When I first learned of the book, I felt a similar malalaise with this use of the word "freedom" for the reason you describe.  But this comment by ThatBritGuy in In Wales' Social construction of poverty diary not only rang very true to my own sense of "poverty" but it also succintly expressed how the notion of freedom could be tied to development:

I have a very simple definition of poverty, which is that it's the opposite of freedom. The US cant about individual freedom is exactly that, and confuses potential freedom of a rich minority with the much more limited freedom of the 99% of the population.

Freedom includes freedom from starvation, thirst, and so on. But it also includes freedom to educate yourself, and contribute socially.

Having to scramble for cash is not freedom. You could argue that from this point of view, poverty is much more widespread than is usually accepted.

Truth unfolds in time through a communal process.