Food Budget Squeeze, Market Penetration and the Calorie Consumption Puzzle in India

December 1, 2012

By Deepankar Basu and Amit Basole

In the past three decades, even as incomes have been rising in rural India, people have been consuming fewer calories. In this article we present results of a recent study showing that this paradox results from people spending more of their scarce incomes on non-food essentials such as educating their children, paying for services such as mobile phones, and paying for health care, and transportation, than on consuming food. Thus although rural incomes have risen modestly (after adjusting for inflation), they have not risen fast enough, with the result that the food budget is being squeezed by rapidly increasing expenditure on non-food essentials. In combination with reduced access to non-market sources of food (food grown at home or procured from forests, rivers etc.), the food budget squeeze is leading to lower average calorie intake over time even as incomes are rising. While a policy evaluation that focuses purely on rising incomes or spending would result in a favorable report card for neoliberal policies, our analysis points to a failure of government policy in securing even a basic minimum of nutrition (by its own standards) to its citizens, even as their incomes are growing.

1. Introduction
The nutritional intake of the majority of rural Indians, measured in terms of calories consumed per day, still remains very low, when compared to nutritional norms developed by the Indian Council of Medical Research.[1] Not only that, calorie intake has been declining even as incomes are rising over time. For example, National Sample Survey (NSS) data [2] show that average calorie intake in rural areas declined by about 10 percent over the two decades between 1983 and 2004. During the same period, real average monthly per capita expenditure (MPCE), that is the money spent per person per month by rural households after adjusting for price increases, increased by about 22 percent (Deaton and Dreze 2009). This is an unexpected and puzzling trend because it is a well-known fact that at any given point in time, those with greater purchasing power are nutritionally better off and consume more calories. The resulting puzzle is sometimes referred to as the “calorie consumption puzzle.”

When we extend the analysis to 2009–10, we see that the same trend continues. For instance, in the decade and a half period between 1993–94 and 2009–10 estimated average calorie intake in rural India declined by about 6 percent. During this period, on the other hand, real average MPCE increased by 17 percent in rural areas. Thus, this opposite trend movement in calorie intake and real MPCE (Figure 1) indicates that the calorie consumption puzzle endures: as people are becoming better off, they are consuming fewer calories.

How should we approach this puzzle? The large and growing body of literature that has emerged around this issue can be divided into two broad strands: (a) those suggesting a coercive explanation, and (b) those offering a non-coercive explanation. Authors in the first strand argue that people consumer fewer calories because they are forced to do so. A coercive mechanism that is often highlighted is the absolute impoverishment of vast sections of the rural population caused by the adoption of neoliberal policies since the early 1990s.[3] For Utsa Patnaik, the most prominent proponent of this strand of research, the “puzzle” does not exist, because the explanation for lower calorie intake is lower real incomes. If people’s purchasing power is declining how can they be expected to increase their calorie intake?

Figure 1: Real monthly per capita expenditure (in 1987-88 rupees) and estimated average calorie intake (Kcal per day) in rural India. Source: NSSO (2011b), and NSSO (2012).


The non-coercive strand takes the opposite view. The basic message from this body of research is that people consume fewer calories because they choose to do so. This could be because they need fewer calories than before or because they are consuming more expensive sources of calories such as milk, fruits, and processed foods, as opposed to cereals (this is known as diet diversification).[4] The argument is that as people become richer they choose to spend less on food and more on other commodities such as education, health care and durables (like television, motorized vehicles, etc.). Further, they choose to spend a greater proportion of their food budget on vegetables, fruits, meat, and milk products that are a more expensive source of calories compared to cereals such as rice or wheat. Researchers who argue for a voluntary decline in calorie intake also point out that a reduction in the agricultural workforce as well as mechanization of agricultural work have reduced the calorie needs among rural Indians, since work has become less strenuous. Finally, increased availability of safe drinking water has resulted in a reduction in the incidence of gastrointestinal diseases such as diarrhoea that previously resulted in a large loss of calories. Thus, from this point of view, declining calorie intake over time is not a worrisome development.

