MD Assignment (P40116, Ayushi Agrawal)

Answer 1) Multi-dimensional head count ratio

Below are the three dimensions:
(i) Education (e) – mean years of schooling
illiterate:0, primary:0.2, secondary:0.4 matriculate:0.6, intermediate:0.8 and
graduate and above:1 Cut off: 0.6
(ii) Income(y)- monthly income
income values: 0 to 100000 Cut off: 10000
(iii) Participation in family decision(p)- scale of 1 to 10
Cut-off: 5
My family has 6 members, let them be A, B, C, D, E, F
A- Grandfather
B- Grandmother
C- Father
D- Mother
E- Myself
F- Young Brother

Index/Person Dimensions Poverty/deprivation Count Poverty criteria

e y p e y p U ∩ d=2

A 1 80000 9 0 0 0 0 0 0 0
B 0.2 0 4 1 1 1 3 1 1 1
C 1 100000 8 0 0 0 0 0 0 0
D 1 3000 7 0 1 0 1 1 0 0
E 1 5000 6 0 1 0 1 1 0 0
F 0.8 8000 5 0 1 0 1 1 0 0
Cut-off 0.6 10000 5 HCR 4/6 1/6 1/6

Multi-dimensional Poverty (MPI)

Indicator Weight A B C D E F
Education Mean years 1/3 0 1 0 0 0 0
of schooling
Income Monthly 1/3 0 1 0 1 1 1
income
Participation Participation 1/3 0 1 0 0 0 0
in family
decision
 Weighted 0 1 0 0.33 0.33 0.33
score
M=2/3 Cut-off = 0.5 Not MPI Not Not Not Not
A= (0.33+1)/2 MPI Poor MPI MPI MPI MPI
MPI=M*A Poor (≥ 0.5) Poor) Poor Poor Poor
= 0.443 (<0.5) <0.3) (<0.5) (<0.5) (<0.5)

Answer 2)
Let the rural individuals be represented as R1,R2,R3,R4,R5,R6,R7 and R8
Monthly Income levels: 0 to 30000
Rural Poverty Line (RPL): 5000
Let the urban individuals be represented as U1,U2,U3 and U4
Monthly Income levels: 1000 to 100000
Urban Poverty Line (UPL): 10000

Individuals Monthly Income Poverty Gap

R1 3000 2000
R2 5000 0
R3 1000 4000
R4 3500 1500
R5 1500 3500
R6 10000 0
R7 20000 0
R8 25000 0
Sum of rural poverty gap 11000
Rural PGR =11000/8 = 1375
U1 50000 0
U2 9000 1000
U3 7000 3000
U4 25000 0
Sum of urban poverty gap 4000
Urban PGR =4000/4 = 1000
Total sum of Poverty gap 15000
For decomposability:
Overall PGR = (rural population share) *(rural PGR) + (urban population share) *(urban
PGR)
= (8/12) *1375 + (4/12) *1000
=1250

Now to calculate directly PGR for the entire population

= (Sum of Poverty gap for all the 12 individuals)/ (Total population)
=2000+4000+1500+3500+1000+3000
=15000/12
=1250

Thus, we find that PGR also satisfies decomposability.

Answer 3)
Poverty tests are used to compare individuals in a society in order to determine the degree to
which they are subjected to unacceptable disadvantages. However, every indicator of poverty
is flawed in and of itself. Imperfections are caused by two factors: data limitations and the
diversity of human lives being measured, which is especially true in a large country like India.
Furthermore, depending on wealth, level of growth, socio-political views, and other variables,
people's conceptions of what constitutes basic human needs differ greatly. As a result, opinions
about how the poverty line should be determined differ greatly. This complicates the option of
a poverty line. Changes in wages, consumption patterns, and prices necessitate recalibrating
poverty lines. With India's growth, priorities have changed over time. Rather than settling for
the bare necessities of food and shelter, today's aspiring poor pursue advancement in schooling,
health, housing, skills, and consumption. As a result, poverty is no longer defined solely by a
lack of basic food to keep the body and soul alive, but also by a lack of living standards, such
as sanitation, housing, piped water, electricity, education, health, and jobs. Furthermore, the
current COVID-19 pandemic has highlighted the importance of "essentials" such as access to
quality healthcare, education and awareness, water and sanitation services, sufficient nutrition,
and living spaces that allow for social distancing. The World Bank has listed India as a lower
middle-income economy, with a poverty line of PPP $3.2 (2011 prices). This equates to around
Rs 75 per person per day in terms of consumption. Over time, India will have to adapt to the
new reality of transitioning to a lower middle-income world, in which poverty is described as
a lack of income to take advantage of the opportunities presented by a rising economy, rather
than a lack of food. Furthermore, various types of deprivation are positively linked to one
another. It may be a lack of infrastructure, as well as a lack of education, sanitation, clean water,
and healthcare. These deprivation intersections also add crucial dimensions to recognising
poverty and guiding public policy to address it.
• It is also important to differentiate between chronic poverty and sporadic poverty: the former
is the product of decades of misery, whereas the latter is the result of a single crisis or short-
term shock, such as the current Corona pandemic. Poverty research has tended to focus on the
state of poverty rather than the ‘dynamics of poverty,' or the mechanisms that lead to and from
poverty.
• Global MPI studies show what has worked and where there are major gaps in policy
development for the future. Broad inequalities across states, districts, and social classes have
also been illustrated in global MPI studies. The two-pronged strategy of allowing the economy
to expand rapidly (with high job intensity) on a long-term basis while still addressing poverty
and disparities through social welfare programmes is still important.
• Ministry of Rural Development’s programmes focusing both on alleviating the poverty of
households through MNREGA, NRLM, PMAY, DDUGKY, and the poverty of regions
through PMGSY, SPRM, SAGY are on right track.
• The importance of rural infrastructure in reducing poverty cannot be overstated. Better
infrastructure facilitates the transition from low-productivity casual labour in agriculture to
higher-productivity casual jobs in the nonfarm market. It also contributes to higher incomes
and improves literacy and school attendance rates. As a result, increased spending in rural
infrastructure pays off in terms of poverty reduction.
• Markets and commodity value chains can help rural economies diversify and reduce poverty
on a larger scale.
• Through a communalized approach to participatory growth involving both PRIs and
community groups like the Women SHGs, gains in health, education, and nutrition results can
be multiplied.
• SECC 2011 has already shown the enormous capacity for beneficiaries in a variety of social
welfare programmes. Since data appears to become redundant, it needs to be revised as soon
as possible to prevent exclusion and inclusion errors. A dynamic Social Registry will be
extremely beneficial to India's poverty-eradication goals. It will assist politicians in making
evidence-based decisions by recognising patterns and intervention hotspots, allowing public
resources managers to better focus their resources.