The Measuring Of Poverty And Its Factors In Bhutan

Poverty is a serious concern in this global arena. Reducing poverty has become an international concern, and Bhutan is also in this race ever since modern development started in the country. According to Pantazis (2006.pp4) there are two major types of poverty; Income poverty and social poverty. “Poverty affects different aspects of people’s lives, existing when people are denied opportunities to work, to learn, to live healthy and fulfilling lives, and to live out their retirement years in security. Lack of income, access to good-quality health, education and housing, and the quality of the local environment all affect people’s well-being.UNO (2010) defines poverty as “It is a multifaceted concept, which includes social, economic, and political elements. Poverty may be defined as either absolute or relative. Absolute poverty or destitution refers to the lack of means necessary to meet basic needs such as food, clothing and shelter”. Whereas Bhutan has developed a different meaning of poverty and its own multidimensional index to measure poverty. As the poverty in Bhutan does not possess the characteristics found elsewhere, our country is in the process of developing its definition and other related parameters. According to the “Poverty Assessment and Analysis report 2015” published by the planning Commission, RGOB, the definition of poverty in the Bhutanese context should revolve around its development philosophy of “Gross National Happiness” as envisioned by HM King Jigme Singye Wangchuck with the attribute like house hold income, Education, health, economics activities, non-material needs, physical facilities, environment, transport, communication and position of women. Bhutan measured poverty for the first time using Multidimensional Poverty Index in 2012, whereby setting an example to outside world. Bhutan has unique meaning and paradigms to the multifaceted concept of poverty; the controversy about the meaning, measurement of poverty and use of index between Bhutan and the world is a very interesting filed to study.

The main poverty line used in the European Union is a relative poverty measure based on 'economic distance', a level of income usually set at 60% of the median household income. The United States uses an absolute poverty measure. The US poverty line was created in 1963–64 and was based on the dollar costs of the U.S. On contrast, Bhutan recognizing the fact that poverty is not just about income but multidimensional and is seen to be similar to the Gross National Happiness (GNH) philosophy of a holistic development approach, the Bhutan Government has started to measure poverty using the MPI since 2012. Multidimensional index is measure all aspects of life just not only income level of an individual. The government has targeted to reduce multi-dimensional poverty from 25.8 % in 2010 to less than 10 % by 2018.Bhutan’s MPI model uses 13 indicators with varying weights:

  • primary schooling and children out of school (education dimension);
  • child mortality, and food insecurity used as a proxy for nutrition (health dimension);
  • road more than 30 minutes away, electricity, housing, cooking fuel, drinking water more than 30 minutes away, sanitation, asset ownership of livestock, land ownership of less than one acre, and appliances (living standards dimension).

Each of the three dimensions is given an equal weight of 1/3. The three indicators used in Bhutan’s MPI in addition to the global MPI are access to roads, land ownership and livestock ownership. As per the Bhutan (2020), “The selection of the dimensions for the multidimensional poverty measure is guided by the eight Millennium Development Goals (MDGs) defined by the Millennium Declaration — to which Bhutan has seriously committed — with some restrictions due to data availability.” Having an adequate income, and for rural households, having access to roads and owing some land, can be framed into the first MDG, which is to eradicate extreme poverty and hunger. For the income cutoff, the official Bhutanese poverty line was used, which is calculated in Nu 1,096.94 per capita, per month. During 2007, this was equivalent approximately to US$25.

Currently, The World Bank forecasts that 702.1 million people were living in extreme poverty in 2015, down from 1.75 billion in 1990. Of these, about 347.1 million people lived in Sub-Saharan Africa (35.2% of the population) and 231.3 million lived in South Asia (13.5% of the population). According to the World Bank, between 1990 and 2015, the percentage of the world's population living in extreme poverty fell from 37.1% to 9.6%, falling below 10% for the first time. Nevertheless, given the current economic model, built on GDP, it would take 100 years to bring the world's poorest up to the previous poverty line of $1.25 a day. On the other hand, Bhutan stands with the poverty rate at the international line of US$1.90 a day (2011 Purchasing Power Parity Index) was 2.2 percent in 2012, one of the lowest in South Asia. At a higher poverty line of US$3.1/day, poverty decreased from 29.1 percent to 13.4 percent between 2007 and 2012 or 3.1 percentage points per year. During the same period, the mean per capita expenditure grew at 6.5 percent overall and also for the bottom 40 percent, according to the 2007 and 2012 Bhutan Living Standard Surveys. Bhutan’s growth rate for the bottom 40 percent was the highest among the six souths Asia. In short span of time Bhutan has achieved much more than expected in poverty reduction. Almost all countries in the world are encouraging new developments at the national level. They are now focusing on economic liberalizations and political opening, making a difference. Governments have eliminated some economic policy obstacles to growth among small rural producers. Moreover rural public institutions are becoming more accountable to the rural poor. Even poverty deduction programs were held, like; east west partnership for poverty reduction built at government, corporate and individuals’ level and more NGO’s involvement in poverty reduction.

