Does Food Price Subsidy Affect Dietary Diversity? Evidence from South India

The present study has tried to address the impact of subsidised rice distribution through the public distribution system on dietary diversity and nutrition intake in the state of Tamil Nadu in India as the state is considered a pioneer in introducing a number of food security programmes in India. We used National Sample Survey Organisation’s data for the years 2004-05 and 2011-12, and the propensity score matching technique to estimate the actual impact of the subsidy programme on food consumption patterns and nutrient intake, as the data-set used for analysis was subjected to non-randomisation and selection bias. The estimated results reveal that the subsidy on rice has significantly and positively impacted food consumption and nutritional intake across households, irrespective of income groups. The increased purchasing power of the poor due to the subsidy is limited to the staple food commodities—rice, millets, pulses and vegetables—whereas middle- and high-income households are more likely to consume high-value commodities such as fruits, processed food and livestock products, with a resultant higher gain in fat and calcium. Our study indicates that extending the price subsidy to nutritious foods, besides rice can help the poor diversify their diets towards healthy and nutrient-rich foods. JEL Codes: C5, C54, D01, D11, D12, Q11, Q18