Beyond Income: Multidimensional Approaches to Poverty Reduction in India

India has made remarkable strides in reducing poverty over the past two decades. But here is a question worth sitting with: if a family earns just enough to cross an official income threshold, are they truly out of poverty? What if their children are malnourished, their home has no toilet, and the nearest school is kilometers away? Income, by itself, tells only a fraction of the story. Poverty is far more layered than a number on a poverty line, and any serious effort to address it must reckon with that reality.

The limits of measuring poverty by income alone
What is multidimensional poverty?
How the MPI works
India’s National MPI: expanding the framework
What the data reveals about India’s poverty
Tackling deprivation beyond income: key policy interventions
Health
Sanitation and living conditions
Education
Financial inclusion
Why this matters: the case for a holistic approach

The limits of measuring poverty by income alone

For decades, India’s approach to measuring poverty revolved around income and consumption expenditure. Official poverty lines – from the Alagh Committee in 1979 to the Tendulkar Committee in 2009 – defined the poor as those unable to afford a minimum basket of goods. The Tendulkar poverty line, for instance, set a daily spending threshold of roughly ₹27 in rural areas and ₹33 in urban areas at 2011-12 prices – figures widely criticized as far too low to reflect real living conditions.

The consumption-based approach has well-documented drawbacks. Measuring monetary income is notoriously difficult, especially for people in informal work or seasonal agriculture. Beyond the measurement problem, a bigger conceptual issue exists: income-based measures fail to capture access to healthcare, education, and other social services that are central to human well-being. A household may spend just above the poverty line yet live without clean drinking water, proper sanitation, or a child enrolled in school. Income data would classify them as “non-poor” while their actual deprivation remains severe.

This is precisely the critique that has reshaped how economists, policymakers, and institutions think about poverty – not as a single number, but as a cluster of overlapping disadvantages that income alone cannot capture.

What is multidimensional poverty?

The concept of multidimensional poverty builds on Nobel laureate Amartya Sen’s idea that development should be understood as expanding human freedoms and capabilities, not just incomes. A person is poor not merely because they earn little, but because they lack the capabilities to live a dignified life – good health, education, adequate living conditions, and economic security.

This thinking was formalized in 2010, when the Multidimensional Poverty Index (MPI) was developed by Sabina Alkire and James Foster and adopted by the UNDP in its Human Development Report. The MPI captures overlapping deprivations across three equally weighted dimensions: health, education, and standard of living. It does not just count how many people are poor – it also measures the depth of their deprivation, asking how poor the poor really are.

How the MPI works

Each household is assigned a deprivation score based on the number of indicators they fall short on, weighted by their dimension. If that score exceeds one-third of the total weighted indicators, the household is classified as multidimensionally poor. The final MPI score combines two elements: how many people are poor (headcount ratio) and how intensely deprived they are (intensity ratio). This dual-lens approach makes it a far richer policy tool than a simple income threshold.

India’s National MPI: expanding the framework

India took a significant step forward when NITI Aayog, in collaboration with UNDP and the Oxford Poverty and Human Development Initiative (OPHI), developed the National Multidimensional Poverty Index – a tool tailored to India’s context and aligned with the Sustainable Development Goals.

India’s National MPI retains the 10 indicators of the global framework but adds two more that reflect national priorities: maternal health under the health dimension, and access to a bank account under the standard of living dimension. This gives India a 12-indicator framework spanning nutrition, child and adolescent mortality, maternal health, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets, and banking access.

The inclusion of maternal health is especially significant. It directly ties poverty measurement to gender outcomes – recognizing that when women lack access to antenatal care, it reflects a deprivation that no income figure would reveal. Similarly, banking access signals financial inclusion, an important dimension of economic participation that lies well beyond a consumption threshold.

What the data reveals about India’s poverty

The results from India’s National MPI are striking – both in how much progress has been made, and in how much the multidimensional lens reveals that income data alone would miss.

India saw multidimensional poverty decline from 29.17% in 2013-14 to 11.28% in 2022-23, with approximately 24.82 crore people escaping multidimensional poverty in nine years. When looked at over a longer span, a total of 415 million people moved out of multidimensional poverty between 2005-06 and 2019-21.

