Editorial. The NITI Aayog and UNDP reports point to a qualified success in poverty reduction

The recently released reports by NITI Aayog and the UNDP underscore India’s remarkable success in reduction of multi-dimensional poverty in recent years. The former says that proportion of MPI (multi-dimensional poverty index) poor has fallen from 24.85 per cent in 2015-16 to 14.96 per cent in 2019-21, which translates into 135 million exiting poverty so defined over this period. The MPI index takes into account health, education and standard of living but not income in any direct sense. Income could figure in the standard of living parameters, such as cooking fuel, sanitation, drinking water, housing, electricity and assets.

The UNDP report says that although an impressive 415 million people moved out of MPI poverty between 2005-06 and 2019-21, 230 million or about 16.4 per cent of the population is still poor, an estimate slightly higher than the NITI Aayog’s. In absolute terms, this is about 70 per cent of the US’ population — surely no small number. The other takeaways of the NITI Aayog report are: the so-called BIMARU States have done well in MPI poverty reduction between 2015 and 2021; rural and urban poverty have fallen but the rural-urban gap remains large (19.28 per cent, against 5.27 per cent); and the gap between the northern and southern States has reduced. The report claims government outreach in nutrition, schooling sanitation and access to cooking fuel has made a difference.

However, it is hard to say which of the three MPI metrics has worked. Besides, there appears to be a data discrepancy between the MPI and India’s score in the UNDP’s human development index, which is distinctly unflattering. Unlike the MPI (which delves more into non-income factors in poverty), the UNDP’s HDI is modelled around per capita income, life expectancy at birth and mean years of schooling with equal emphasis to each. Given the statistical ambiguities here, it is important to apply the ‘smell test’. Despite improvements in MPI, the fact is that India’s health, education and civic amenities are below even the standards of medium income countries. India should persist with efforts to improve quality and access in healthcare and education.

In terms of income poverty, measured on the basis of a daily income of $2.15 per day in PPP terms, India seems to have done well. According to the World Bank and UNDP, 10 per cent of the population exists below this level at present. This estimate lies somewhere between two extreme projections: an IMF study by Surjit Bhalla, Karan Bhasin and Arvind Virmani which claims that India has all but wiped out poverty with food transfers, and the ‘withdrawn’ National Sample Survey of 2017-18, which said consumption had fallen 3.8 per cent, pointing to a poverty spike. The latest estimates should be regarded as indicators, without being taken wholly at face value. Data on real wages, industrial growth, migration patterns, and disease and mortality trends could provide some leads.

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