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Mains Answer Writing

5-october-2023

Q1) The first step to eradicating poverty is reliable poverty assessment for program design, implementation, and monitoring. In this context discuss the methodology and significance of NITI Aayog’s National Multidimensional Poverty Index.

ANSWER:

Poverty assessment is essential for three distinct objectives i.e. build awareness on poverty, design policies, programs, and institutions to alleviate poverty, and monitor and evaluate these policies, programs, and institutions associated with it. In this context, NITI Aayog’s National Multidimensional Poverty Index (MPI), the first such index at the national level shows promising prospects.

THE METHODOLOGY OF NITI AAYOG’S MULTIDIMENSIONAL POVERTY INDEX

  1. Methodology: MPI follows Alkire Foster’s (AF) methodology for more realistic poverty estimates.
  2. Dimensions: The poverty assessment is done in 3 dimensions: Health, Education, and Standard of Living in order to assess what really constitutes poverty and improve a dimensional understanding of what constitutes poverty.
  3. Indicators: There are a total of 12 indicators in these 3 dimensions which reflect the areas where there is a lack of availability of adequate resources.
  4. Headcount Ratio: After the identification of multidimensionally poor individuals, MPI determines the proportion of multidimensionally poor individuals in the total population. This is known as the headcount ratio of multidimensional poverty or the incidence of poverty.

THE SIGNIFICANCE OF THE NATIONAL MULTIDIMENSIONAL POVERTY INDEX

  1. Complements Monetary Approach: MPI complements the traditional monetary approach of poverty based on the poverty line. MPI captures various qualitative aspects of poverty which are difficult to comprehend through monetary approaches such as child mortality, living conditions, etc.
  2. Depth of Poverty: MPI helps in understanding the depth of poverty and in this manner helps in profiling the poor into different segments. Even if poverty by headcount reduces, the poorest may become poorer due to inequality in resources. This is captured through the assessment of poverty over multiple indicators.
  3. All Forms of Poverty: Not all are money poor, some can be health poor, others may be skills poor, education poor, productivity poor, quality poor etc. MPI assesses all such dimensions thereby helping in ending poverty in all dimensions.
  4. Objective Targeting: Profiling and measuring various simultaneous deprivations of poverty helps in deciding the level of targeting required within program implementation. For e.g., AAY under TDPS provides more subsidized grains to chronically poor households.
  5. Close Monitoring of Individual Indicators: When various indicators of poverty are assessed, it is easier for the State to prioritize efforts and monitor improvement. For e.g., if in any State, the major indicator of poverty comes out to be child stunting and wasting, the Government can target that through relevant nutrition programs.
  6. Urban-Rural Understanding: MPI allows better urban-rural differentiation in poverty assessment, thus relevant policy formulation, implementation, and monitoring in different regions based on the %age of the urban and rural population.
  7. Coordinated Efforts: A national MPI can guide coordinated actions by several ministries and departments, provide clear goals and targets for each indicator, and act as a monitoring and accountability tool within the government.

Poverty reduction requires a multi-dimensional and multi-sectoral approach. It requires inter-ministerial and intersectoral cooperation and coordination. Hence, robust and reliable poverty estimation is required to better design and implement poverty eradication programs.

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