In a recent study (Basu and Basole 2012) we argue that the coercive explanation that relies on declining real incomes cannot account for the phenomenon of declining calorie intake. However, we also find that declining calorie needs of the rural population and diversification of diets (the non-coercive explanations) do not account for reduced intake either. We offer a third line of explanation of the calorie consumption puzzle building on the arguments in Mehta and Venkatraman (2000) and Sen (2005). When we look across Indian states and over time we find a strong negative relationship between the average calorie intake and the share of monthly expenditure devoted to nonfood essentials (after controlling for the effect of other relevant factors like real expenditure, calorie needs, diversification of diets).[5] Thus, states where on average households spend a larger share of their monthly expenditure on nonfood essentials (like education, health care, transportation) are also the states where, again on average, they consume lower calories. Thus, the lower calorie intake could result due to a strong food budget squeeze.

Why does the food budget get squeezed? We argue that it gets squeezed due to galloping expenses on non-food essentials like health care, education, transportation and other essential services. This absorbs the increases in household incomes and keeps real expenditures on food from rising. The food budget squeeze has both demand and supply side aspects. On the one hand people are demanding more and better education knowing full well that this is the most important route for upward social mobility. Similarly, they are demanding better and/or more formal- institutional health care like childbirth in hospitals or allopathic medicines. Additionally, the inability of the agricultural sector to generate stable incomes, and the resulting migration to towns and cities for work has increased commuting expenses. Further, services that were previously considered luxury items, such as mobile phones, are no longer luxuries but are essential for participating fully in economic and social life.[6] On the other hand publicly funded schools, dispensaries and hospitals are in worse shape than ever. Even as people’s needs are growing, the government is failing to step up to the task of supplying essential services. Therefore, people are forced to bear all the expenses of these essential services by themselves, leading to a squeeze on their food budgets.[7]

In addition to this squeeze, there is another important factor at work. While market incomes (incomes earned from wages or from self-employment) may not be declining, non-market incomes are falling. Over time, common property resources such as forest that are critical sources of consumption outside the market, are being threatened and increasing penetration of the market in rural areas is bringing about a decline in consumption of home-grown food (particularly cereals). However, it is not necessary that home-grown food will be substituted by equally nutritious market-purchased food. For one, money could be spent on non-food essentials. Secondly, market-purchased food may be a more expensive source of calories (particularly if it is processed food).

Thus instead of declining market incomes or reduced calorie needs, we argue that the calorie consumption puzzle is explained primarily through a combination of a food budget squeeze and declining home-grown consumption.

2. Alternative Explanations

2.1. Rural Impoverishment
A simple explanation for the puzzle could be that, in fact, there exists no puzzle. Rather, the fall in calorie intake is driven by impoverishment, i.e., decline in real income and expenditure. According to Patnaik (2004, 2007, 2010a,b) adoption of neoliberal policies has led to declining real incomes of the vast majority of the masses, especially in rural India. The decline in average calorie intake is a direct outcome of such impoverishment.[8]

This explanation seems reasonable given the backdrop of widespread agrarian distress during the neoliberal period that we have also written about at Sanhati. But evidence on consumption and incomes points in the opposite direction. NSS data show that even though the average level of spending in rural India remains very low, there has been a modest increase (not a decrease) in rural spending, during the past twenty years. Average real MPCE (measured in 1987-88 prices) in rural India increased by 17.45 percent between 1993–94 and 2009–10; that is, rural Indians were able to spend more money per capita over this period, even after adjusting for inflation. But, could it be that real MPCE has increased on average only because it has increased for the rich and decreased for the poor? In fact this is not the case. When we look at the poorest 10% of the population in rural India we still find an increase in real MPCE of about 12.36 percent over the same period. Indeed, there is no evidence of decline in real expenditures for any section of rural population in India (Figure 2).

Could it be that the adjustments made for inflation are somehow faulty and are not accurately reflecting the increase in price of food? This could happen, for instance, if food prices increase faster than the general rate of inflation. But the data show that even though food prices have increased rapidly since 2008-09, over the long term (i.e. the last 20 years) the relative price of food shows no clear trend (Deaton and Dreze 2009 and Balakrishnan 2010). This means that food has not become more expensive relative to other items of consumption over the last two decades. Hence, increase in food price cannot be an explanation for the lower calorie intake that we observe over time in rural India.

There is a second, more compelling, argument against the impoverishment thesis. When we break down the NSS data by expenditure classes, we see that calorie intake has increased for the poorest 10% of the population between 1983 and 2009-10, while it has declined for all other groups in the same period (Figure 2 and top panel in Figure 3). Since there is no reason to expect rural impoverishment, if it does occur, to bypass the poorest section of the rural population, this evidence is difficult to square with the impoverishment thesis. But it is possible to explain the increasing calorie intake by the bottom 10 percent of the rural population using our hypothesis of a food budget squeeze and declining access to non-market sources of food. For instance, it might be the case that the poorest of the poor are not able to afford even basic expenses on non-food essentials (like education and institutional health care), thereby spending their increased incomes on securing better access to food.

