Why is Calorie Intake Falling if Incomes are Rising in India?

Deepankar Basu and Amit Basole, Guest Bloggers

Deepankar Basu is an assistant professor of economics at the University of Massachusetts-Amherst. Amit Basole is an assistant professor of economics at the University of Massachusetts-Boston. This blog post summarizes the findings from their recent Political Economy Research Institute (PERI) working paper “Fueling Calorie Intake Decline: Household Level Evidence from Rural India.” The full paper is available here.

The Indian “Calorie Consumption Puzzle” has attracted a lot of attention recently. The puzzle is that average per capita calorie intake has been declining over the past few decades, even as real per capita expenditures and incomes have been rising. According to National Sample Survey (NSS) data, between 1983 and 2009-10, average inflation-adjusted monthly expenditure increased by 28% but calorie intake declined by 16% in rural India (Figure 1). Since, at any given point in time, calorie intake tends to increase with income, the Indian time trend is unexpected and puzzling.

Figure 1: Average real monthly per capita expenditure (MPCE) and calorie intake in rural India. Real MPCE is obtained by deflating nominal MPCE by the consumer price index for agricultural labourers (with 1986-87 as the base year). Source: Report 508 and 538 of the National Sample Survey Organization, India and authors’ calculation from unit-level data.

Alternative explanations for the puzzle have been considered in detail by Angus Deaton and Jean Dreze in this paper. One explanation that has become popular is declining calorie needs. As the workforce shifts from physically demanding agricultural work to more sedentary occupations, as agriculture becomes mechanized, and as epidemiological conditions improve, leading to fewer cases of diarrhea and other diseases, Indians need to consume less calories. Further, as another sign of growing incomes, diets have been steadily diversifying in India, which entails the replacement of cheaper calories (cereals) by more expensive ones (milk, meat, and vegetables). Other explanations include increase in the relative price of food, voluntary choice of luxuries like TVs over food, and under-reporting of calorie intake due to eating outside the home.

If largely voluntary reasons lie behind declining calorie intake, then it should not be a matter of concern from a policy perspective. But, in fact, there are several reasons why we should be concerned. First, even though anthropometric measures, such as height-for-age, weight-for-height, and weight-for-age among children, and adult body mass index (BMI) have improved in India, they are still among the worst in the world and are improving slowly relative to recent rates of economic growth.

Second, comparing the average calorie intake in rural India in 2009-10 in Figure 1 with the norms developed by the Indian Council for Medical Research, we find that the vast majority of the population falls below the required daily intake. Further, calorie intake has been falling across expenditure declines, even among those poorest Indians who already consume far below the nutritional norm. This suggests that voluntary reductions in calorie intake cannot be the whole story.

Third, if real expenditures diverge from calorie intake, this means that expenditure-based measures of poverty and calorie-based measures of under-nutrition also diverge from each other. Thus, even as the poverty head count ratio has declined in India over time, prevalence of under-nutrition has increased.

Taken together, these reasons imply that purely voluntary explanations such as reduced intake due to reduced needs or diversification of the diet may not suffice. Factors outside the control of households may also be at work.

In a recent paper, we offer evidence for one such mechanism: a squeeze on the food budget; i.e., a stagnant food budget in real terms due to rapidly rising expenditures on non-food necessities. Preliminary support for the squeeze hypothesis comes from the observation that food expenditures have stagnated in real terms in rural India while non-food expenditures have been rising rapidly (Figure 2). The food-budget squeeze hypothesis proposes that the two are causally linked.

Figure 2: Real average expenditure on food and nonfood items in rural India. Real expenditure is obtained by deflating nominal expenditure by the consumer price index for agricultural labourers (with 1986-87 as the base year). Source: Report 508 and 538 of the National Sample Survey Organization.

Although, in the conventional microeconomic model, expenditures on food as well as non-food items are jointly determined as outcomes of household preferences and budget constraints, structural changes in the economy shape the context in which these decisions are taken. For example, loss of access to common property resources, increasing informalization of the labour market, decline in livelihood options in rural areas, and changes in the supply of social services by the State can all affect private expenditures on healthcare, education, fuel, transportation, and other personal services. In such a context, a food-budget squeeze can arise if rapidly rising expenses on such non-food essentials absorb all the increases in total expenditures and keep real expenditures on food from rising.

We test this hypothesis in the case of one essential non-food item, cooking fuel. To estimate the impact of rising fuel expenditures on calorie intake, we take advantage of the fact that a transition from non-commercial to commercial fuel sources is underway in rural India. The majority of rural Indian households uses non-commercial fuel sources such as fuelwood or dung, but are increasingly switching to commercially purchased kerosene and liquefied petroleum gas (LPG). Whereas non-commercial sources of cooking fuel are largely obtained without cash transactions, commercial sources require cash purchase. Since consumed calories predominantly come from cooked food, the demand for cooking fuel is relatively inelastic. Hence, the switch from non-commercial to commercial sources, which is equivalent to an increase in the price of cooking fuel, entails significantly higher expenditures. If overall expenditures do not increase enough to accommodate both higher fuel expenditures this leaves lower purchasing power for food, leading (along with other factors) to lower calorie intake.

Using household-level data from four Consumption-Expenditure Survey (CES) rounds of the NSS (1987-88, 1993-94, 2004-05, and 2009-10), and an instrumental variable approach we show that rising expenditures on cooking fuel caused a decline in calorie intake. We also find that the relative price of food and diversification of diets are important factors. Our results show that controlling for diet diversification, relative price changes, changes in the pattern of occupation, the epidemiological environment, education, caste, religion and other demographic factors, a 10% increase in real expenditure on fuel between 1987-88 and 2009-10 causes between 0.7% and 1.8% decline in calorie intake.

In conclusion, we suggest that declining calorie intake in India should be seen as an outcome of a growth process where rural purchasing power has not increased sufficiently to allow for more food and non-food consumption. Proximate policy implications call for more effective delivery of food and fuel via the public distribution system. In the longer run, improved investments in agriculture as well as more non-farm employment opportunities are essential to increase rural purchasing power sufficiently.

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