Measuring poverty is not an essay task. It takes lots of time and resources. The factors affecting measurement of poverty can broadly be categorize into conceptual factors and practical factors. Conceptual factors includes the time period over which poverty is measured; in some countries like in U.S. its measure annually, whereas in Bhutan it is measured in every two years, so there is controversy over the time period in which poverty is measured. Another factor is lack of standard poverty line, when conceptually approaching the idea of a poverty line; it is useful to frame it within the context of generating an amount of income that is appropriate to ensure a reasonable standard of living for an individual. However, due to the fact that poverty lines are different in different countries because there is no standard way for setting and measuring the poverty line. Thus, it’s relative. Practical factors are inadequate data regarding income and expenditure; most of the people are illiterate and it’s difficult to collect data on the income and expenditure. Another one is disparity between purchasing power of different currencies is on major problem. For example, a pound has much higher value in Bhutan than it does in London, thus, a large margin of error is leading to statistical imprecision into the outcome. Not having enough resources to gather good quality data: Measuring the amount produced in a poor country in a year is very difficult, given resource constraints. There's an inevitable need for some statistical guesswork. Some types of data, e.g. household consumption data, rely on surveys which are often poor quality. The informal economy; often farmers and villagers work for each other and are paid in kind, thus, there is lack of standard monetary value for this kinds. These all factors are hindrance for a precise measurement of poverty.

The status of the Bhutanese poverty according to the 2017 MPI Bhutan report found that 11.8% of the population was poor. Only 3.2% of those identified as income poor (12% of the population) were also multidimensionally poor, showing a significant mismatch between the people captured by each measure. Similarly, among the 11.8% that are multidimensionally poor, 10% are not income poor. Even geographically, those Dzongkhags that are income poor are not actually multidimensionally poor. This highlights the importance of using both measures to inform decision making in the country. Datasets from two periods 2012 and 2017 can be compared to assess the change in MPI in Bhutan. In the period from 2012 to 2017, the MPI was reduced by 3.8 percentage points. The largest reductions in MPI were observed in sanitation (19.9%), cooking fuel (18.3%), electricity (17.4%) and road access (15.2%). Multi dimensional Poverty Index (2017). The current poverty rate 8.2 and the government is trying to reduce it through means “like effective delivery of agriculture extension services and agriculture services and agriculture inputs, expansion of education and training programs and support of income generating activities like cottage industries and eco-agro tourism are given importance. The government of Bhutan will also continue to ensure the provision of quality health services and while expanding infrastructure such as telecommunication and electricity…etc.” 

To conclude poverty is compound phenomenon and it is a multifaceted concept, which includes social, economic, and political elements. Most of the measuring index view or the common idea of poverty is the lack of basic needs in one’s life or in a family but the silent feature is it just not about income or financial needs it about how an individual socialize with the people around them or how they fit in the society they live in with an sufficient income. One cannot doubt that, without income one cannot fit in the community, the world nations are in the process of addressing this social issue and much have been achieved. Due to the fact that, poverty is multidimensional, a multidimensional poverty index has been adopted by Bhutan in line with the developmental philosophy of Gross National Happiness. The unique meaning of poverty proclaimed by Bhutan is another achievement in Bhutan which is in association with Millennium Developmental Goals. The challenges in measuring poverty and producing a precise outcome, on which policy makers can count on is a very big challenge due to conceptual and practical limitations. Nevertheless, current index are in a position to produce a relevant data for policy formulation and other uses. According to NBS (2019) “8.2 percent of Bhutan’s population lives under poverty line.” The interesting thing in this data is that not all 8.2 percent live in the poverty only 3 percent of are below the poverty line; rest are in the poverty in the view of Multidimensional poverty. In the vision 2020 the RGOB is aiming to eradicate income poverty by this 2020.


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16 August 2021
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