Crucially, the data shows where gains happened. The most notable reductions were in sanitation – down by 21.8 percentage points – and cooking fuel deprivation, down by 14.6 percentage points between 2015-16 and 2019-21. These are not income-related improvements. They are improvements in living conditions, driven by targeted programmes. Yet they had a direct impact on people’s well-being and their classification as poor.

Regional disparities also stand out sharply under the multidimensional lens. Multidimensional poverty is below 1% in Kerala but as high as 35% in Bihar – a gap that income-based national aggregates would easily obscure. In 2021, 19.28% of the rural population was multidimensionally poor compared to 5.27% in urban areas – a divide that calls for place-specific policy responses, not uniform national benchmarks.

Tackling deprivation beyond income: key policy interventions

A multidimensional understanding of poverty does not just change how we measure it – it changes what we do about it. India’s policy landscape in recent decades reflects this shift, with major programmes targeting specific non-income deprivations.

Health

Initiatives like Poshan Abhiyan and Anemia Mukt Bharat have significantly enhanced access to healthcare and nutrition, driving down deprivation in this dimension. Ayushman Bharat, India’s health insurance scheme, has expanded financial protection for medical treatment – addressing a critical vulnerability that income measures simply do not track.

Sanitation and living conditions

The Swachh Bharat Mission, launched in 2014, facilitated the construction of over 100 million household toilets, benefitting 500 million people across 630,000 villages. Beyond the physical infrastructure, households in open defecation-free villages were found to save up to INR 50,000 annually – through fewer illness-related costs and time savings – illustrating directly how sanitation deprivation and income poverty are interlinked. Separately, the Pradhan Mantri Ujjwala Yojana has distributed clean cooking fuel to millions of households, reducing a deprivation that directly affects respiratory health and the time burden placed primarily on women.

Education

Schemes like Sarva Shiksha Abhiyan and the Mid-Day Meal Scheme have increased school enrollment and reduced dropout rates, especially among marginalised communities. These interventions target the education dimension of the MPI directly – ensuring children are in school, not just that their households have crossed an income line. When children stay in school, the long-term effects on poverty extend far beyond what any single generation’s income can capture.

Financial inclusion

The Pradhan Mantri Jan Dhan Yojana has brought banking access to hundreds of millions of previously unbanked households. This matters because the bank account indicator is one of the 12 MPI indicators, and its absence signals exclusion from formal economic systems – a form of deprivation invisible to income measures. Financial access enables households to save, receive transfers, and withstand economic shocks, all of which reduce vulnerability in ways that go well beyond monthly income.

Why this matters: the case for a holistic approach

The shift from income-based to multidimensional poverty measurement is not merely academic. It has real consequences for how resources are directed and who gets counted as poor. A multidimensional approach identifies the underlying causes of poverty more effectively, guiding targeted interventions that address root causes rather than just symptoms.

At the same time, honest assessment requires acknowledging that measurement itself is contested. Researchers have pointed out that minor changes in how indicators like maternal health or housing are defined can meaningfully shift poverty estimates, and that some indicators – like nutrition and maternal health – require concentrated, individual-level interventions that large-scale government programmes cannot easily deliver. The MPI, in other words, is a significant improvement over income measures, but it is not without its own methodological challenges.

Still, the core argument holds: reducing poverty requires attending to the full range of deprivations people face. A child who goes to school hungry, a mother who delivers without medical care, a family that cooks over biomass in an unventilated room – these are all forms of poverty. Addressing them demands policies built around people’s actual lives, not just their incomes.

What do you think? If India’s official poverty line were replaced entirely by the multidimensional poverty index, how might that change which communities receive government support first? And beyond policy tools, what does it mean for a society when economic growth rises but deprivations in health or education persist?

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Table of Contents

The limits of measuring poverty by income alone 🔗

What is multidimensional poverty? 🔗

How the MPI works 🔗

India’s National MPI: expanding the framework 🔗

What the data reveals about India’s poverty 🔗

Tackling deprivation beyond income: key policy interventions 🔗

Health 🔗

Sanitation and living conditions 🔗

Education 🔗

Financial inclusion 🔗

Why this matters: the case for a holistic approach 🔗