Figure 2: Percent change in real MPCE and calorie intake across MPCE classes between 1993–94 and 2004–05. Source: NSSO (1996b), and NSSO (2006).


Finally, we also see that real wages for agricultural and non-agricultural workers in rural India have increased over this same period. Using data from various Employment-Unemployment Surveys of the NSSO, the bottom left panel of Figure 3 plots the average daily wage of agricultural labourers for the country as a whole after controlling for price increases. The plot indicates that there is a steady increase in real agricultural wages between 1993–94 and 2009–10. The bottom right panel in Figure 3 shows that wages of non-agricultural workers in rural areas have also increased in real terms (i.e., after accounting for price increases) from 1999–00 to 2009–10.[9] Now it is true that an increase in wages by themselves do not mean things are getting better, since overall employment could be declining at the same time, offsetting the effect of higher wages. But it is difficult to have both declining employment and increasing wages. Thus, taken together, we believe that all the pieces of evidence point to a slow but steady increase in living standards in rural India. Hence, without disputing the reality of agrarian distress during the neoliberal period, as highlighted by the continuing spate of farmer suicides, we believe that absolute immiserization of the vast majority of the rural population cannot be an explanation for the calorie consumption puzzle.

Figure 3: Top panel: Estimated average calorie intake (Kcal per day) of the bottom decile and the top quartile of expenditure classes in rural India. Source: Deaton and Dreze (2009), and NSSO (2012).Bottom Panel: Average daily real wage of agricultural labourers and nonagricultural workers in 1987-88 prices. NSSO (2011a).


But there are two issues on which we are in agreement with proponents of the impoverishment thesis, such as Utsa Patnaik. Firstly, the fact that people across the income spectrum, from the poorest to the richest, are earning or spending more money, does not tell us anything about inequality between the rich and the poor. As is well-known, inequality in India has increased sharply during the neoliberal period.

Second, one of Patnaik’s principal concerns is to show that official poverty figures grossly underestimate poverty in the country. While this issue does not directly bear on the puzzle being discussed here, the two issues are related. A decline in calorie intake over time has meant that a large proportion of the population now consumes fewer calories than the poverty norm of 2400 Kcal/day (in rural areas). However, the way the official poverty rate is calculated does not take into account actual calorie consumption. Instead the expenditure level that was required to purchase the requisite number of calories in 1972 (when the norm was developed) is simply adjusted for inflation to give a new expenditure criterion. If a person spends more than this amount, he/she will not be counted as poor, even if they consume fewer calories than the original norm. We agree that such a method obscures widespread undernourishment and malnourishment among Indians, especially in rural areas.

2.2 Non-coercive Explanations
A more benign explanation for the decline in calorie intake is that people are in need of fewer calories as work in agriculture is becoming less strenuous (due to mechanization of important parts of agricultural production) and as access to safe drinking water is reducing prevalence of diseases like diarrhoea which result in a loss of calories. Further, as people’s spending power increases they are choosing to substitute cereals (cheap source of calories) with vegetables, fruits, milk products etc., i.e. more expensive source of calories (Deaton and Dreze, 2009; Rao, 2000; Mittal, 2007).

Why might the calorie needs of the population go down? There are at least three important reasons that might reduce the calorie needs of the population. First, it is a well-known fact that, on average, agricultural work is far more physically demanding than non-agricultural work. Thus, as a larger share of the Indian workforce moves from agriculture to industry and services, the average calorie needs of the population might decline. Second, as sanitary conditions improve, the calorie absorption capacity of the population increases. This might reduce the average calorie consumption needs of the population because a larger share of whatever is consumed can now be retained. Third, mechanization of key parts of agricultural work (like threshing), adoption of labour-saving technology within households, and mechanization of transportation (i.e., switch from walking to using bicycles, from bicycles to motorcycles, and so on), might also reduce the average calorie needs of the population.

In our analysis, we use two variables to capture the calorie needs of the population at the state level: (1) the share of the workforce in the agricultural sector, and (2) the percentage of households that have access to safe drinking water, i.e., water coming from a tap, a tube well or a hand pump. The first is meant to capture the reduction in the strenuousness of work due to shifts of the workforce out of agriculture and mechanization of agricultural work; the second is meant to capture the improved epidemiological environment in rural India. When we include these variables in our analysis we find no evidence that declining calorie needs play a significant role in the whole story.

