Decoding Bare Necessities Index: Move from bare to basic

By Amarendu Nandy & Abhishek Tripathy

The Economic Survey 2020-21 has constructed a composite index called the Bare Necessities Index (BNI) to examine the progress made in providing access to bare necessities that are sine qua non for a decent living (Chapter 10, Volume 1). Using state-level data from two NSO rounds, the 69th (2012) and the 76th (2018), the BNI integrates 26 indicators across five dimensions—water, sanitation, housing, micro-environment, and other facilities to assess the inter-state disparity in the access of bare necessities. The consolidated and dimension-wise index values are constructed and compared for rural, urban, and combined (rural plus urban) for all states across India.

The BNI appears to have taken inspiration from the design of the Multidimensional Poverty Index (MPI), developed by researchers at the Oxford Poverty and Human Development Initiative (OPHI). The MPI is a global measure of multi-dimensional poverty that complements traditional monetary poverty measures by capturing the intensity of acute deprivations across dimensions like health, education, and living standards. In September 2020, NITI Aayog was entrusted with the responsibility to measure and monitor the state-wise performance of the Global MPI as part of GoI’s Global Indices to Drive Reforms and Growth (GIRG) exercise. The development of the BNI appears to be a step towards aligning monitoring mechanisms at the domestic level with widely-adopted global benchmarks like the Sustainable Development Goals (SDGs) and the Human Development Index (HDI).

The development of BNI signals the government’s willingness to adopt a new and more relevant multi-dimensional lens, to objectively monitor policy implementation of central schemes. Over the years, the government has launched a slew of schemes like Swacch Bharat Mission, PMAY, JJM, PMUY, Saubhagya, etc, which address various dimensions of well-being. It enables the government to take a systemic view of the progress made in the implementation of these programmes, and how they can serve the common goal of improving the living standards of the society as a whole. The BNI, thus, conflates economic development with human development by adopting an objective measure across multiple (otherwise) subjective dimensions.
The BNI also presents an opportunity to explore inter-departmental synergies, which could reflect a corporate-style problem-solving approach.

Coordination among various departments responsible for implementing the different flagship schemes can lead to better allocation and utilisation of public funds by curbing redundancies. Further, as BNI compares inter-state progress, its adoption could potentially unlock a competitive spirit amongst states, thereby, enabling better accountability and resource utilisation.

One major point of departure with the MPI is related to the issue of directionality. While MPI measures deprivations, BNI endeavours to measure access to bare necessities and services. Deprivation indices may be more useful in identifying inequalities compared to access-based measures as the latter may suffer from issues of misestimation, particularly when the unit of analysis is less disaggregated. Access to necessities may not necessarily mean realised access at the household or individual level as various social, political, and spatial factors may influence this.

Inter-state comparisons of BNI implicitly assume that every scheme (that captures the different dimensions) has been uniformly provisioned across states in the first place. This may not be necessarily true as Centre-state relations, and other political-economy factors can significantly influence the adoption and implementation of the central flagship schemes (including the ones taken in BNI), as evidenced by instances in states like West Bengal, Delhi, Telangana and others.

While it is tempting to explore the inter-state disparities with the BNI, geographic, socioeconomic and demographic heterogeneity makes salient the need for disaggregating data down to a district or block level. This can help policymakers fine-tune the intra-state implementation of flagship schemes and direct public resources to where it matters, thereby, also improving the dynamics of Centre-state coordination. This can be complemented by periodic surveys to paint a continuous picture of progress.

The BNI appears to make an assumption about a uniform set of bare necessities for all citizens. For example, the sub-indices related to micro-environment and sanitation have more relevance for rural households than urban, as the latter arguably experience better waste management and hygiene practices. Therefore, BNI can be better understood if a bottom-up approach could be adopted, so that bare necessities reflect some of this diversity. Customisation of the BNI may be required to reflect progress across varied income, occupational, gender, and other demographic categories.

Lastly, keeping in mind the current and future orientation of government initiatives (particularly relating to aspects of ‘Digital India’ and ‘Ease of Living’), it would help to explore ways in which the current BNI can be extended to keep pace with the fluid definition of ‘bare’ necessities in a fast-changing economy. Indicators related to primary education, healthcare, access to information and communication technologies, and access to basic financial services, warrant integration with the existing definition in order to paint a more holistic picture of human welfare.

The adoption of BNI does represent a mindset change to make public policy formulation, implementation and evaluation more evidence-based—as in vogue across the globe. Though the BNI goes one step beyond the philosophy that underpinned our approach to development in the post-independence era (roti, kapda, makaan), there exists further scope of redefining the ‘B’ as ‘basic’ rather than ‘bare’, making the approach more forward-looking.

Nandy is assistant professor at IIM, Ranchi and Tripathy is a PhD candidate at IIM, Ahmedabad. Views are personal