We have made significant progress on poverty reduction

The Global Multidimensional Poverty Index (MPI) for 2022 follows a rigorous and objective approach, and in doing so provides cross-country analysis and important insights on long-term trends. The methodology of the MPI identifies overlapping poverty indicators and therefore captures the intensity of deprivation and its changes. Deprivation is monitored across 10 indicators spanning health, education and standard of living. The weighted average score of each household is the MPI. If that deprivation score is one-third or higher, the MPI identifies the family as multidimensionally poor. By identifying who is poor and the nature and intensity of their poverty, the global MPI complements the international $1.90 per day poverty threshold.

First of all, good news. In 15 years, starting in 2005, 41.5 million people in India have been lifted out of poverty. This is the first time that we have evidence of China’s performance in reducing poverty. During this period, the incidence of poverty fell from 55.1% of our population to 16.4%. Even though India still has an unacceptably large number of poor people, we can clearly say that India is no longer a “poor country”. As India’s population has quadrupled in the 75 years since independence, India’s progress on poverty reduction has been steady, especially in India. in the last 30 or so years. India has made mediocre progress on all 10 deprivation indicators. In 2019, my column used estimates from the World Poverty Clock to suggest that India has made dramatic progress in reducing extreme poverty (bit.ly/3ziA0Y5). This report confirms that observation more strictly.

In 111 developing countries, 4.1 million poor people are deprived of all 10 indicators (that is, a deprivation score of 10). Of them, 3.8 million live in sub-Saharan Africa, 214,000 in the Arab states (dominated by Sudan) and about 110,000 in South Asia, concentrated in Afghanistan and Pakistan. For example, Nepal has made dramatic progress on a number of indicators such as sanitation, cooking fuel, electricity and housing in Laos and Ethiopia over the years of schooling. Ethiopia remains poor, with 68.8% poverty just before the start of the pandemic.

For India, the good news is not that we still have the world’s largest number of poor people (229 million). The urban-rural divide is deep. 21.2% of our rural residents are poor as compared to only 5.5 percent of urban residents. According to the report, nearly 90% of all poor people in India live in rural areas, with 205 million out of 229 million. In India, the most common ‘deprivation bundle’ includes access to cooking fuel, housing, nutrition and sanitation. And sadly, one in five (21.8%) children are poor compared to one in seven adults (13.9%). Amazingly, even though Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh, Rajasthan and Uttar Pradesh (the so-called ‘BIMARU’ states) have improved the most, they are still India’s most disadvantaged. Odisha has joined this underprivileged club. Karnataka, Maharashtra and Gujarat have made great progress with Kerala, Tamil Nadu, Delhi and Punjab leading the way.

The data used in the report covers only a few months after the pandemic. The asymmetric impact of COVID is likely to hamper India’s dramatic progress. Some estimates suggest that school closures and food insecurity may have contributed to the many-year regression in this count. We will learn more about the impact of the pandemic as the first reports from post-pandemic household surveys begin arriving next year.

One positive consequence of evaluating ‘deprivation bundles’ is that it helps us re-orient public policy. Lack of access to nutrition, cooking fuel, sanitation and housing needs to be addressed on a priority basis. The remarkable progress made in the distribution of basic calories through our public distribution system should now be oriented towards the distribution of ‘nutrition’.

This progress was enabled by the success of Aadhaar in targeting beneficiaries with less waste and fewer fake claimants. The same composition can be used for a more balanced food delivery system that includes healthy macro and micronutrients and proteins. Perhaps a more robust real-time system could be added to enable access to perishable goods such as eggs, vegetables and fruits.

Subsidized cooking fuel benefits from the same architecture, but needs to deepen its reach in rural areas. Ujjwala Yojana estimates that LPG penetration in India is now around 98%. More objective estimates that adjust for multiple connections in some households yield lower but more appreciable numbers. Central and many state governments are focusing on cleanliness and affordable housing. Significant progress remains to be made in these matters. So clearly there is more to be done.

PS “Poverty is a denial of opportunity,” said Nobel laureate Amartya Sen.

Narayana Ramachandran is the chairman of Include Labs. Read Narayan’s Mint column at www.livemint.com/avisiblehand