More than money: The new measure of poverty changing India’s story

When people talk about poverty, the first image that comes to mind is of someone struggling to make ends meet empty pockets, low wages, or families living on less than a few dollars a day. But real poverty goes much deeper than a lack of money. It’s also about the absence of basic needs that make life dignified good health, education, clean water, electricity, and a safe home.

That is exactly what the Multidimensional Poverty Index (MPI) tries to capture. Created by the Oxford Poverty and Human Development Initiative (OPHI) in collaboration with the United Nations Development Programme (UNDP), the MPI is widely recognised as one of the most comprehensive ways to understand how people experience deprivation in their daily lives.

What the MPI really means

Unlike conventional poverty measures that focus only on income, the MPI looks at how people actually live. It asks a question that’s both simple and profound: How many basic things are people missing in life? Instead of treating poverty as a single number, the MPI looks at multiple hardships that can occur together such as poor nutrition, a lack of education, unsafe drinking water, no electricity, or weak housing. A household or individual is considered “multidimensionally poor” if they are deprived in at least one-third of these indicators.

This idea marks a major shift from the old understanding of poverty. For example, two families may earn the same amount of money, but one might have access to schooling, toilets, and healthcare while the other doesn’t. Under income-based measures, both would be treated equally. The MPI, however, recognises the second family as poorer in a more meaningful sense.

How the MPI works

The MPI uses a statistical method called the Alkire–Foster approach, which combines data from different dimensions of poverty namely health, education, and living standards. Each of these dimensions includes specific indicators, and every indicator carries a certain weight. The more indicators in which a person is deprived, the higher their overall deprivation score.

The three dimensions and their ten indicators are summarised below:

A person or household whose total weighted deprivation reaches one-third or more is classified as multidimensionally poor.

Why the MPI tells a deeper story

For decades, poverty was defined by money alone how much people earn or spend. The World Bank’s well-known poverty line of $2.15 a day captures this idea. But life is not just about income. A steady salary does not guarantee clean water, a safe home, or an educated child.

This is where the MPI brings a deeper understanding. It uncovers the “hidden poverty” that income figures overlook. For instance, a household earning just above the official poverty line may still live without toilets, safe water, or electricity. Under income measures, they might appear to have escaped poverty, but in reality, they remain deprived.

The MPI also shows not only how many people are poor but how they are poor. It paints a fuller picture of human deprivation revealing whether a community’s greatest challenges lie in health, education, or housing. This clarity helps governments design better policies. Instead of one-size-fits-all solutions, they can focus on what each region needs most: sanitation drives, nutrition programmes, or school retention schemes.

Another strength of MPI is its stability. Income levels can change quickly due to inflation or job loss, but improvements in education, sanitation, or housing tend to be lasting. The MPI, therefore, captures more durable progress in people’s quality of life.

The South Asian picture

The Global MPI 2024 report, released jointly by OPHI and UNDP, shows that South Asia remains home to a significant share of the world’s multidimensionally poor. But progress has been steady, and differences between countries are striking.

The numbers tell a clear story. South Asia’s poverty landscape ranges from extremely low deprivation in Sri Lanka where less than three percent of the population is MPI-poor to severe poverty in Afghanistan, where nearly two-thirds of people face multiple deprivations. India, which accounts for the region’s largest population, stands out for its steady decline in MPI. In 2005–06, more than half of Indians were multidimensionally poor. By 2019–21, that number had dropped to just over 16 percent lifting hundreds of millions out of overlapping poverty.

India’s State-Wide MPI: A Country of contrasts

The NITI Aayog’s National MPI Report (2023), based on the National Family Health Survey (NFHS-5), gives the most detailed snapshot of India’s multidimensional poverty at the state level. It reveals a nation of contrasts: some states have nearly eradicated poverty, while others continue to struggle with deep-rooted deprivation.

Southern and Western India

Northern and Central India

Eastern and Northern States

The difference between Kerala, with less than one percent of its population considered poor, and Bihar, where one in three people still suffer multiple deprivations, illustrates how uneven India’s development has been.

India’s progress in reducing MPI

India’s rapid improvement in MPI over the past two decades did not occur by accident. It was driven by a series of targeted social and economic policies aimed at improving access to basic needs.

Government programmes such as the Pradhan Mantri Awas Yojana (PMAY) provided affordable housing, while the Saubhagya Yojana expanded household electricity connections to remote areas. The Swachh Bharat Mission and Jal Jeevan Mission revolutionised access to sanitation and clean drinking water, drastically reducing health-related deprivations.

Nutrition and healthcare programmes also played a major role. Initiatives like POSHAN Abhiyaan, the Mid-Day Meal Scheme, and Ayushman Bharat improved food security and medical access, especially for women and children. As a result, India saw steady declines in malnutrition and child mortality, two major components of the MPI.

Education reforms under Sarva Shiksha Abhiyan and Samagra Shiksha increased school enrolment and reduced dropout rates, while female literacy improved dramatically. At the same time, efforts to expand financial inclusion, such as the Jan Dhan Yojana and Direct Benefit Transfers, ensured that welfare benefits reached millions of households without leakages.

The digital transformation of governance, including the Digital India programme and Aadhaar-linked welfare systems, brought unprecedented transparency and efficiency to welfare delivery. Together, these initiatives reshaped the lives of millions of people, giving them better access to housing, education, sanitation, and basic utilities, the very ingredients that form the MPI.

Why the MPI differs across Indian states

India’s Multidimensional Poverty Index (MPI) reveals stark state-wise disparities driven by uneven economic growth, historical advantages, and governance quality. Southern and western states like Kerala, Tamil Nadu, and Maharashtra, with early industrialisation and strong social investments, show near-zero poverty, while Bihar, Uttar Pradesh, and Madhya Pradesh lag due to weak infrastructure and agriculture dependence. Geography and conflict further hinder progress in states like Odisha and Chhattisgarh. Despite lifting 250 million people out of poverty between 2005 and 2021, large Hindi heartland states still face high deprivation. Sustaining progress demands stronger local governance, quality healthcare, education, and job creation. The MPI underscores that poverty is not just lack of income, but the absence of dignity, opportunity, and choice — a challenge India must meet by 2030.