Head Count Ratio: Indian Economy
Introduction
The percentage of a population that lives in poverty is known as the Head Count Ratio (HCR). India's HCR is 25.01%, according to the NITI Aayog's National Multidimensional Poverty Index for 2021. According to the same NITI Aayog report, the rural HCR is 32.75% while the urban HCR is 8.81%.
What Is The Headcount Ratio?
• When the number of poor is estimated, the Head Count Ratio (HCR) is the percentage of people living below the poverty line.
• The number of people who are multidimensionally poor is first determined using 12 factors that include health, education, and standard of life in order to establish the headcount ratio (HCR).
• We can obtain the headcount ratio by dividing the multidimensionally poor by the entire population.
• The head count ratio, denoted by the letter H, offers an answer to the query, "How many people are poor?" 25.01 percent of the population is categorized as multidimensionally poor by India's national MPI.
• It can be determined mathematically using the formula.
Where,
q = total number of multidimensionally poor individuals identified and
n = the total population
Types of Head Count Ratios
There are two types of HCR calculated. Both the censored and uncensored headcount ratios exist.
Uncensored Headcount Ratio
• The uncensored headcount ratio (HCR), in contrast to the headcount ratio (HCR), displays the percentage of the population that is deficient in any indicator (such as nutrition, maternal health, electricity, assets, bank accounts, etc.), regardless of whether they are multidimensionally poor or not.
Let's use an example to better grasp this:
Table: Deprivation status matrix to calculate uncensored and censored headcount ratio
|
Individuals |
Multidimensional Poor |
Sanitation Deprivation score below cutoff |
Electricity Deprivation score below cutoff |
|
Individual A |
Yes |
Yes |
No |
|
Individual B |
Yes |
No |
Yes |
|
Individual C |
No |
Yes |
No |
|
Individual D |
No |
No |
Yes |
• In the above example, individuals A and B are used to estimate the headcount ratio.
• The uncensored headcount ratio for sanitation considers only individuals A and C.
• The uncensored headcount ratio for electricity considers only individuals B and D.
• The below graph provides details of the uncensored headcount ratio across all indicators.
Censored Headcount Ratio
• The filtered headcount ratio shows the percentage of people who are multifaceted impoverished and disadvantaged in each given indicator (for instance, nutrition, maternal health, electricity, assets, bank account, etc.).
• The censored headcount ratio for sanitation only takes into account individual A from the aforementioned table.
• The censored headcount ratio for electricity uses the aforementioned data and only takes individual B into account.
Details on the filtered headcount ratio across all indicators are shown in the graph below:
India’s Headcount Ratio
Percentage of population who are multidimensionally poor in each State/UT
• Bihar- 52.91%
• Jharkhand- 42.36%
• Uttar Pradesh- 37.79%
• Madhya Pradesh- 36.65%
• Meghalaya- 32.67%
• Assam- 32.67%
• Chhattisgarh- 29.91%
• Rajasthan- 29.46%
• Odisha- 29.35%
• Nagaland- 25.23%
• Arunachal Pradesh- 24.27%
• West Bengal- 21.43%
• Gujrat- 18.60%
• Manipur- 17.89%
• Uttarakhand- 17.72%
• Tripura- 16.65%
• Maharashtra- 14.85%
• Telangana- 13.74%
• Karnataka- 13.16%
• Andhra Pradesh- 12.28%
• Haryana- 9.80%
• Mizoram- 9.80%
• Himachal Pradesh- 7.62%
• Punjab- 5.59%
• Tamil Nadu- 4.89%
• Sikkim- 3.82%
• Goa- 3.76%
• Kerala- 0.71%
• Dadar and Nagar Haweli- 27.36%
• Jammu and Kashmir- 12.585
• Daman and Diu- 6.82%
• Chandigarh- 5.97%
• Delhi- 4.79%
• Andaman and Nicobar- 4.30%
• Lakshadweep- 1.82%
• Puducherry -1.72%
Conclusion
The percentage of the population that lives in poverty is known as the Headcount Ratio (HCR). The headcount ratio's disregard for the severity of poverty is one of its flaws, as the poor get poorer, the headcount index stays the same.