Juxtaposing Consumption Poverty and Multidimensional Poverty: A Study in Indian Context

Abstract

The present study explores the nature of poverty by considering both consumption and multidimensional approaches and assesses the change in it due to variation in population subgroups and household characteristics in India between 2004–2005 and 2011–2012. We have developed a Multidimensional Poverty Index for India which has the advantage of being comparable with consumption poverty using National Sample Survey Organization data relating to the ‘Level and Pattern of Consumer Expenditure’ of the latest two rounds. Our analysis shows a significant reduction in consumption poverty as well as multidimensional poverty. Multidimensional poverty has reduced significantly for both consumption poor and non-poor but the reduction has not been uniform across subgroups and household characteristics. Satisfactorily, the reduction was faster among the poorer subgroups. Notwithstanding this trend, urban location, upper strata of social caste, literate head, self- or regular employment and higher level of benefits from Public Distribution System (PDS) have a favorable impact on the nature of poverty. The study strongly recommends the incorporation of the multidimensional approach along with the consumption approach to measure poverty which has high policy relevance.