NITI Aayog Multidimensional Poverty Index: Methodology and Indicators

The NITI Aayog Multidimensional Poverty Index is India’s national measure of poverty that looks beyond income to capture deprivations in health, education, and standard of living. The NITI Aayog Multidimensional Poverty Index was first published in 2021 as a baseline using data from the National Family Health Survey, and has since been updated with subsequent NFHS rounds. The index follows the globally accepted Alkire-Foster methodology developed at the Oxford Poverty and Human Development Initiative, customised for the Indian context with indicators that reflect domestic priorities. It complements the older income-based poverty estimates and aligns with the global Multidimensional Poverty Index published annually by UNDP and OPHI.

Why Move Beyond Income

Income-based poverty lines, such as the earlier Tendulkar and Rangarajan estimates, measure whether a household can afford a minimum basket of goods. They miss whether children attend school, whether the family has clean drinking water, whether childbirth happens in a health facility, and whether the home has a toilet. A household above the income poverty line could still suffer significant deprivation in these other dimensions, and a household just below the income line might fare well on schooling and sanitation. The multidimensional approach captures both pictures.

It also matches the structure of public programmes. Most Indian welfare programmes target specific deprivations: housing under PM Awas Yojana, sanitation under Swachh Bharat, maternal health under PM Matru Vandana, and so on. A multidimensional measure lets policymakers track whether these programmes are reducing the specific deprivations they aim to address.

The Alkire-Foster Method in Brief

The Alkire-Foster method, developed by Sabina Alkire and James Foster at OPHI, operates in two steps. First, deprivation is measured at the individual or household level across multiple indicators. Each indicator has a defined threshold below which the person is considered deprived in that indicator.

Second, the deprivations are aggregated into a single score using indicator weights. If the weighted sum of deprivations crosses a poverty cutoff, typically one-third of weighted indicators, the person is identified as multidimensionally poor.

The headcount ratio, denoted H, is the share of the population that is multidimensionally poor. The intensity, denoted A, is the average share of deprivations among the poor. The MPI is the product H times A, so it reflects both how widespread and how deep the multidimensional poverty is. This product property is what makes the Alkire-Foster method dimensionally complete: a country can reduce its MPI either by reducing the number of poor people or by reducing the intensity of their deprivation.

The Three Dimensions and Twelve Indicators

The Indian MPI groups twelve indicators into three equally weighted dimensions: health, education, and standard of living. Within each dimension, indicators are weighted equally.

Health Dimension, Weight One-Third

Nutrition status of children, adolescents, and adults using anthropometric standards.

Child and adolescent mortality among children under five and reported in the household.

Maternal health, including whether the most recent birth in the last five years was attended by skilled personnel and received antenatal care.

Education Dimension, Weight One-Third

Years of schooling, where the household is deprived if no eligible member has completed six years of schooling.

School attendance, where the household is deprived if any school-age child is not attending school up to the age at which they would complete class eight.

Standard of Living Dimension, Weight One-Third

This is the largest dimension by indicator count, with seven indicators each carrying a weight of one twenty-first.

Cooking fuel, deprived if the household uses a polluting cooking fuel.

Sanitation, deprived if the household has no improved sanitation facility or shares one with others.

Drinking water, deprived if there is no access to safe drinking water or it is more than thirty minutes away.

Electricity, deprived if the household has no electricity.

Housing, deprived if at least one of the dwelling’s roof, wall, or floor is of inadequate material.

Assets, deprived if the household lacks a defined set of household assets and does not own a vehicle.

Bank account, deprived if no household member has a bank or post office account.

The inclusion of maternal health and a bank account distinguishes the Indian MPI from the global OPHI-UNDP MPI, which does not include these indicators in the same form. The bank account indicator reflects financial inclusion, a major Indian policy priority, while the maternal health indicator captures both the access and quality dimensions of obstetric care.

What the Index Shows

The baseline 2021 report based on NFHS-4 data showed a national MPI headcount ratio of around twenty-five per cent, with significant variation across states. Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, and Meghalaya had the highest multidimensional poverty headcount ratios, while Kerala, Goa, Sikkim, Tamil Nadu, and Punjab had the lowest.

The updated report based on NFHS-5 showed a substantial decline in the national headcount ratio, with about a hundred and thirty-five million people exiting multidimensional poverty between the two rounds. Standard of living indicators showed the fastest improvement, driven by sanitation, electrification, and cooking-fuel access. Education indicators improved more slowly. The maternal health indicator showed marked improvement.

This work runs parallel to the broader system of social indicators captured by the Human Development Index and complements distributional measures like the Gini coefficient.

How the National MPI Is Used

State-level rankings have created competitive pressure for state governments to accelerate programme delivery in lagging districts. The NITI Aayog also publishes district-level MPI estimates as part of its Aspirational Districts Programme. The MPI feeds into the Sustainable Development Goals reporting framework, particularly SDG 1 on ending poverty in all forms.

The choice of twelve indicators and the equal weighting of dimensions has been debated. Some economists argue that health should carry a higher weight; others argue that asset and bank account indicators may overlap. The methodology, however, is transparent and stable, which makes year-to-year comparisons meaningful.

FAQs

What is the NITI Aayog Multidimensional Poverty Index?

A national index that measures poverty using multiple deprivations in health, education, and standard of living rather than only income.

How many indicators does it use?

Twelve indicators grouped into three dimensions: health, education, and standard of living.

What method does it use?

The Alkire-Foster method developed by OPHI, which counts weighted deprivations and identifies a person as multidimensionally poor if the weighted sum exceeds one-third.

How is the MPI calculated?

As the product of headcount ratio H and intensity A, where H is the share of the population that is multidimensionally poor and A is the average share of deprivations among them.

What dimensions does it cover?

Health, education, and standard of living, each weighted one-third.

What is unique about the Indian MPI compared to the global MPI?

The Indian version includes a maternal health indicator and a bank account indicator that are not part of the global OPHI-UNDP MPI in the same form.

Which states have the highest multidimensional poverty?

Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, and Meghalaya have ranked highest in successive reports.

How has the index changed between NFHS-4 and NFHS-5?

The national headcount ratio fell substantially, with around a hundred and thirty-five million people exiting multidimensional poverty. Standard of living indicators improved fastest.

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