About Poverty – Global Indices on Poverty

Definition of Poverty

Poverty is defined by the World Bank as the deprivation of well-being across multiple dimensions. It encompasses low income and a lack of access to basic goods and services essential for survival with dignity.

Global Multidimensional Poverty Index (MPI)

The Global Multidimensional Poverty Index (MPI) was launched in 2010 by the United Nations Development Program (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI). The MPI measures poverty through three dimensions – education, health, and standard of living, using ten specific indicators.

MPI Indicators and Weights

The MPI includes the following indicators – – Education – Years of schooling and child enrolment, each with equal weight. – Health – Child mortality and nutrition, each with equal weight. – Standard of living – Factors including electricity, flooring, drinking water, sanitation, cooking fuel, and assets, each weighted at 1/18. If an individual is deprived of one-third or more of the weighted indicators, they are classified as multi-dimensionally poor. If deprived of half or more, they are considered to be in extreme multidimensional poverty.

Global MPI Findings in India

The Global MPI 2020 report indicated levels of multi-dimensional poverty in India, with notable differences between rural and urban populations. The report brought into light variations in poverty levels across different state of Indias.

World Bank Poverty Line

The World Bank defines extreme poverty as living on less than $1.90 per day, based on 2011 purchasing power parity (PPP) prices. In India, portion of the population lives below this threshold. In September 2022, the World Bank updated the poverty line, setting it at a higher rate using 2017 prices.

Global Poverty Statistics

As of 2021, approximately 9.2% of the global population lived on less than $1.90 a day. The COVID-19 pandemic led to an estimated 97 million additional people entering extreme poverty in 2020. Sub-Saharan Africa has the highest rates of extreme poverty, with over 40% of its population living below the poverty line.

Poverty Measurement Indices

Several indices are used to measure poverty globally: – World Bank Poverty Line – Defines extreme poverty based on income levels. – Multidimensional Poverty Index (MPI) – Assesses poverty through multiple deprivations in health, education, and living standards. – Human Development Index (HDI) – A composite index measuring average achievements in health, education, and standard of living. – Gini Coefficient – Measures income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).

Poverty Trends Over Time

The global extreme poverty rate decreased from 36% in 1990 to 10% in 2015. However, post-2015, progress in poverty reduction has stagnated, with rising numbers due to economic shocks and conflicts.

Poverty and Inequality

The Poverty Gap Index measures the intensity of poverty by evaluating how far the poor are from the poverty line. The Inequality Adjusted Human Development Index (IHDI) adjusts HDI figures for inequality in each dimension of human development.

International Initiatives to Combat Poverty

The Sustainable Development Goals (SDGs) aim to end poverty in all forms by 2030. The World Bank focuses on poverty alleviation through economic growth, social protection, and improved access to services.

Urban vs. Rural Poverty

Urban poverty is typically associated with higher living costs and informal employment. In contrast, rural poverty often relates to agricultural dependency and inadequate infrastructure.

Gender and Poverty

Women and children are disproportionately affected by poverty, representing percentage of the global poor. Gender disparities influence access to resources and opportunities.

Key Reports and Surveys

The World Bank’s Global Monitoring Report provides data on poverty trends and progress towards SDGs. The UNDP Human Development Reports offer vital information about the multidimensional aspects of poverty and development.

Challenges in Poverty Measurement

Data limitations arise from inconsistent data collection methods across countries. The dynamic nature of poverty complicates measurement, as individuals may move in and out of poverty.

Future Projections on Poverty

Estimates indicate that without policy changes, global poverty rates may not return to pre-pandemic levels until 2030 or later.

Questions for UPSC:

1. Critically discuss the effectiveness of the Global Multidimensional Poverty Index (MPI) in addressing the complexities of poverty in India.
2. Examine the impact of the COVID-19 pandemic on poverty trends in India, focusing on the reversal of progress made in poverty alleviation.
3. Analyse the relationship between the Gini Coefficient and poverty levels in India, considering how income inequality affects marginalized communities.
4. Point out the distinct characteristics of urban and rural poverty in India and discuss the implications of urbanization on poverty dynamics.

Answer Hints:

1. Critically discuss the effectiveness of the Global Multidimensional Poverty Index (MPI) in addressing the complexities of poverty in India.

1. The MPI measures poverty through multiple dimensions, including health, education, and living standards, offering a comprehensive view beyond income alone.
2. India’s MPI has shown regional variations, denoting disparities in poverty levels across states and communities.
3. The index has been instrumental in policy formulation, guiding targeted interventions in areas with high multidimensional poverty.
4. Critics argue that the MPI may overlook certain cultural and social factors that contribute to poverty in India.
5. Despite its strengths, the MPI’s reliance on data quality and availability can affect its effectiveness in accurately reflecting poverty levels.

2. Examine the impact of the COVID-19 pandemic on poverty trends in India, focusing on the reversal of progress made in poverty alleviation.

1. The pandemic has led to widespread job losses and income reduction, pushing millions back into poverty after years of progress.
2. Vulnerable populations, including informal workers and daily wage earners, faced the brunt of economic disruptions caused by lockdowns.
3. Government responses, such as cash transfers and food security measures, were implemented but often fell short of addressing the scale of need.
4. Rural areas experienced unique challenges, as migration to cities halted and local economies suffered from reduced demand.
5. Long-term impacts include increased food insecurity and a rise in mental health issues, complicating poverty alleviation efforts moving forward.

3. Analyse the relationship between the Gini Coefficient and poverty levels in India, considering how income inequality affects marginalized communities.

1. The Gini Coefficient measures income inequality, with higher values indicating greater disparity; India’s Gini has been increasing, suggesting widening inequality.
2. Marginalized communities, including Scheduled Castes and Tribes, often experience disproportionate effects of income inequality, remaining trapped in poverty.
3. Income inequality can limit access to essential services such as education and healthcare, exacerbating poverty cycles.
4. Economic growth in India has not been inclusive, leading to benefits accruing primarily to the wealthy, further entrenching inequality.
5. Addressing income inequality through progressive taxation and social welfare programs is critical for effective poverty alleviation.

4. Point out the distinct characteristics of urban and rural poverty in India and discuss the implications of urbanization on poverty dynamics.

1. Urban poverty is often characterized by high living costs, inadequate housing, and lack of access to basic services, while rural poverty is linked to agricultural dependency and lower income opportunities.
2. Urban areas attract migration due to perceived better opportunities, but many migrants end up in slums, facing precarious living conditions.
3. Rural poverty often involves isolation from markets and services, making it harder for communities to improve their economic situation.
4. Urbanization can lead to increased competition for resources and jobs, potentially exacerbating poverty if not managed properly.
5. Policies addressing both urban and rural poverty must consider the interconnectedness of these dynamics to create sustainable solutions.