Despite our world’s scientific advances and interconnected economies, malnutrition remains a persistent global issue. The United Nations reported that in 2023, an estimated 2.33 billion people were moderately or severely food insecure.
Researchers from UC Santa Barbara, the Indian Institute of Management, and the University of Calgary embarked on a study to explore the efficacy of the most extensive food aid programme globally. Their findings, published in the American Economic Journal, illustrated that this initiative’s health and economic benefits extend well beyond the nutritional value of the food provided at a subsidy.
Kathy Baylis, a co-author of the study and a professor in UCSB’s Geography Department and the Environmental Markets Lab (emLab), commented on the nutritional challenges in India, stating, “Malnutrition in India has been a long-standing problem.” She highlighted that despite India’s relative wealth, stunting rates among children are comparable to those in some of the poorest regions of sub-Saharan Africa. India implemented the Public Distribution System (PDS), the world’s most extensive food transfer programme and a significant component of the country’s social safety net to address this.
The PDS is akin to the food stamp programmes in the United States in previous decades. It allows eligible individuals and families to purchase staples like rice and wheat at significantly reduced prices. Serving about 800 million people, the PDS accounted for 60% of India’s social assistance budget from 2019 to 2020.
The paper also details changes made to the food assistance programme. Historically managed at a state level, the PDS transformed in 2013 when the federal government of India set minimum standards for the programme, compelling many states to enhance their support by increasing grain allotments or reducing prices.
To assess the impact of these changes, the researchers utilised data from a comprehensive five-year survey conducted by the International Crops Research Institute for the Semi-Arid Tropics. This survey, which the Gates Foundation supported, included 30 villages across eight states. The researchers focused on tracking children’s height for age. This metric indicates long-term nutritional status better than body mass index and is linked to various adverse health and cognitive development outcomes affecting education and income levels.
The expansion of the PDS led to a notable reduction in stunting rates, from 36% to 28.8%. This significant decrease was especially prominent in children between zero and two years old, a critical period for child development where nutritional intake is crucial.
The PDS’s benefits were more evident during times of poor rainfall, underscoring its role as a nutrition-sensitive safety net that buffers childhood nutrition from local climatic disturbances. The researchers aim to explore this aspect of the programme further.
Despite some criticisms that subsidised grains might replace more nutritious options, leading to diets rich in empty calories, the study found that participants in the PDS had more diverse diets. Families could allocate more of their budget to nutrient-rich foods like meat and dairy by lowering the cost of basic staples. This shift was significant enough to contribute to the observed increase in children’s heights.
The study also revealed broader impacts on household finances. The researchers observed an increase in household expenditure that exceeded what could be attributed to the savings on food alone. They theorised that well-nourished individuals might work additional hours, thus increasing their wages. Moreover, the security provided by the programme allowed people to be more selective in their job choices, a trend notably observed among hourly wage earners.
These findings underscore that the benefits of food transfer programmes extend well beyond mere caloric intake. They contribute significantly to income, health, and human capital development. Kathy Baylis remarked on the broader implications, suggesting that even modest social safety nets can have substantial and far-reaching benefits, influencing aspects of life beyond basic nutritional needs. This insight is particularly relevant as economists and policymakers deliberate on various strategies, including direct cash transfers, which have been shown to increase food prices in areas where they are implemented. Conversely, subsidised food can lead to lower food prices, reinforcing the focus on nutritional security within budget allocations.
More information: Kathy Baylis et al, Food Transfers and Child Nutrition: Evidence from India’s Public Distribution System, American Economic Journal: Applied Economics. https://www.aeaweb.org/articles?id=10.1257/app.20220505
Journal information: American Economic Journal: Applied Economics Provided by University of California – Santa Barbara