Multidimensional Poverty & Inequality
MPI (UNDP), dimensions of poverty, Gini coefficient, Lorenz curve, and India’s inequality challenge.
📖 Beyond Income — Multidimensional Poverty
Traditional poverty measurement only looks at income or expenditure. But poverty is much more — a person can earn above the poverty line yet still lack education, healthcare, clean water, or sanitation. This is why the Multidimensional Poverty Index (MPI) was developed.
A family in rural Odisha earns ₹35/day (above Tendulkar poverty line) but has no toilet, no electricity, children not in school, and no access to a doctor. They are income-non-poor but multidimensionally poor — MPI captures this reality.
📊 Multidimensional Poverty Index (MPI)
The MPI was developed by UNDP and the Oxford Poverty and Human Development Initiative (OPHI) in 2010. It measures poverty across three dimensions and ten indicators:
| Dimension | Indicators (10 total) | Weight |
|---|---|---|
| Health | Nutrition, Child mortality | 1/3 |
| Education | Years of schooling, School attendance | 1/3 |
| Living Standards | Cooking fuel, Sanitation, Drinking water, Electricity, Housing, Assets | 1/3 |
A person is multidimensionally poor if they are deprived in at least one-third (33%) of the weighted indicators.
🇮🇳 India’s MPI Data
| Year | MPI Poor % | No. of Poor |
|---|---|---|
| 2005-06 | 55.1% | ~645 million |
| 2015-16 | 27.9% | ~369 million |
| 2019-21 | 16.4% | ~230 million |
📐 Gini Coefficient — Measuring Inequality
The Gini coefficient measures income inequality in a society. It ranges from 0 to 1:
- 0 = Perfect equality — everyone has the same income
- 1 = Perfect inequality — one person has all the income
- 0.3–0.4: Moderate inequality (most developed countries)
- 0.5+: High inequality (South Africa = 0.63, most unequal)
India’s Gini coefficient is approximately 0.35 (income) to 0.45 (wealth). This means India’s top 10% own ~77% of total wealth, while the bottom 50% own only ~3%. The gap between a Mukesh Ambani and a daily wage worker illustrates this inequality.
📈 Lorenz Curve
The Lorenz Curve is a graphical representation of income distribution. The further the Lorenz curve is from the diagonal line of perfect equality, the greater the inequality. The Gini coefficient is the ratio of the area between the diagonal and the Lorenz curve to the total area under the diagonal.
⚖️ Causes of Inequality in India
- Land inequality: Top 10% own most agricultural land
- Education gap: Quality education accessible only to the rich
- Urban-rural divide: Urban incomes 3x higher than rural
- Caste and gender discrimination: Dalits and women earn less
- Jobless growth: GDP grew but formal jobs didn’t grow proportionally
- Capital vs labour: Returns to capital (stocks, property) grew faster than wages
India’s top 1% captured 22% of total income growth between 2014-2022 (Oxfam, 2023). Meanwhile, 800 million Indians depend on free food under PMGKAY. This extreme inequality is a major challenge for India’s development.
🔑 Key Terms
- MPI: Multidimensional Poverty Index — measures poverty across health, education, living standards
- OPHI: Oxford Poverty and Human Development Initiative — co-develops MPI with UNDP
- Gini Coefficient: 0 = perfect equality; 1 = perfect inequality
- Lorenz Curve: Graphical representation of income distribution
- Deprivation: Lacking access to basic services/goods
- India’s Gini: ~0.35 (income); ~0.45 (wealth)