Further, it is not clear to us that a decline in calorie needs, even if it has occurred, will also lead to decline in average calorie intakes, especially for poorer rural Indians of whom calorie intakes are still very low. As shown in Figure 4, in 2009-2010 the absolute level of calorie intake for all MPCE classes except the top two lay below the 1972 poverty line norm of 2400 Kcal per capita per day and even below the updated 2009 norms published by the Indian Council of Medical Research (see note 1). And the poorer half of the population (the lower five MPCE decile classes) lies far below the line, having average calorie consumption of less than 2100 Kcal per capita per day. The “declining needs” explanation requires us to believe that a very large number of rural Indians are voluntarily foregoing food consumption even while falling far short of the basic minimum nutritional requirement. We think this is highly unlikely.

Figure 4: Estimated average calorie intake (Kcal per day) across MPCE decile classes in rural India in 2009–10 with respect to the 2009 ICMR norm for sedentary activities for males (horizontal line, 2320 Kcal per capita per day). Source: NSSO (2012)


3. Results of our study: A different coercive explanation
Instead of declining calorie needs we find strong evidence for two other factors mentioned by Deaton and Dreze (2009). First, rising non-food essential expenditures are squeezing the food budget. NSS data reveal that in the past two decades, almost the entire increase in rural spending (after adjusting for inflation) has taken the form of increased spending on education, transportation, consumer services, etc., while food budgets have remained stagnant in real terms (Deaton and Dreze, 2009). This can be seen from data available in NSSO (2011b): for the average rural Indian household, the value of food expenditure in real terms (i.e., after accounting for the increase in food prices) did not increase over the past two decades, and in fact declined slightly over the last 15 years.

Let us first look at some data that clarifies this phenomenon. Figure 5 shows how the share of total expenditure devoted to education, health care (i.e. buying medicines, doctor visits, x-rays and blood tests, hospital visit etc.), conveyance and other consumer services as well as per capita calorie consumption have changed between 1993–94 and 2009–10. It is obvious from the figure that per capita calorie intake and the share of expenditure devoted to non-food essentials display exactly opposite movements over time: even as the share of MPCE devoted to such non-food essentials has increased over time, average per capita calorie intake has declined.

Figure 5: Share of Monthly expenditure devoted to nonfood essentials (percentage) like education, healthcare, transportation, and estimated average calorie intake (Kcal per day) in rural India. Source: NSSO (2006), and NSSO (2011b).


The relationship between calorie intake and non-food expenditures emerges even more strongly when we look across rural classes. Taking two time points, 1993-94 and 2004-05, Figure 6 shows that richer classes witness higher increases in non-food essential expenditures (NFE) in this period, and also register larger declines in calorie intake. At least two interesting implications emerge from this graph. First, there is a strong negative relationship between changes in the share of non-food essential expenditure and changes in calorie intake across MPCE classes. Moreover, the relationship exists across the vast majority of rural households, both rich and poor.

However, two points are important to note in this regard. First, a decline in calorie intake for the upper expenditure classes, even if larger in absolute (or even percentage) terms, would not have the same implications for nutritional status as even a much smaller decline for the lower expenditure classes. This is because they have very different starting points (say 3000 Kcal versus 2000 Kcal).

Second, a given change in NFE does not have the same implication for the food budget for all expenditure classes. The bottom panel of Figure 6 plots change in NFE against the percentage change in real food expenditures across MPCE classes. We see clearly that smaller increases in NFE give rise to larger decreases in real food expenditures for the intermediate MPCE classes (particularly classes 4 to 10) indicating that the food budget is more likely to be squeezed for these classes. For the top two MPCE classes (i.e., classes 11 and 12), larger increases in NFE are accompanied by smaller reductions in the food budget, suggesting that the food budget is squeezed to a lesser extent. That is, the relatively well-to-do rural classes have been able to maintain spending on food to a greater extent, despite large increases in non-food spending. The poorer rural classes have not been able to do so. The data suggest that the food budget squeeze operates to a greater or lesser extent for the vast majority of rural households, except possibly the richest two expenditure classes.

