Multidimensional Poverty Index

Rationale for measuring multidimensional poverty

For a comprehensive understanding of poverty, and to design policies for overall well-being and happiness of the people, it is imperative to measure both monetary and non-monetary deprivations people face. These include, in addition to income, levels of education and health, and access to basic amenities. This is the rationale behind adopting the Multidimensional Poverty Index (MPI) to gauge multiple deprivations faced by the people of Andhra Pradesh.

The global MPI was developed by OPHI with the UN Development Programme (UNDP) for inclusion in UNDP’s flagship Human Development Report in 2010. It has been published in the HDR ever since. MPI identifies poor households by counting deprivations in health, education, and standard of living using 10 indicators.

Household survey for data collection

To estimate MPI and related parameters, it is required to gather information on all 10 indicators for a household from the same survey. Since no such recent dataset was available, a household survey covering 12,325 households and 43,664 persons in them was conducted by the Directorate of Economics and Statistics, Planning Department. The sampling of rural households has taken the social category (SC/ ST/ OBC/ Others) and landholding size (landless/ marginal and small farmer/ medium and above groups) of the households into consideration. For urban households, employment category (self-employed/ regular wage or salary earning/ casual labour/ others) has been considered, instead of landholding size. The categories of landholding size and employment are based on NSSO definitions detailed in NSSO report no. 554 (68/10/1).

Collaboration with OPHI

Planning Department, Government of Andhra Pradesh and OPHI agreed to collaborate on the MPI estimation project. Accordingly, the end-to-end process including sampling, data processing & analysis, and estimation of headcount and index values undertaken by VMU have been verified and vetted by OPHI.

Key results

The MPI Report places Andhra Pradesh at equivalent to 51st rank globally, with an index value of 0.0825 (value ranges from 0 to 1; 0 being the best and 1 being the worst (poorest)). India, with an index value of 0.1911 is at the 66th position in the table. Within the state, East Godavari is the best performing district with an MPI value of 0.0468 while Vizianagaram is the lowest ranked district with an MPI value of 0.1271.

The multidimensional poverty headcount ratio of the State, which gives the proportion of people living in multidimensional poverty, has reduced from 41.6% in 2005-06 to 21% in 2016-17. The rural headcount ratio stands at 22% while for urban areas it is 19%. As of 2011, the headcount ratio of the country stands at 41.3%.

Way ahead

MPI is an important indicator from the point of view of Sustainable Development Goals (SDGs). Goal 1, which aims at “ending poverty in all its forms everywhere by 2030”, focuses not only on monetary poverty but also on multiple deprivations faced by people. The State Government will use MPI to monitor its progress in the eradication of poverty in all dimensions.

The MPI report and the initiative to conduct an exclusive survey for MPI has the potential of becoming a template for other states. This can in turn help in increased frequency of such studies thereby contributing to evidence-based policy making.