Prime Minister Manmohan Singh's decision to set up a new panel for re-examining the measurement of poverty is a fresh opportunity to rethink India's approach towards poverty. While the Planning Commission is right in saying that poverty has declined from 37.2% in 2004-05 to 29.8% in 2009-10, one question remains: if we no longer measure human progress by income alone, then why do we still use income as a measure of poverty?
In 1990, the United Nations Development Programme (UNDP)'s Human Development Index (HDI) broadened the measure of human progress beyond income to include health and education. This idea had its initial sceptics but today HDI is an accepted measure of human progress.
Twenty years later, in its 2010 Human Development Report, UNDP, working with scholars of Oxford University, proposed a Multi-Dimensional Poverty Index (MPI). The MPI measures poverty by the access a person gets to education, health, and living standards that include access to adequate housing, cooking fuel, toilets, water, electricity and assets.
Just as in 1990, there are sceptics of the MPI too. But over time, people will realise that such an approach will not only give us a better measure of poverty but it will also help us widen our understanding of the nature of poverty. By using MPI, India can refine its anti-poverty programmes.
Using the MPI, India's poverty rate is estimated at 54% in 2005, much higher than the figures using an income poverty measure at 37% for the same year. This makes sense because the income measure of poverty is based on caloric food intake and some measure of health and education. By not measuring the other attributes of poverty, we are not tackling the problem of poverty in a more holistic manner.
In general, the lower the HDI of a country, it's more likely that the percentage of people considered poor will be higher using the MPI, than using an income poverty measure. But there are countries like China, Sri Lanka and Uzbekistan, where the poverty rate using the MPI is less than the one using income poverty because they have focused on other attributes of life such as health, education and shelter. Over time, India has improved the measurement of poverty. But the focus was always to come up with an income poverty line that would correspond to the required caloric intake and health and education expenditure.
Many countries have now started calculating both the MPI and income poverty, as these measures complement each other and give us a more complete picture of the nature of poverty and deprivation.
The MPI measurement requires more data, which is sometimes not easy to get and so it's difficult to use it for inter-country comparison. But it is always useful to understand the nature of poverty in a country at a given point of time.
India should celebrate the decline in poverty from 2004-5 to 2009-10 as measured by income poverty due to rapid growth. But the multi-dimensional deprivations faced by more than half of its population need faster growth but also concerted and effective programmes to deliver basic health, education, access to water and sanitation, cooking fuel and a house with a paved floor.
Many poor people face multiple deprivations on these counts while they may have reached a minimal income poverty line and are not considered extremely poor by that yardstick. Acknowledging this through better poverty measures will be a first step.
Ajay Chhibber is assistant secretary general, United Nations, and regional director for Asia and the Pacific, UNDP. The views expressed by the author are personal.