Whatever cynics might say, there is cause to take heart from the NITI Aayog’s recently released discussion paper on reduction in multi-dimensional poverty (MDP) in the country over nine years ending FY23. The paper, which defines MDP in terms of 12 indices encompassing education, health and living standards (three, three and six metrics, respectively, in each category), says that poverty so defined has fallen from 29.17 per cent of the population in FY14 to 11.28 per cent in FY23, with the poorer states – Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan – doing particularly well. As a result, regional disparities have narrowed. The total number of people having ‘escaped’ MDP has been estimated at 24.82 crore. Odisha and Chhattisgarh have done just as well.

The MDP indices have been derived from three National Family Health Surveys (2005-06, 2015-16 and 2019-21), with backward and forward projections for the remaining years based on the observed rates of reduction. The improvements, all-India, have been most impressive (since 2005-06, and markedly after 2015-16) in the areas of bank account addition, assets, school attendance, access to electricity and drinking water. Access to cooking fuel, sanitation, housing, maternal health and nutrition remains a cause for concern, even if some of these indices looked worse 18 years back. The indices take into account the headcount of deprivation as well as its intensity, although it is not entirely clear how deprivation itself is assessed. Perhaps, the report writers could clarify here, as there is evidently no clear ‘line’ to define poverty that is not income-based. As for income-based poverty, the report cites World Bank’s assessment to say that on the basis of $2.15 per capita (2017 PPP), poverty headcount ratio fell from 18.73 per cent in 2015 to 11.9 per cent in 2021.

The MDP findings have, however, given rise to some questions. Unlike in the case of the UN HDIs, MDP does not explicitly include income, although bank account, assets and housing can be seen as proxies. The HDI accords equal weights to education, health and standard of living based on per capita income. While the assessment of poverty has come a long way from being income or calorie-based to include a basket of factors, downplaying income is not a great idea. Indeed, India’s GDP growth took a hit between FY18 and FY23. The annual growth rates of the four States that have shown good MDP progress are below the national average (2012-22) . It is remarkable that MDP has fallen sharply amidst rather low growth rates.

This, as the report rightly points out, can perhaps be explained by the success of Central schemes such as Jan Dhan Yojana, Poshan Abhiyaan and Garib Kalyan Yojana. But the success of such welfarism also raises a disturbing thought: in the absence of strong growth, can the population eventually do without these ‘antyodaya’ schemes? Poverty reduction works best when inclusive growth and welfarism go together.

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