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By Jagdish Rattanani with Sunil Ray
The Union Budget for 2024-25 presented as a vote on account once again spoke of India’s reported dramatic reduction in what is called multidimensional poverty. This reiterates earlier announcements with a string of eye-catching headlines. The claim is that 248.2 million Indians have escaped “multidimensional poverty” in the last nine years, including some 60 million people in Uttar Pradesh, followed by Bihar at 38 million and Madhya Pradesh at 23 million.
The MPI calculations admittedly exclude the impact of Covid-19, as if health, schooling, standards of living were unimpacted during the pandemic, contrary to the real burdens brought by the pandemic precisely in these areas, not only in the immediate but also follow-on impacts that carry into the later years
The data is based on the Niti-Aayog report “National Multidimensional Poverty in India since 2005-06 – A Discussion Paper”, and was also cited by the Prime Minister Narendra Modi to talk of development as a “chariot of trust” that is changing India. In Jan. 2024, speaking on the Viksit Bharat Sankalp Yatra, the Prime Minister said 25 crore people have come out of poverty in the last nine years due to the efforts of the government. In his words: “Our government has … made even the impossible possible … India is changing rapidly.” The period under discussion covers the last two terms of the Modi government, and yatra itself uses official machinery to take claims on poverty reduction to the hinterland close to a coming national election.
Jobs and quality of jobs continue to be an area of concern
How fair is the claim and does it stand scrutiny?
In brief, the multidimensional poverty index (MPI) is based not on income or expenditure of households but on National Family Health Survey (NFHS) data that captures access across three equally weighted dimensions – health, education and standard of living – measured through 12 indicators. The national MPI retains all the ten indicators from the global MPI and incorporates two additional indicators, Maternal Health and Bank Accounts. Each indicator then has a set cut off, below which the individual is considered deprived. A weighted sum of deprivations gives a score. An individual is considered MPI poor if their deprivation score equals or exceeds the poverty cutoff of 33.33%.
Bank accounts may have been opened on a large scale but how much of that can be a reliable indicator of lack of deprivation, when there is no view on how many of these are operational, or if this led to banking transactions or related financial activity like, say, insurance coverage?
The MPI calculations admittedly exclude the impact of Covid-19, as if health, schooling, standards of living were unimpacted during the pandemic, contrary to the real burdens brought by the pandemic precisely in these areas, not only in the immediate but also follow-on impacts that carry into the later years. The discussion paper notes that “since part of the NFHS-5 data were collected before the pandemic, the estimates presented in this paper may not fully reflect the impact of Covid on the economy or the implications of subsequent government interventions.”
In the Indian context, multidimensional poverty calculated thus runs into some very special difficulties. Schooling carries a one-third weightage in the index and within it has two indicators: A household is considered deprived if a) not even one member of the household aged 10 years or older has completed six years of schooling; b) any school-aged child is not attending school up to the age at which he/she would complete class 8.
A dramatic reduction in poverty sits at odds with the need for the Central government to provide free food grains to about 813.5 million beneficiaries
Even if the Covid impact is left aside, and even if the answer to both the questions on education results in a finding of “not deprived”, there is data to show that this may not amount to much. Given doubts on the quality of the school infrastructure, the availability and quality of teachers, and other issues plaguing the school system, it is clear that goals of schooling cannot be said to be met, and in fact are not met. This is amply clear from the Annual Status of Education Report Rural (“ASER 2023: Beyond Basics”) under the aegis of the noted non-profit Pratham, released in New Delhi last month.
ASER 2023 notes that “nearly 85% of surveyed youth can measure length using a scale when the starting point is 0 cm. This proportion drops sharply to 39% when the starting point is moved.” In the age group 14-18 years, “more than half struggle (56.7%) with (simple) division (3-digit by 1-digit) problems”, which is a skill usually expected in Std III/IV, the ASER 2023 survey notes.
Total employment in India declined, mainly driven by significant loss of employment in agriculture. Although the services sector absorbed labour to a large extent, the quality of these jobs evidently deteriorated
Consider the standards of living indicator that says a household is deprived if no one in the family has a bank or post office account. Bank accounts may have been opened on a large scale but how much of that can be a reliable indicator of lack of deprivation, when there is no view on how many of these are operational, or if this led to banking transactions or related financial activity like, say, insurance coverage?
So apart from methodology, choice of indicators, the extrapolations used for the Covid years, and related technical issues, this raises questions on numbers that indicate progress but may not reflect ground realities.
This is not to say that MPI is to be rejected in toto but that the dramatic numbers and fantastic conclusions being drawn are contestable. They point to an overreach of marketing that tends to overstate achievement, can build a sense of complacency and can stifle new efforts since the picture presented is already rosy. Meanwhile, jobs and quality of jobs continue to be an area of concern.
The food security covers 75% of the population in rural areas and 50% in urban areas
The Centre for Monitoring Indian Economy, CMIE, reported that rural unemployment in December 2023 at 8 per cent marked a record high in the past seven years (barring 2020). The rate has been steadily climbing since December 2017, when rural unemployment was 4.6 per cent. In urban India, the unemployment rate increased to 10.1 per cent in December 2023, similar to the level a year ago but higher than the rate of around 9 per cent in December in the past three years.
The overall unemployment rate in India fell sharply to 6.8 per cent in January 2024 but this fall “concealed the stress in the labour market that was shown by a fall in the Labour Participation Rate (LPR) as well as employment rate. Total employment in India declined, mainly driven by significant loss of employment in agriculture. Although the services sector absorbed labour to a large extent, the quality of these jobs evidently deteriorated,” according to CMIE.
A dramatic reduction in poverty sits at odds with the need for the Central government to provide free food grains to about 813.5 million beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana for a period of five years with effect from January this year. Almost the same number of beneficiaries were provided free food earlier. The programme in itself is laudable but what happens to poverty if food grain distribution is stopped? The food security covers 75% of the population in rural areas and 50% in urban areas, making it one of the largest programmes of its kind in the world.
The overall and simple fact is that on the road to development, India has many things going for it and many, many others that are failing. Integrity, commitment and the willingness to truly attack poverty demand that we read the indicators with caution and work to fix the deep-seated structural issues that require both time and effort. In the work of development, there are no quick fixes, and there is no magic wand.
(Jagdish Rattanani is a journalist and faculty member at SPJIMR. Sunil Ray, a former director of the A N Sinha Institute of Social Studies, Patna, is advisor, Impact and Policy Research Institute, Delhi and Centre for Development Studies and Communication, Jaipur. Views are personal)