Differential effects of rising food prices on Indian households differing in income

Rapidly growing population and rising incomes are placing great pressures on food security in India. Rising food prices can further increase food insecurity. This paper uses National Sample Survey Office (NSSO) data on household consumption expenditure covering the years 2009–2010 in order to analyse the effects that food price rises have on calorie and protein intake in India. The differences in food prices between rural and urban areas can be attributed to the Public Distribution Service (PDS) and price spread while price differences across income groups are due to quality and provide an opportunity for value-addition as incomes are growing. The consumption of reduced calories and proteins but greater amounts of fats by the majority of the population in urban regions calls for government intervention. Protein intake is more affected by price rise than calorie intake, which indicates that there may be a quality-quantity trade-off, especially in poorer households. Ordinary Least Squares (OLS) shows that the negative impact of food price rises on consumption is greater on the more affluent as they have the capacity to cut calorie intake. The highly negative effects of higher prices for milk and pulses on calorie intake emphasise the need for their stability. Quantile regressions within income groups show high negative impacts of price increases in pulses on poorer urban households, but these decrease while moving from lower to higher quantiles: this observation calls for location specific inclusion of pulses in PDS. Milk prices show more or less the same impact across the quantiles for all income groups, except the Highest Income Group (HIG – highest quartile).