Bibek Debroy's Last NDTV Column: Why India Needs A New Poverty Line

(The co-author, Bibek Debroy, passed away on November 1 at the age of 69. This is his last column for NDTV, which he submitted on October 21. His other columns can be found here)

The Global Multidimensional Poverty Index (MPI) is a comprehensive tool developed by the Oxford Poverty and Human Development Initiative (OPHI) and the UNDP's Human Development Report Office. It was first introduced in 2010 to measure acute multidimensional poverty across over 100 developing countries. The MPI goes beyond income-based poverty measures by assessing deprivation across three key dimensions: health, education, and standard of living. These dimensions are represented through ten specific indicators, such as stunting, underweight, child mortality, years of schooling, and access to basic amenities like clean water and electricity. Each indicator is assigned a weight, with the health and education dimensions receiving 1/6 weight each, and the standard of living indicators collectively weighted at 1/18 each. Individuals are considered multidimensionally poor if they are deprived in at least one-third of the weighted indicators, emphasising the interconnectedness of deprivations.

How MPI Is Calculated

Methodologically, the MPI computation starts by constructing a deprivation profile for each household based on survey data such as Multiple Indicator Cluster Surveys and Demographic and Health Surveys. These profiles track deprivations for every individual in the household. The MPI is calculated as the product of the incidence (H), or the proportion of people who are multidimensionally poor, and the intensity (A), which measures the average share of deprivations experienced by the poor. This approach enables disaggregation of poverty data by region, age group, and other socio-demographic factors, allowing for more precise targeting of interventions.

The Multidimensional Poverty Index (MPI), which considers various non-monetary deprivations across health, education, and living standards, reveals significant regional disparities. Sub-Saharan Africa and South Asia remain disproportionately affected, housing 83% of the world's poor. In countries with low Human Development Index (HDI) scores, such as Niger, Chad, and the Democratic Republic of the Congo, high poverty rates persist, with over half of the population living in multidimensional poverty. While global efforts have reduced poverty, particularly in countries like Nepal and Sierra Leone, challenges related to governance, conflict, and environmental shocks continue to hinder progress in many regions.

How Some Regions Have Progressed

Despite these challenges, 76 countries have witnessed statistically significant reductions in MPI values. Sub-Saharan Africa, despite housing the largest concentration of the poor, has seen notable improvements in countries such as Ethiopia and Liberia. These reductions are often attributed to strategic interventions in education, healthcare, and infrastructure, which address the core dimensions of multidimensional poverty. The COVID-19 pandemic temporarily reversed gains in some areas, but post-pandemic data shows a slow resumption of progress in most regions. This highlights the need for sustained, evidence-based policy interventions, particularly in conflict-prone regions where poverty alleviation efforts have been stymied.

India has been a standout case in global poverty reduction, particularly in the last decade. With 234 million people living in multidimensional poverty in 2024, India still accounts for the largest number of poor individuals globally. However, the country's efforts to address poverty through large-scale programmes have yielded impressive results. Since 2005-06, India has significantly reduced the MPI, with a 16.4 percentage point reduction in poverty incidence between 2015-16 and 2019-20 alone. Programmes such as the Pradhan Mantri Awas Yojana (housing), Swachh Bharat Abhiyan (sanitation), and Ayushman Bharat (healthcare) have targeted the core deprivations affecting millions, particularly in rural areas where poverty is most prevalent. Substantial improvements in key indicators such as nutrition, school attendance, and access to electricity have driven India's multidimensional poverty reduction.

MPI Is Inadequate

But is MPI a real measure of poverty? The answer is no. It is more of a development indicator rather than a true measure of poverty. As discussed, MDPI is grounded in three key dimensions: health, education, and living standards. Health indicators—such as nutrition, child and adolescent mortality, and maternal health—along with education metrics like years of schooling and school attendance are undeniably crucial for shaping an individual's future prospects and determining long-term poverty outcomes. These dimensions, however, are more forward-looking in nature and capture the potential for future poverty rather than the immediate deprivation that living standards reflect.

Living standards encompass access to cooking fuel, sanitation, drinking water, electricity, housing, assets, and financial inclusion (e.g., bank accounts), providing a more immediate and tangible picture of poverty. While health and education are critical drivers of development, conflating them with living standards under the umbrella of “poverty” risks diluting the focus of poverty measurement.

Yet, this elasticity is necessary because poverty is not just about material deprivation; it also encompasses missed opportunities and structural disadvantages. As Sen (1999) and Nussbaum (2000) highlight in their capabilities approach, addressing poverty requires more than just economic relief—it demands empowering individuals to lead lives they value, which involves access to education and health. In this sense, the broad scope of MDPI reflects a deeper understanding of human development and the interrelatedness of various deprivations.

Why The Tendulkar Line Is Outdated Now

However, we need an updated headcount ratio to accurately measure poverty and assess the effectiveness of its socio-economic policies. India also urgently needs a new poverty line due to the outdated nature of the existing Tendulkar line, last updated in 2011-12. As economies evolve, so do the standards of what constitutes a “bare minimum” for subsistence, yet India continues to rely on this decade-old benchmark. The debate over the adequacy of the ₹32 per capita per day figure, once a lightning rod for controversy, highlights the need for a more accurate measure that reflects current economic realities. While the Rangarajan Committee proposed a revised poverty line in 2014, it was never officially adopted, leaving India reliant on an obsolete metric.

With the release of new data from the Household Consumption Expenditure Survey (HCES), there is an opportunity to recalibrate India's poverty line to reflect contemporary socio-economic conditions. The HCES provides detailed insights into household consumption patterns, and applying this data to a revised poverty line could give a more accurate measure of deprivation in the country.  

(Bibek Debroy was Chairman, Economic Advisory Council to the Prime Minister, and Aditya Sinha is OSD, Research, Economic Advisory Council to the Prime Minister)

Disclaimer: These are the personal opinions of the authors