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How Consumer Price Subsidies affect Nutrition

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  • 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.

Suggested Citation

  • Neeraj Kaushal & Felix Muchomba, 2013. "How Consumer Price Subsidies affect Nutrition," NBER Working Papers 19404, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19404
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    2. Kishore, Avinash & Chakrabarti, Suman, 2015. "Is more inclusive more effective? The “new-style†public distribution system in India:," IFPRI discussion papers 1421, International Food Policy Research Institute (IFPRI).
    3. Andaleeb Rahman, 2015. "Universal Food Security Program and Nutritional Intake: Evidence from the Hunger Prone KBK Districts in Odisha," Working Papers id:6925, eSocialSciences.
    4. Anderson, Kym & Strutt, Anna, 2014. "Food security policy options for China: Lessons from other countries," Food Policy, Elsevier, vol. 49(P1), pages 50-58.
    5. Prasad Krishnamurthy & Vikram Pathania & Sharad Tandon, 2017. "Food Price Subsidies and Nutrition: Evidence from State Reforms to India’s Public Distribution System," Economic Development and Cultural Change, University of Chicago Press, vol. 66(1), pages 55-90.
    6. Priyam Sengupta & Kakali Mukhopadhyay, 2016. "Economic and Environmental Impact of National Food Security Act of India," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-23, December.
    7. Priyam Sengupta & Kakali Mukhopadhyay, 2016. "Economic and Environmental Impact of National Food Security Act of India," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-23, December.
    8. Valero-Gil, Jorge & Valero, Magali, 2018. "Calories and poverty during a prolonged crisis," Food Policy, Elsevier, vol. 76(C), pages 56-69.
    9. Andaleeb Rahman, 2015. "Universal food security program and nutritional intake: Evidence from the hunger prone KBK districts in Odisha," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2015-015, Indira Gandhi Institute of Development Research, Mumbai, India.
    10. Drèze, Jean & Khera, Reetika, 2017. "Recent Social Security Initiatives in India," World Development, Elsevier, vol. 98(C), pages 555-572.

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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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