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Gini Coefficient UPSC NOTE

 What is the Gini Coefficient?

  • The Gini coefficient, also known as the Gini index or Gini ratio.

  •  Its a statistical measure used to assess the income inequality within a population or group.

  • It essentially tells you how far the distribution of income deviates from a perfectly equal one.

  • It ranges from  0 to 1 (or 0% to 100%)

Interpretation:

  • 0: Perfect equality - everyone has the same income.

  • 1: Perfect inequality - one person has all the income, while everyone else has none.

  • Values between 0 and 1: Higher values indicate greater inequality, with a small number of individuals holding a large share of the total income.

How it works:

  • The Gini coefficient is calculated based on the Lorenz curve, which graphically depicts the distribution of income. 

  • A perfectly equal distribution would be represented by a diagonal line.

  • A perfectly unequal one would be a curve hugging the bottom axis

  • The Gini coefficient essentially measures the area between the Lorenz curve and the line of perfect equality.

expressed as a proportion of the total area under the line of perfect equality.

Applications:

  • The Gini coefficient is widely used by economists, policymakers, and researchers to:

  1. Compare income inequality across different countries or regions.

  2. Track changes in income inequality over time.

  3. Evaluate the effectiveness of policies aimed at reducing income inequality.

India's National Multidimensional Poverty Index (MPI)

  • The National Multidimensional Poverty Index (MPI) is a crucial tool used in India to measure and track poverty beyond just income

  • It captures the multiple and simultaneous deprivations faced by individuals and households across three key dimensions:

  1. Health: Nutrition, child mortality, and prenatal care access.

  2. Education: Years of schooling and school attendance.

  3. Living Standards: Cooking fuel, sanitation, drinking water, electricity, housing, and assets.

Key Points about India's MPI:

  • Developed by: NITI Aayog under the Government of India's Global Indices for Reforms and Growth (GIRG) initiative.

  • Methodology: Follows the globally accepted approach by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).

  • Data Source: National Family Health Survey (NFHS).

  • Latest Report: "National Multidimensional Poverty Index: A Progress Review 2023" (based on NFHS-5 data, 2019-21).

Key Findings from the 2023 Report:

  • Reduction in Multidimensional Poverty: Compared to 2015-16 (NFHS-4), India witnessed a significant decrease in multidimensional poverty:

    1. Headcount Ratio: Down from 24.85% to 14.96%. This means 135.5 million people escaped poverty during this period.

    2. MPI Value: Nearly halved from 0.117 to 0.066.

    3. Intensity of Poverty: Reduced from 47.14% to 44.39%.

  • Disparities: While significant progress has been made, rural areas still have a higher proportion of multidimensional poor compared to urban areas (19.28% vs. 5.27%).

  • SDG Target: India is well on track to achieve Sustainable Development Goal (SDG) 1.2, which aims to reduce poverty in all its forms by at least half by 2030.

Why in news

  • Less than 5% of Indians are now expected to be below the poverty line, and extreme destitution has almost gone away, a top government official asserted on Sunday, citing the findings of the Household Consumption Expenditure Survey (HCES) for 2022-23. 

  • Dismissing the narrative that rural economy is weak and India’s growth story is “restricted to a few people”, B.V.R. Subrahmanyam, chief executive officer of the Centre’s think tank NITI Aayog, averred that growth is “broad-based” with rural Indians’ incomes and spends rising faster than their urban peers.


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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Gini Coefficient UPSC NOTE
Gini Coefficient UPSC NOTE
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