Lastly, note that the poorest of the poor (MPCe class #1) seem to be unaffected or relatively less affected by the food budget squeeze: for the lowest MPCE class we see a small increase in calorie intake (50 Kcal/day) as well as an increase in real food expenditures. One possibility is that the bottom expenditure class households are so desperately poor that they cannot afford to send their children to private schools or access private healthcare in the first place. Hence, the increasing cost of education or healthcare does not have a large impact on their household budgets. So, they are able to devote the increases in their real incomes to food consumption, allowing them to increase their calorie intakes. Further, these households may also rely to a greater degree on non-market sources of food, fuel, etc. This might cushion them against the operation of the food budget squeeze.

Figure 6: Top: Calorie intake change as a function of percentage point change in share of NFE in MPCE between 1993-94 and 2004-05. Bottom: Percent change in real food expenditures by percentage point change in share of NFE between 1993-94 and 2004-05. Source: NSSO (1996b), and NSSO (2006).


Does the negative relationship between the share of the monthly budget devoted to nonfood essential expenditure and per capital calorie intake, shown in Figure 5 persist even after we control for structural factors that change the calorie needs of the rural population and for diet diversification? When we perform a statistical analysis to answer this question we find a robust and highly significant negative effect of the share of non-food essential expenditures on per capita calorie intake; we interpret this as suggesting that the food budget squeeze is an important factor driving declines in average calorie intakes. In quantitative terms, we find that a 1% increase in the share of monthly expenditure on non-food essentials is associated with a 1% decline in calorie intake after controlling for changes in real expenditures, calorie needs, and diversification of diets.

Note that ordinarily we would expect the relationship between the share of the monthly budget devoted to nonfood essential expenditure and per capital calorie intake to be positive. Even though growth in real per capita incomes is accompanied by an increase in the share devoted to essential services like education, health care, etc., this is seldom accompanied by a decline in calorie intake. This is because people’s incomes grow to accommodate both needs (food and non-food) and a fall in the real price of food ensures that a lower share of household expenditure requires to be devoted to food. Therefore, when an increase in the share of non-food essential expenditure leads to a decline in calorie intake, it is a perverse and worrisome outcome.

Referring back to the coercive explanation that calorie intake is declining because people are able to spend less money, our results show, on the contrary, that even as rural expenditures increased during this period, they did not increase enough to accommodate both, the increased need for spending on non-food essentials, as well as an increasing or even sustained nutritional intake.

As we have already pointed out, our analysis also throws up another important factor that drives the calorie consumption puzzle: food grown at home for consumption (as opposed to sale). This factor is extremely important for a developing country like India where even today a large portion of the consumption of poor households, especially in rural areas, is met from non-market sources. More than 60 percent of milk, about 40 percent of wheat, 30 percent of rice, 11 to 18 percent of seven common pulses, and 14 percent of eggs, and a large portion of common vegetables consumed in rural India in 2004-05 came from home produce (NSSO, 2007).

The increasing penetration of the market in rural areas reduces the proportion of food consumed out of home production (and other non-market sources like forest, rivers, etc.). But if people can no longer access wheat grown at home, fruit from the forest or fish in rivers, it is not necessary that they will purchase these goods from the market. There may be other more pressing demands on their scarce money income. This will result in people spending more money but not acquiring more calories, because the money is spent on other necessities like sending their child to school, commuting to work or paying for a mobile phone.

5. Is the food budget squeeze “voluntary?”
At this point an argument can be made that even if declining calorie needs are not solely responsible for reduced calorie intake, the reduction is still voluntary because people are choosing to spend more on education, health, and other non-food items. On the basis of our analysis we cannot directly rule out such an explanation. However, given the low absolute level of real expenditure on food as well as number of calories consumed by the majority of the rural Indian population, we do not think the non-coercive or voluntary explanation can be the whole, or even the major part of the, story.

How can one distinguish between voluntary and forced reduction in calorie intake? One way might be to take a calorie norm as the dividing line. That is, declines in nutritional intake among those who already consume less than some basic minimum may be taken as coercive or involuntary declines. As noted earlier, the absolute level of calorie intake for the bottom eight deciles (i.e., 80% of rural Indians) in 2009- 2010 was below the minimum ICMR norm of 2320 Kcal per capita per day (for males involved in sedentary activities). Therefore, we hypothesize that the majority of the rural population in India is consuming lower calories because they are being coerced to do so due to the combination of a food budget squeeze and declining access to non-market sources of food.

