The Indian Government presented its Union Budget and Economic Survey for 2020 against the backdrop of a noticeably slowing economy and declining consumption rates. One interesting heuristic device used in the Economic Survey was ‘Thalinomics,’ which attempted an exposition of the Indian economy’s performance and progress. Setting a barometer for individual consumption, Chief Economic Advisor Krishnamurthy V. Subramanian began by quantifying what a common person paid for a Thali, or a plate of food, in India.
This conception is somewhat similar to the Big Mac Index created in 1996, which measured the comparative purchasing power parity of nations that consumed the famous McDonald’s Big Mac Burger. Similarly, Thalinomics maps out the cost of a regular thali at the national and state level.
The Economic Survey includes a chapter titled ‘Thalinomics: The Economics of a Plate of Food in India’, which concludes that the absolute prices of a thali have decreased significantly since 2015-16. Due to the increase in prices of pulses and vegetables however, the price of a vegetarian thali has increased in 2019. Basically, due to the decrease in thali prices, as per the survey, an average household consuming two thalis per day saved Rs. 10,887 and Rs. 11,787 on average while consuming vegetarian and non-vegetarian thali respectively. The Survey divides India’s states into four regions based on geographic location. The highest savings were reported in the southern region in 2018-19 for a vegetarian thali.
The prices from the year 2006-07 to 2019-20 for 25 states and union territories have been analyzed in the survey. It takes into account the prices for cereals (rice or wheat), vegetables (vegetables plus ingredients), pulses (pulse plus ingredients) and the cost of fuel. A vegetarian thali consists of 300g of cereals, 150g vegetables and pulses, while, for a non-vegetarian thali, pulses have been replaced by egg, fish and goat meat. The estimation has been calculated for a household comprising five individuals and each consuming two thalis a day. The survey has used the dietary guidelines for Indians specified by the National Institute of Nutrition in 2011.
The survey also states that it has taken the requirements for an adult male engaged in heavy work; therefore, the estimated prices are likely to overestimate the cost of a meal in the average household.
The survey used the price data from the Consumer Price Index for an Industrial Worker and states that the affordability for vegetarian and non-vegetarian thali improved by 29% and 18% respectively. According to the survey, affordability of thalis has increased as the share of wages required decreased from ~70% to ~50% for a vegetarian thali, and from ~93% to ~79% for a non-vegetarian thali.
These findings have come after India scored poorly on the Global Hunger Index in 2019, slipping to the 102nd position amongst 117 countries; trailing behind all its neighbours, except Afghanistan. As per the report, over 1 in every 5 children in India is ‘wasted’ or suffering from acute malnutrition, which is the highest for any country. Moreover, the share of wasted children has increased from 16.5% in the 2008 to 2012 period to 20.8% between 2014 and 2018. Just 9.6% of all children between the age of 6 to 23 months are fed a minimum acceptable diet.
Ironically, the most affordable thali was in Jharkhand, the state which recorded 86 starvation deaths in the last five years. Jharkhand has one of the highest malnutrition rates among children and women. According to the National Family Health Survey (NFHS 4), 2015-16, 49.8% of children under the age of five years in Jharkhand are underweight and 29.5% are wasted. Moreover, at least 48% in the same age bracket living in rural Jharkhand are stunted.
But, the major drawback of Thalinomics is its flawed methodology. The survey calculates the affordability of a meal by calculating food prices as a percentage of worker’s income in the organized manufacturing sector. The manufacturing sector accounts for around 11% of total employment in India, and workers in the organized manufacturing sector in turn only comprise less than 5% of this number. This number may actually be bloated since, according to a study by the Indian Council for Research on International Economic Relations, 2018, there has been a further informalization witnessed in the sector.
The Economic Survey has failed to establish a correlation between the economic activity, income levels and consumption rates of a common man. It does not capture the impact of falling Gross Domestic Product (GDP) on stagnating incomes and affordability. India’s GDP has slipped below 5% and the unemployment rate has increased to 7.7%. Moreover, the current unemployment rate is the highest it has been in the last 45 years and the labour force participation rate has come down to 46.5%. As per the leaked National Sample Survey (NSS) Consumer Expenditure Data for the year 2017-18, the real monthly per capita expenditure has fallen between 2011-12 and 2017-18. It also showed a significant drop of 9% in rural consumption including staples between 2011-12 and 2017-18.
For the improving prices of thalis, the Economic Survey 2019-20 credited the reform measures and initiatives of the government that helped increase agricultural productivity and efficiency in agricultural markets. However, it does not quite elucidate the productivity gains accrued due to these state schemes.
The Agricultural Ministry data shows that less than 3% of sanctioned amount of pulses and oilseeds have been procured under the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PMAASHA). Similarly, the PM Krishi Sinchayi Yojana (PMKSY) has failed to focus on irrigation deprived districts and has not benefited states such as Bihar, Chhattisgarh, Jharkhand, Karnataka, Rajasthan, Uttar Pradesh and West Bengal. This is also the case with PM Fasal Bima Yojana (PMFBY).
It is pertinent to understand that the cause of hunger and nutrition problems in India is not the non-availability of food. What cripples the ecosystem is often a lack of food accessibility, which economist Amartya Sen calls ‘entitlement’. The distribution gap in food security programs is a matter of serious concern. However, the economic survey recommends to the government a reduction in coverage under the National Food Security Act, 2013, for highly subsidized grains (Rs. 3 per kg for rice and Rs. 2 per kg for wheat) to the bottom 20% of the population, compared to current 67%. For many poor households, food grains from Public Distribution System (PDS) is the only source of assured sustenance. Shockingly, despite worsening food security, this year's budget slashed the food subsidy bill by 69,000 crores.
Finance Minister Nirmala Sitharaman proposed to provide Rs. 35,600 crores for nutrition-related programs for the financial year 2020-21 in her budget speech. But, in comparison to the previous year’s budget, there is no considerable increase in support in any related schemes. In fact, there is a slight decrease in the budget allocated for mid-day meals, PM Matru Vandana Yojana (PMMVY), Poshan Abhiyan, Integrated Child Development Services (ICDS) and Anganwadi services, which are already under-resourced.
During an economic slowdown, the employment guarantee scheme is a valuable safety net. Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) is crucial for vulnerable landless labourer households in rural distress. But, allocation to MGNREGA has also been reduced from Rs. 71,002 crores (revised estimate) in the current year to Rs. 61,500 crores in 2020-21.
‘There simply isn’t enough money in low-income countries with low GDP rates’ is not a good response either. A study of 64 countries belonging to low and middle-income levels in the global South showed that countries could prioritize their fiscal budgets towards social protection in an effort to reduce hunger and malnutrition. This can be found in low income and lower-middle-income countries like Ghana, Guyana and Vietnam. Therefore, social protection strategies, appropriate policy design and governance structure are equally crucial.
Shrinking social expenditure has increased the dependency on private entities and expenditure on non-food essential items such as education, transportation, healthcare etc. Consequently, the real income is being absorbed into non-food items, thus diminishing the amount that can be spent on food. The survey reads like a poor attempt to defend the government’s inflation management policies.
The chapter on Thalinomics emphasized ‘Zero Hunger’ as an indispensable Sustainable Development Goal (SDG). However, it seems to display an insufficient understanding of the growing hunger and nutrition problem in the country. Without income redistribution and social welfare policies, the government’s lofty goals cannot be achieved.
Thalinomics: Achieving food affordability or mocking India’s growing hunger problem?
February 18, 2020
SOURCE: CURLY TALES AND THE TIMES OF INDIA