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Difficulty: HardPoverty Estimation, Inequality Metrics, and Inclusive Growth Strategies

Consider the following statements regarding the National Multidimensional Poverty Index (MPI) framework published by NITI Aayog:

1. The index assigns an equal weight of 13\frac{1}{3} to each of the three macroeconomic dimensions: Health, Education, and Standard of Living.
2. In addition to the ten indicators of the Global MPI, the National MPI incorporates two context-specific indicators for India: 'Maternal Health' and 'Bank Account'.
3. A household is classified as multidimensionally poor if its cumulative weighted deprivation score is equal to or exceeds 50%50\% of the weighted indicators.

Which of the statements given above is/are correct?

  1. 1 and 2 onlyAnswer
  2. B
    2 and 3 only
  3. C
    1 and 3 only
  4. D
    1, 2 and 3

Answer

Statements 1 and 2 only are correct.
The National Multidimensional Poverty Index developed by NITI Aayog aligns with the global Alkire-Foster methodology by maintaining three equally weighted dimensions (Health, Education, Standard of Living at one-third each). It adapts to the national policy landscape by including Maternal Health and Bank Account access, raising total indicators from 10 to 12. A household is multidimensionally poor if deprived in 33.33% or more of the weighted indicators; a 50% threshold indicates severe multidimensional poverty, rendering the third statement false.

Step-by-Step Solution

1
Evaluate Statement 1 regarding dimensional weights.
Statement 1 is correct. The National MPI employs the Alkire-Foster dual-cutoff counting method, allocating equal weight of 13\frac{1}{3} to each of the three main dimensions: Health, Education, and Standard of Living.
Structure of the Multidimensional Poverty Index demands equal dimensional weighting.
2
Evaluate Statement 2 regarding indicator modifications.
Statement 2 is correct. NITI Aayog expanded the 10 indicators of the global Oxford Poverty and Human Development Initiative (OPHI)/UNDP model to 12 indicators by adding 'Maternal Health' under the Health dimension and 'Bank Account' under the Standard of Living dimension.
Customization aligns poverty metrics with national financial inclusion and maternal health policies.
3
Evaluate Statement 3 regarding the poverty headcount cutoff threshold.
Statement 3 is incorrect. A household is identified as multidimensionally poor if its deprivation score is greater than or equal to 13\frac{1}{3} (33.33%33.33\%) of the weighted indicators. A threshold of 50%50\% or higher defines 'severe' multidimensional poverty.
Confusing the poverty headcount cutoff threshold (33.33%33.33\%) with the severe poverty cutoff (50%50\%).

Key Concept

NITI Aayog National Multidimensional Poverty Index (MPI) Methodology and Thresholds
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Topics

Poverty Estimation, Inequality Metrics, and Inclusive Growth Strategies