Page 42 - economic review

MACRO ECONOMIC PROFILE14

Multidimensional Poverty Index

1.33 Estimating poverty on the basis of per capita income or per capita monthly expenditure alone
will not give a clear and accurate indication of multi-dimensional poverty. There have been efforts in
recent years to measure multidimensional poverty ratios. Keeping this in view the Oxford Poverty and
Human Development Initiative and the United Nations Development Programme have developed a
Multidimensional Poverty Index (MPI). Multidimensional Poverty is made up of several factors that
constitute people’s experience of deprivation – such as poor health, lack of education, inadequate
living standards, lack of income, disempowerment, poor quality of work and threat of violence. The
Multidimensional Poverty Index (MPI) for Kerala shows that there were 5.6 million people living in
poverty in Kerala in 2010. The challenge is to pull this vast population out of poverty. It also shows
that Kerala ranks 169 among 673 provinces of 104 countries across the world in terms of the head
count ratio. The State’s position (128) is slightly better on the intensity of deprivation (Perspective
Plan 2030 – Kerala).

1.34 The Planning Commission, in June 2012, constituted an Expert Group under the Chairmanship
of Dr.C. Rangarajan to review the methodology for the measurement of poverty. The report published
in June 2014. The Expert Group (Rangarajan) has considered an alternate view in estimating the
poverty line by reference to the ability of households to save. The Methodology developed and
adopted by the Expert Group (Rangarajan) and some of the results based on these are outlined are
given in Box 1.

Box No 1.1
Suggestions of the Expert Group (Rangarajan) for measurement of poverty

• The poverty line should be based on certain normative levels of adequate nourishment, cloth-
ing, house rent, conveyance and education, and a behaviorally determined level of other non-
food expenses.

• The Expert Group (Rangarajan) computed the average requirements of calories, proteins and
fats based on Indian Council of Medical Research (ICMR) norms differentiated by age, gender
and activity for all-India rural and urban regions to derive the normative levels of nourishment.
Accordingly, the energy requirement works out to 2,155 kcal per person per day in rural areas
and 2,090 kcal per person per day in urban areas.

• The protein and fat requirements have been estimated on the same lines as for energy. These
requirements are 48 gms and 28 gms per capita per day, respectively, in rural areas; and 50
gms and 26 gms per capita per day in urban areas.

• In India, the new poverty line works out to monthly per capita consumption expenditure of
` 972 in rural areas and `1,407 in urban areas in 2011-12. For a family of five, this translates
into a monthly consumption expenditure of ` 4,860 in rural areas and ` 7,035 in urban areas.

• In Kerala, the rural poverty line stands at `. 1054.03 per capita per month in 2011-12 and
` 1353.68 for urban areas. (Appendix 1.23)

• State-level poverty ratio was estimated as weighted average of the rural and urban poverty
ratios and the national poverty ratio was computed again as the population-weighted average
of state-wise poverty ratios.

• The Expert Group (Rangarajan) therefore estimates that the 30.9% of the rural population and
26.4% of the urban population was below the poverty line in 2011-12. The all-India ratio was
29.5%. In rural India, 260.5 million individuals were below poverty and in urban India 102.5
million were under poverty. Totally, 363 million were below poverty in 2011-12.

Kerala State Planning Board