NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Consumer Price Subsidies affect Nutrition

Neeraj Kaushal, Felix Muchomba

NBER Working Paper No. 19404
Issued in September 2013
NBER Program(s):   DEV   HE   PE

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.

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This paper was revised on November 26, 2013

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Document Object Identifier (DOI): 10.3386/w19404

Published: World Development Volume 74, October 2015, Pages 25–42 Cover image How Consumer Price Subsidies affect Nutrition Neeraj Kaushala, Felix M. Muchombab

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