Poverty Measurement — Economic Framework

Economic Framework

Begin by identifying measure, threshold, source and period. Monetary poverty uses income or consumption against a specified line. Multidimensional poverty combines selected deprivations. Neither measure can be substituted for the other without changing the question.

The headcount ratio records incidence. If 200 of 1,000 people are classified as poor, it is 20 per cent. It can remain unchanged while their shortfalls deepen. A poverty-gap measure or multidimensional intensity adds information that a count alone omits.

India's national MPI has three equally weighted dimensions and twelve indicators; the indicators do not all have equal weight. The poverty cutoff is at least one-third of weighted deprivations. MPI = H × A, where H is the headcount ratio and A average intensity among the poor. With H = 0.30 and A = 0.40, MPI is 0.12, not a 12 per cent headcount.

NITI Aayog's 2023 report compares NFHS 2015–16 and 2019–21, reporting headcount decline from 24.85% to 14.96%. Its January 2024 discussion paper's 2013–14 and 2022–23 values are interpolated or extrapolated estimates, not direct surveys in those years.

The World Bank's June 2025 international extreme-poverty line is USD 3.00 per person/day in 2021 international dollars. PPP conversion is not conversion at today's market exchange rate. Keep both the price basis and the observation period visible when making comparisons.