Context
The welfare challenge lies in providing assistance to needy households to ensure adequate diets without creating conditions in which they opt for inferior diets that are too heavy on cereals
A disconnect
In the first few paragraphs, author has depicted an apparent disconnect between an improvement in the proportion of households receiving PDS subsidies and corresponding improvement that should be witnessed in malnutrition
- Source of the data: State-wise data has been taken from Annual Health Survey/District Level Health Surveys of 2012-14 as well as National Family Health Survey IV of 2015-16
- Rajasthan: Proportion of households receiving PDS subsidies in Rajasthan increased by about 15 percentage points, underweight declined by 3 percentage points
- Madhya Pradesh experienced increase in the PDS but a sharper decline underweight (17 percentage points)
- Gujarat shows a drop in PDS use but records a modest improvement in underweight statistics (5 percentage points)
- Andhra Pradesh: The number of people receiving PDS rose to76 % in 2011-12 but underweight rate seems to be stuck around 32% with hardly any improvement
This is the apparent disconnect which the author is trying to expose here in this article
A more complex relation
Author states that a recently released report based on India Human Development Survey of 2004-05 and 2011-12 suggests that the relationship between the PDS and nutrition may be more complex
- Survey organised by: Jointly by researchers from National Council of Applied Economic Research and University of Maryland
- USP: It is the first nationwide survey to interview the same households at two points in time
- What has survey done? Households with similar income, family size, land ownership and place of residence have been compared
- One group is with Below Poverty Line (BPL) or Antyodaya Anna Yojana (AAY) card and the other group is without these cards
- What do results suggest?
For households with BPL or AAY card:-
- Access to PDS subsidy changes allocation behavior: When items like rice, wheat and other cereals are available cheaply households try to get more of their required calories from cereals and less from milk, fruits and vegetables
- Cereal consumption is high: Results show that households with BPL/AAY cards consume a monthly per capita average of 11.87 kg of cereals, but only 2.77 litres of milk
- Food consumption forms 56% of household budget
For households without BPL or AAY card:-
- Lesser consumption of cereals: Households without BPL/AAY cards but at the same income level, consume somewhat less cereals (11.22 kg) but more milk (3.21 litres)
- Food consumption forms 58% of household budget
Why money saved from buying cereals in families with BPL or AAY card is not being used to buy fruits, vegetables and nuts?
Because school and medical costs are rising and households face many other demands on their purse, these savings seem to be spent on non-food items
Previous study
Author states that a previous study done in a similar manner and published in joint NCAER/Brookings journal, India Policy Forumfound that
- No effect of subsidy access to child nutrition: Households with a BPL/AAY card were no better than households without PDS subsidies when it came to child nutrition
Reason: Dietary diversity (eating different kinds of foods) is important for balanced nutrition. Access to cheap PDS cereals reduces this habit and people consume more and more of cereals on a daily basis leading to nutritional deficiencies which ultimately results in no visible improvements in child nutrition.
Q: So, should food subsidies be discontinued?
A: No because as per the NCAER report,
- Access to PDS is vital in maintaining dietary diversity: For very poor households or households that experience income declines of 20% or more between the two surveys, access to the PDS is very important for preserving food intake and dietary diversity
Survey findings:
- Households with BPL/AAY card: When faced with a sharp income decline, households with BPL/AAY cards reduce their cereal intake by 770 g per capita per month, and maintain their milk intake
- Households without BPL/AAY card: In contrast, households who can’t avail of food subsidies reduced their monthly per capita cereal intake by 930 g and milk intake by 280 milliliters
The Challenge
Author states that the challenge lies in providing assistance to needy households without creating conditions that force them towards inferior eating habits
Author suggests
- Cash transfers: Cash transfers may be one way of dealing with this challenge. They would allow households to invest in better diets without restricting what they consume. Currently they are given rice, and other cereals which limits their choice
- However, success of cash transfers would depend on the ability to effectively administer transfers and reduce leakages
Conclusion
Author concludes by stating thatifthe mechanisms for effective administration of the UBI are in place, it is possible to make a case for replacing PDS by cash transfers on nutritional grounds
