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142 Economic Survey 2020-21 Volume 1

• Rich to poor ratio (INQ) is taken as a measure of inequality from the study by Chauhan et. al.
(2015) defined as ratio of richest to the poorest consumption quintile for 1993-94, 2004-05, and
2011-12.
• To control for initial level of development, Gini coefficient for land distribution (LAND) sourced
from National Sample Survey Office report on Operational Land Holdings in India 1991-92,
literacy rate (LIT) from Census 1991, and life expectancy (LIFE), 1991 are taken from Sample
Registration System, Bulletin.

4.22 To shed light on post 2011-12 evidence on the impact of economic growth on poverty,
the information on multidimensional poverty headcount ratio from Global Multi-dimensional
Poverty Report 2018 for 2005-06 and 2015-16, and from Alkire and Seth (2013) for the year
1998-99 is used. MPI is based on three dimensions – education, health and standard of living
– using ten indicators viz; education attainment, year of education; nutrition and mortality; and
electricity, drinking water, sanitation, cooking gas, housing, and assets. Headcount ratio counts
persons as multi-dimensionally poor if their composite score is more than 0.33. HCR of MPI is
interpreted as proportion of population that is multi-dimensionally poor.

4.23 First, note that states that witnessed large reduction in poverty, using the official estimates
based on consumption, experience proportional reductions in multi-dimensional poverty as well.
Figure 18 plots state’s values of change in MP-HCR per year against change in this measure of
poverty HCR per year. The regression line shows that the association between MPI and poverty
6
has been positive. It indicates that improvement in poverty also alleviates poverty measured
along multiple dimensions and vice versa.

Figure 18: Correlation between poverty based on
consumption and multi-dimensional poverty

Source: Survey calculations based on official poverty estimates of erstwhile Planning Commission and MPI.

6 The change in poverty HCR is calculated between ‘1993-94 and 2004-05’, and for the period between 2004-05
and 2011-12. The corresponding figures for MPI are for ‘1999 and 2005-06’ and ‘2005-06 and 2015-16’ for which
estimates are available.