India is witnessing a significant transformation in its food consumption patterns, with a notable decline in the share of total household expenditure on food across both rural and urban areas, according to a recent government report. The paper, titled “Changes in India’s Food Consumption and Policy Implications” by the Economic Advisory Council (EAC) to the Prime Minister, highlights this trend as a marker of substantial progress since the country’s independence in 1947.
For the first time in modern India’s history, average household spending on food has fallen to less than half of the total monthly expenditure of households. This shift reflects broader economic and social changes, driven by effective government policies and rising incomes.
Decline in cereal expenditure and dietary diversification
One of the key findings of the EAC-PM report is the sharp decline in the share of household expenditure on cereals across all states and union territories, affecting both rural and urban households. This reduction is particularly pronounced among the bottom 20 percent of households, suggesting the success of the government’s food security initiatives, such as the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which provides free food grains to around 800 million eligible people nationwide.
As households spend less on cereals, they are diversifying their diets by allocating more of their budgets to milk and milk products, fresh fruits, and animal-based foods like eggs, fish, and meat. This shift is seen as a positive development, reflecting improved food security and nutritional outcomes for a large section of the population.
Policy implications for agriculture, health, and nutrition
The report outlines several policy implications arising from these changes in household food expenditure. As India’s consumption patterns evolve, agricultural policies will need to be adjusted to support the production and availability of a wider variety of food items beyond cereals. The paper recommends that the government continue to support agricultural initiatives that promote the cultivation and distribution of fruits, vegetables, and animal-source foods to meet shifting household demands and improve supply factors.
The report also suggests that policies like the Minimum Support Price (MSP), which has traditionally focused on cereal procurement, will have a limited impact on improving farmers’ welfare in the long term. Given the declining consumption of cereals across all wealth classes, it may be necessary to diversify the support offered to farmers to align with changing consumer preferences.
Rise in processed food consumption and health concerns
The report also observes a significant increase in household spending on served and packaged processed foods, a trend that is more pronounced among the top 20 percent of households and particularly noticeable in urban areas. While the food processing sector is recognised as a key driver of economic growth and job creation, the rising consumption of processed foods is raising concerns about potential health impacts.
To address these concerns, the report calls for policies to regulate the nutritional content of processed foods and promote healthier alternatives. This approach is seen as essential for safeguarding public health outcomes while continuing to support the growth of the food processing sector.
Impact on consumer price index
The changing consumption patterns will also impact the calculation of the Consumer Price Index (CPI) in the future. As the demand for different food items shifts, and supply factors improve, there may be further changes in price indices that influence economic policy. The report suggests that the government should continue to support policies that enhance the production and accessibility of diverse food items to cater to these evolving consumption trends.
