The Hindu Business Line : Starvation threat looms as food, fuel prices shoot up

Bangalore, July 13 High food and fuel prices can push 4.8 per cent of the rural population and five per cent of the urban population to the brink of starvation.

The rural poor are more vulnerable because of their higher expenditure on food and cereals as a proportion of total spending.

Hunger and starvation should have ceased to exist when Engels law, or the growth of non-food expenditures with a rise in income, is at work.

According to data derived from various National Sample Surveys (NSS), the percentage of expenditure on food dropped from 73 per cent in 1972-73 to 55 per cent in 2004-05 in rural areas, and from 64.5 per cent to 42.5 per cent in urban areas.

Spending on cereals as a proportion of food expenditure has fallen from 55.7 per cent in 1972-73 to 32.7 per cent in 2004-05 in rural India, and from 36.2 per cent to 23.7 per cent in urban India.

While monthly capita consumption expenditure has increased across all classes in rural and urban India, about 80 million people lack the economic resilience to take food price increases in its stride.

A paper by Mr K. Thomas of the NSSO on consuming patterns of the poorest of the poor (those with a monthly per capita consumption expenditure of less than Rs 235 in rural areas and Rs 335 in urban areas) sheds some light on their vulnerability.

Those in this category account for 4.8 per cent of the population of rural India and five per cent of the population of urban India. In the case of the really poor in rural India, food accounts for 68.45 per cent of total expenditure. Of the expenditure on food items, 50.67 per cent is spent on cereals. Both these proportions are way above the shares for the entire rural population.

The paper points out that an individual in this category buys 9.88 kg of cereals in a month, paying Rs 69.67 or Rs 7 a kg three years ago. He lives on about Rs 8 a day. The sharp rise in food prices, including cereals, would have reduced his intake, since non-food expense heads such as fuel, education and health have not turned cheaper.

There has been no dramatic rise in rural incomes to take care of such expenses. In the case of a rural individual in the highest per capita consumption bracket of Rs 1,155 and more, food accounts for 33.69 per cent of his total spending–half the budget allocation of the poorest rural individual.

He consumes 12.12 kg of cereals in a month, paying Rs 10 a kg, or 43 per cent more than the price paid by the poorest rural individual.

Yet his spending on cereals is about a third of his food expenditure (again lower than the proportion spent by the poorest of the poor), which implies that his food intake has more variety and nutrient value.

Besides, a greater proportion of his income is available for non-food expenditure, such as education, health and fuel. In urban India, spending on food as a proportion of total expenditure is lower than in rural India.

Within the food group, a lower proportion is spent on cereals. However, the current spurt in both food and non-food prices are likely to negate any advantage the urban poor might have over their rural counterparts.

Food makes up 64.86 per cent of the urban individual whose monthly per capita expenditure is less than Rs 335; within food, 40.53 per cent goes towards cereals. This is a sharp divergence from the proportions for the entire urban population.

The poorest urban individual purchases 9.25 kg of cereals, paying Rs 73.72 in 2005 or Rs 7.97 per kg. The per capita monthly consumption of the poorest urban individual is about Rs 280.

Like the poorest rural person, he is likely to be consuming less food, given the price rise in all categories of goods.

In the case of an urban individual in the highest per capita consumption bracket of Rs 2,540 and more, food accounts for just 23.7 per cent of total expenditure. In fact, he consumes less cereals than the poorest urban person, or 9.1 kg in a month. For this, he pays Rs 14.80 per kg or 65 per cent more than the poorest of the urban poor. Therefore, the urban well-to-do individual is even better placed than his rural counterpart to absorb a big price increase in food items. The operation of the Engels Law in a broad sense does not indicate nutritional adequacy.

Even before inflation burst upon the scene a year and a half ago, education and health had emerged as major non-food expense items, the latter being identified in NSS surveys as a cause of indebtedness. The relative spends on food and non-food items may not necessarily be linked to prosperity. Otherwise, it is hard to explain the alarming prevalence of malnutrition among women and children in particular, as brought out by the National Family Health Survey-3. The vulnerability of the population to inflation extends beyond the desperately poor, to include a far larger number.

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