; and for electricity, it dropped from 27.43 per cent to 9.16 per cent. Though the point about stickiness remains valid, the next big declines will be in nutrition, maternal health, cooking fuel, sanitation and housing, because the base levels of deprivation are still high, allowing for sharp reductions.
Within UP, as is understandable, there are variations between districts. Aspirational districts of Bahraich, Shravasti and Balrampur are still relatively high on deprivation. But there has been a metamorphosis in Chandauli, Chitrakoot and Fatehpur, again relatively speaking. Perhaps there is a need to probe what clicked in these districts. They weren’t “easy” districts and are also aspirational. MDPI is one kind of snapshot. Development has other dimensions as well. In those too, BIMARU states are breaking the shackles.
The writer is chairman, Economic Advisory Council to the Prime Minister.
Views are personal
