NDI a more realistic approach in addressing poverty

If Padu functions as intended, it could reduce inefficiencies in the current system and enable better decision-making.

THE government’s plan to adopt net disposable income (NDI) as the new basis for measuring poverty is a significant move.

Most pundits agree that the new approach offers a more meaningful and realistic view of poverty, as it takes into account the real cost of living, including expenses on essentials like food, housing, utilities and transportation, rather than relying on outdated measures.

It is also designed to reduce exclusion errors while ensuring that those who truly need help are not overlooked simply because they don’t fit into an outdated framework.

The NDI approach could be of great benefit in addressing inequality in Malaysia, where there are significant regional differences in living costs. A family in Kuala Lumpur, for example, will have very different expenses than one in rural Kelantan.

In adopting NDI, the government recognises these differences and offers a system that is more equitable and adaptable.

However, this move is not without challenges. Such a comprehensive system will require a robust infrastructure, including accurate data collection and seamless coordination between government agencies.

Prime Minister Datuk Seri Anwar Ibrahim says the government aims to use the Central Database Hub (Padu) by 2025 to consolidate data and ensure aid distribution is more accurate and transparent.

If Padu functions as intended, it could reduce inefficiencies in the current system and enable better decision-making.

But this is a big “if”.

Historically, data management in government programmes has always been challenging. Much effort is therefore needed to ensure that the platform is reliable.

Meanwhile, the government’s commitment to fiscal reforms deserves praise. Overhauling the subsidy structure to make it more targeted is a sound approach, as blanket subsidies often benefit those who do not need them.

As Anwar rightly pointed out, relying solely on government funding could put undue pressure on the nation’s finances. His proposal to use innovative financing methods like social impact funds and public-private partnerships is a pragmatic solution. However, it remains to be seen whether the private sector will fully engage in these initiatives or whether their participation will be largely symbolic.

The most ambitious part of the plan is the effort to change mindsets and attitudes around poverty.

This long-term behavioural shift is necessary but challenging. Empowering individuals and communities to break free from the cycle of poverty requires not only financial resources but also a deep cultural shift, something that is often difficult to achieve.