We would also like to point out that disentangling coercive from non-coercive factors is not straightforward. For example, consider the following scenarios. It is reasonable to suppose that people are voluntarily spending more on education because they believe this is the way to ensure economic security for their children and social respect for their families. But the increasing unviability of agriculture as a source of income and the precariousness of informal employment, which are structural factors, also play a role in increasing the allure of formal sector jobs, for which school education is a must. Second, people may spend more on health care not only because preference for allopathic care is on the rise but because the public health-care system is in decline. This is again a mixture of involuntary (structural) and voluntary changes. Third, people could be spending more on transportation because of a decline in rural livelihood options (a structural factor) and increased pull of urban jobs and lifestyles (a taste based factor). Thus, in most realistic situations a combination of the two would be in operation. Separating out the coercive from non-coercive factors and testing their relative strengths would be an instructive exercise for future research.

6. Conclusion
We have argued in this article that the decline in calorie intake across rural classes in India is correlated with an increase in spending on non-food essential items such as education, health, transportation and other essential services. While rural incomes have indeed increased (after adjusting for inflation) they have not increased fast enough, with the result that people are cutting back on food to accommodate other expenses. In our analysis we do not find a significant effect of declining calorie needs or of the diversification of diets on reduced calorie intake.

The failure of the government in the neoliberal period emerges clearly from this analysis. An important factor is stagnant or even declining public expenditure on social services in the post-reform period (Mooij and Dev, 2004; Joshi, 2006; Tilak, 2004). For example, throughout the 1990s, social sector expenditure, as a percentage of GDP, was lower than that in the late 1980s. Even though per capita social services expenditure did show an increase of 54% in the period 1990 to 2001, after disaggregation it is apparent that the share of secondary education in central government expenditures showed a 9 percentage point decline while share of spending on central government hospitals and dispensaries fell by 7 percentage points. And these numbers do not even touch the question of quality that by all accounts is in decline. As people flock to more and more expensive private schools and hospitals these expenses will only mount.

To this must be added the well-known problems of agricultural policy that have forced farmers to migrate greater and greater distances for poorly paid jobs in the urban and rural informal sector. While such a transition can increase MPCE or GDP, it can also mean a real decline in living standards, since the increases in income are spent on traveling rather than on food.
Clearly, a policy evaluation that focuses purely on rising incomes or spending would result in a favorable report card for neoliberal policies. But in the phenomenon of declining per capita calorie intake we have a different type of evaluation. One that points to the failure of government policy in securing even a basic minimum of nutrition (by its own standards) to its citizens, even as their incomes are growing.

1. Over the years, the Indian Council for Medical Research (ICMR) has recomputed the Indian calorie norms informed by improved methodologies and using more complete information. The most recent figures for Indian calorie norms were released by the ICMR in 2009. For men, the calorie norms (measured in Kcal per day) were as follows: 2320 (sedentary work), 2730 (moderate work), 3490 (heavy work). The corresponding norms for women were: 1900 (sedentary work), 2230 (moderate work), 2850 (heavy work) (?, Table 4.14).

2. Data collected from the large scale, nationally representative consumption expenditure surveys (CES) conducted roughly every five years by the National Sample Survey Organization (NSSO), the so- called “thick rounds”, show that this trend starts in 1972–73 (NSSO, 1996c).

3. Prominent researchers arguing within this broad strand, with slight variations in emphasis, have been, among others, Mehta and Venkatraman (2000); Chandrasekhar and Ghosh (2003); Patnaik (2004, 2007, 2010a,b).

4. Prominent researchers within this strand, again with variations in the preferred explanation adopted, have been, among others, Rao (2000); Mittal (2007); Deaton and Dreze (2009); Li and Eli (2010).

5. Data for the analysis in this paper has been collected from two main sources: (1) various reports related to the CES of the NSSO, and (2) Census of India data available on the website of the Registrar General of India. See Basu and Basole (2012) for details.


7. As Sen (2005) notes: “…the cost of meeting the minimum non-food requirements has increased to such an extent that the earlier proportion of expenditures no longer suffices and a larger proportion has to be applied to meet the requirements, thereby leading to a decrease in the income left available for food…The observed behaviour seems to suggest that people are treating food as the residual item of consumption. There are at least two items of non-food expenditure- rent and health care- which may take precedence over food as claims on income, and it has been observed that these are the fastest growing components of household expenditure in urban and rural areas respectively.”

8.Thus,”…there is no puzzle of declining per capita calorie intake with consistently rising per capita “real spending” since such behaviour does not exist in reality: applying reasonable alternative deflators shows decline in real spending, which turns out to be particularly large in the economic reforms decade.” (Patnaik, 2010a).

9. One caveat is that wage rate may go up even as the total number of people employed goes down bringing about worse conditions for workers.


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