Multidimensional poverty is a complex issue that extends beyond mere income levels. The Multidimensional Poverty Index (MPI) was developed to provide a more comprehensive view of poverty. It assesses deprivations across health, education, and living standards. This framework helps policymakers and researchers identify where interventions are most needed.
The Multidimensional Poverty Index
- The MPI was created by the Oxford Poverty and Human Development Initiative and the United Nations Development Programme.
- It uses ten indicators to evaluate poverty. These indicators are grouped into three dimensions – health, education, and living standards.
- In the health dimension, child mortality and nutrition are key indicators.
- For education, school attendance and years of schooling are evaluated.
- Living standards include access to clean water, sanitation, and electricity.
- This structured approach allows for a deeper understanding of poverty.
The Capability Approach
- Amartya Sen’s Capability Approach underpins the MPI.
- It views poverty as a deprivation of essential capabilities rather than just a lack of income.
- Capabilities refer to the freedoms individuals have to achieve lives they value. This includes health, education, and participation in economic activities.
- By focusing on what people can do and be, the Capability Approach prioritises human development over material wealth.
Niti Aayog’s Adaptation of MPI in India
- In India, the Niti Aayog has adopted a version of the MPI.
- They added two indicators – bank account ownership and maternal health.
- Their reports indicate a decline in multidimensional poverty, from 24.85% in 2015-16 to 14.96% in 2019-21.
- However, the choice of indicators and methodologies has faced criticism. It is argued that countries should tailor the MPI to reflect their unique contexts.
- This includes focusing on measures that enhance capabilities rather than just outcomes.
Health Expenditure and Economic Vulnerability
- In India, out-of-pocket expenditure (OOPE) for healthcare is issue.
- Nearly 50% of health expenditures are paid directly by households, leading to financial strain.
- Many households end up below the poverty line due to excessive medical costs.
- Insurance coverage is limited, with only 9.55% of the below-poverty-line population having health insurance.
- This lack of coverage exacerbates economic vulnerability and limits access to healthcare.
The Role of Digital Access
- Access to the internet is increasingly vital in the modern world.
- It enables individuals to engage in education, economic activities, and healthcare. Studies show that internet access can reduce poverty.
- However, disparities exist. Women and rural populations have lower internet usage rates.
- Addressing these gaps is crucial for enhancing capabilities and encouraging economic mobility.
Implications for Policy and Poverty Reduction
- About multidimensional poverty requires a comprehensive approach.
- Incorporating health insurance and internet access into the MPI can provide a clearer picture of poverty in India.
- This can help policymakers identify areas needing intervention and allocate resources effectively.
- The focus should be on improving both negative and positive freedoms to enable individuals to lead fulfilling lives.
Questions for UPSC:
- Examine the impact of the Capability Approach on poverty alleviation strategies in developing countries.
- Discuss the significance of incorporating health insurance in the Multidimensional Poverty Index. What implications does this have for economic stability?
- Critically discuss the relationship between digital access and economic mobility in rural India.
- Analyse the role of out-of-pocket expenditure in perpetuating poverty in India. What measures can be taken to mitigate this issue?
Answer Hints:
1. Examine the impact of the Capability Approach on poverty alleviation strategies in developing countries.
- Focuses on enhancing individual capabilities rather than solely increasing income.
- Encourages policies that promote health, education, and community engagement.
- Empowers marginalized groups by recognizing diverse needs and aspirations.
- Shifts the narrative from poverty as a lack of resources to a lack of opportunities.
- Supports tailored interventions that address specific local contexts and challenges.
2. Discuss the significance of incorporating health insurance in the Multidimensional Poverty Index. What implications does this have for economic stability?
- Health insurance reduces out-of-pocket expenditure, mitigating financial shocks.
- Increases access to healthcare services, improving overall health outcomes.
- Enhances economic stability by allowing households to invest in education and livelihoods.
- Facilitates better resource allocation for healthcare, addressing systemic barriers.
- Improves resilience against health crises, reducing the risk of falling into poverty.
3. Critically discuss the relationship between digital access and economic mobility in rural India.
- Digital access provides opportunities for education and skill development.
- Enables participation in the gig economy, enhancing income-generating options.
- Bridges the gap between rural and urban economies, encouraging structural transformation.
- Access to information can improve agricultural practices and market access.
- However, disparities in access highlight the need for targeted interventions to ensure equity.
4. Analyse the role of out-of-pocket expenditure in perpetuating poverty in India. What measures can be taken to mitigate this issue?
- Out-of-pocket expenditure leads to financial strain, pushing households below the poverty line.
- It limits access to necessary healthcare services, exacerbating health-related vulnerabilities.
- Government initiatives should focus on expanding health insurance coverage and accessibility.
- Implementing universal healthcare systems can reduce reliance on out-of-pocket payments.
- Promoting financial literacy can help households manage healthcare costs more effectively.
