Shaping India's multidimensional fight against poverty
It is now widely recognised that poverty is multidimensional, encompassing more than just lack of money. It includes deprivations in health, education, and quality of life.
India's Multidimensional Poverty Index (MPI) measures poverty using multiple indicators. It looks at 12 basic needs across health, education, and standard of living to understand how people are deprived in different parts of their lives. A person is considered poor if they are deprived in at least one-third of the indicators used.
Based on this approach, NITI Aayog's discussion paper reminds us that nearly 200 million people in India still face multiple hardships. Poverty remains severe, with the poorest struggling to meet about half of their 12 basic needs. These people often live in mud houses in which piped water and proper sanitation are still considered luxuries. It is not unusual for them to skip meals in a day, and an illness or an unexpected life event can have disastrous consequences.
It's important to remember that when people face simultaneous deprivations — especially non-monetary ones — these challenges can reinforce each other, keeping people trapped in poverty.
For example, people who are deprived in both nutrition and sanitation are potentially more vulnerable to infectious diseases. These deprivation bundles are a recurring pattern observed among people living in extreme poverty around the world. Quite often, poverty reduction policies are not framed keeping these interlinkages in mind.
Graduation Approach
This multi-pronged way to measure and study poverty also demands a fresh approach to design anti-poverty programmes. For governments, it means investing in programmes that give people living in extreme poverty the tools to escape the poverty trap. Bangladesh-based NGO BRAC's Graduation Approach offers an effective model to do that.
The Graduation Approach provides the poorest of the poor a sequential and complementary package that includes a productive asset such as livestock or small items for trading, training to manage them, some money for up to a year to meet their immediate needs, and mentorship to manage their income and savings.
The programme has become a global success. It has reached and improved the standard of living for millions of households across 43 countries following randomised evaluations by researchers affiliated with the Abdul Latif Jameel Poverty Action Lab (J-PAL), including Nobel Laureates Abhijit Banerjee and Esther Duflo.
Households around the world receiving the multi-component support package of the Graduation Approach made significant gains in all the key MPI indicators.
Let's take a closer look at them.
Standard of living: The model increased household spending on food, fuel, and assets — all key elements of the MPI's standard of living dimension. In Bangladesh, researchers observed that participants were more likely to own land and a shop just two years after the programme — activities which the rural middle class partakes in. Even in Yemen, among the poorest countries in the world, people spent more on refurbishing their houses, suggesting they had money to spare after meeting their essential needs. Families also reported better financial security and higher spending on children. In India, households held more assets and reduced their dependence on informal credit.
Health: Graduation Approach's focus on improving food security and access to healthcare can directly contribute to better health outcomes. In Afghanistan, the programme helped reduce diarrhoea among children under five years of age by eight percentage points. A study in Pakistan, India, Honduras, Ghana, Ethiopia, and Peru found people reported better health and happiness. In India too, some emerging lessons from studies show significant and sustained improvement in food security with 99% of participant households not skipping meals.
Education: Researchers found that certain adaptations of the Graduation Approach also increased school enrolment rates among children. A study in Afghanistan conducted over 2016-2018 found that school enrolment rose by 7 percentage points for boys and 5 for girls.
The Graduation Approach's close alignment with the national MPI indicators gives Indian States as well as the federal government a useful blueprint to design anti-poverty programmes effective in handling its multidimensional nature.
Common deprivations
It helps policymakers to identify the key areas that need urgent attention. For instance, the most common deprivation bundle in India is across four categories: nutrition, housing, sanitation, and clean cooking fuel. More than 34 million people lack access to these in India. Policies that target these areas in tandem are likely to have a much greater impact on poverty reduction.
Over the past few years, India has introduced a slew of policies to improve children's nutrition, health and well-being of mothers, and financial inclusion for people living in poverty. And it has been successful too. Initiatives such as Poshan Abhiyan have been instrumental in improving health outcomes, particularly in reducing malnutrition, and PM Awas Yojana has reached millions through affordable housing. But these actions are often led by different Ministries. A multifaceted programme such as the Graduation Approach makes it easier for policy planners to achieve these different goals through one concerted strategy.
In 2024, the Ministry of Rural Development took an important step in this direction by piloting the Samaveshi Aajeevika Initiative (Inclusive Development Programme) initiative across 11 States with a consortium of partners including BRAC, The Nudge Institute and the Abdul Latif Jameel Poverty Action Lab ( J-PAL) South Asia. The programme — based on the Graduation Approach model — is designed to help rural women become entrepreneurs and put them on the path to self-sufficiency.
Using this as a platform and in the spirit of cooperative federalism, States can identify vulnerability hotspots through MPI and target them through integrated proven solutions such as the Samaveshi Aajeevika to fight poverty and its multiple facets.
Prime Minister Narendra Modi has laid down an ambitious vision for inclusive development with a singular objective: leave no one behind. And as India marches towards becoming a high-income country by 2047, States must embrace evidence-based, innovative models such as Samaveshi Aajevika that can set people free from the poverty trap.
Parikrama Chowdhry is the Lead - Policy (Scale-ups) at J-PAL South Asia; views are personal
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