Working Paper: NBER ID: w19404
Authors: Neeraj Kaushal; Felix Muchomba
Abstract: We study the effect on nutrition of an exogenous increase in food grain subsidy in rural India resulting from a program targeting the poor. Our analysis suggests that increase in income resulting from the food price subsidy changed consumption patterns in favor of the subsidized grains and certain more expensive sources of calorie, and lowered consumption of coarse grains that are cheaper, yet taste-wise, inferior sources of nutrition, but had no effect on calorie, protein and fat intake in poor households. Further, our analysis shows that households allocated some of the increase in income from food price subsidy to expenditures on non-food items. Estimates of the price effect of food price subsidy on the three measures of nutrition are also negligible. We find evidence that the decline in the price of wheat and rice, changed consumption patterns toward increased consumption of wheat and rice and lower consumption of coarse grains, the unsubsidized staple food. Our analysis thus suggests that food price subsidies are likely to affect agriculture markets without impacting nutrition.
Keywords: food price subsidy; nutrition; public distribution system; India
JEL Codes: I10; I32; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| BPL card ownership (G51) | food price subsidy (Q11) |
| food price subsidy (Q11) | income (E25) |
| income (E25) | calorie intake from subsidized wheat and rice (H53) |
| income (E25) | calorie intake from sugar and sugar products (L66) |
| income (E25) | calorie intake from coarse grains (L66) |
| food price subsidy (Q11) | consumption of wheat and rice (F62) |
| food price subsidy (Q11) | consumption of coarse grains (Q13) |
| food price subsidy (Q11) | nutritional outcomes (I15) |