People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 38

September 19, 2010

The Early Kalidasa Syndrome

Utsa Patnaik



THE most valuable resource that a country has is its people. The poor are not a liability, but an asset; they are the producers of essential goods and services we use, they hold up the sky for us for a pittance of a reward. The least that a country can do is to ensure that its people get enough to eat, that already low nutritional standards are not compromised. The present government has achieved a dubious record: the level of per head cereal supply and consumption in India by 2007 at 174 kg fell below the 182 kg recorded by the least developed countries and was considerably below the 196 kg level of Africa. By 2008 Indian average cereal consumption fell further steeply to 156 kg owing to large exports and addition to stocks, and is likely to be lower still in the just-ended drought year.


Cereals account for nine-tenths of food grains, which provide three-quarters of both energy intake and protein intake for the average consumer. Average calorie intake and protein intake have both fallen since 1993. The fall in per head food grain supply and consumption is not new, it has been going on for over a decade, yet our leading economists and policymakers have contributed to increasing food insecurity by their refusal to remove the artificial barriers to distribution created by arbitrarily dividing the population into ‘below' and ‘above' poverty line.


They remain as unmoved as Kalidasa proverbially hacking away at the very branch on which he sat — they would rather let food grains rot than feed the poor. What explains this torpor, this near-comatose lack of response to a long-brewing crisis of increasing hunger? The answer is that they simply fail conceptually to recognise that hunger is growing because of the serious misconception they have regarding the behaviour of cereal demand in a developing economy.





John Maynard Keynes had remarked that the world is moved by little else but ideas. Once a wrong idea gets into the head of a policymaker it is very difficult to get it out. Keynes's argument on the paradox of thrift — if every person saves more, the nation ends up saving less — is still not understood 75 years after the General Theory and finance ministers continue to behave like housewives, cutting back spending to balance budgets even though they have to deal with rampant unemployment. Many ill-advised policies we see creating havoc around us arise from incorrect but obstinately held ideas.


The crucial incorrect idea here is that there is nothing surprising about cereal consumption falling — as a country develops and its per head income rises, people diversify their consumption away from ‘inferior' cereals and towards ‘superior' food, including milk, eggs, meat, and so on. Most economists thus believe in what they call a ‘negative income elasticity of cereal demand' and this influences many others, so they actually interpret declining grain consumption in a positive light. Their idea however arises from ignorance and is factually incorrect. It represents a fallacy of composition, in which only a part of total cereal demand — that directly consumed (as boiled rice, chapatti and so on) — is taken into account and cereal demanded as livestock feed converted to milk, eggs, meat, and so on is ignored.


Fifty years of data from the United Nations Food and Agriculture Organisation show that as average income rises in a country and diets become more diversified to superior foods, the per head cereal/food grain demand far from falling rises steeply, and average calorie and protein intake rise in tandem. This happens because much more cereals get consumed indirectly as feed converted to animal products.


The higher the average income of a country, the higher is its cereal consumption and the higher the share of the latter, which is indirectly consumed, as the Table shows. The richest country in the world, the United States, consumed nearly 900 kg per head of cereals in 2007 of which only one-eighth was directly eaten and three-fifths used as feed converted to animal products, with the balance being processed. Its cereal consumption was more than five times higher than the 174 kg recorded by India and its normalised calorie intake (namely, deducting 1000 calories as survival level) was two and a half times higher than in India.


China has been raising its income fast — we are talking of purchasing power parity adjusted US dollars — and by now it converts a massive 115 million tonnes of cereal output as feed to animal products, compared with less than 10 million tonnes in India. Its people consume directly as much as Indians do, but owing to more diversified diets they consume nearly 300 kg cereals per head, 115 kg more than we do and their average calorie and protein intake is higher.


Why has India's average consumption declined to such a low level despite rising average income? Since India and China have seen high growth rates, observers as disparate as Paul Krugman and George Bush (wrongly) explained the 2008 global food price rise in terms of fast-rising cereal demand in these countries. They were quite right to expect rising demand in India but quite wrong to think it had actually happened. The fall, which has taken place over the last decade, pushing India below Africa and the least developed countries, is not normal for a country with rising average income, and has resulted from the lopsided, inequitable nature of growth.


Krugman et al did not take account of the adverse changes in income distribution, owing to severely income deflating fiscal policies advised by the Bretton Woods Institutions and faithfully implemented by successive Indian governments after 1991, which sent agriculture in particular into a depression from which it has still not recovered. With unemployment rising, with the fruits of growth going to a tiny minority while the masses suffered income deflation, the effects of dietary diversification by the rich have been swamped by an absolute decline in cereal intake for the majority.


National Sample Survey (NSS) data show for all except two states an absolute fall in average animal products intake as well, along with falling direct cereal intake over the reforms period. No wonder average energy and protein intake have both fallen. People other than the rich are not diversifying diets; even the hungry are forced to cut back and are suffering nutritional decline.


By 2008, the situation was even worse despite good output. A record 31.5 million tonnes of food grains were exported plus added to stocks, reducing domestic cereal supply steeply to 156 kg per head. This happened because the global recession impacted to raise unemployment and food prices spiralled to lower real incomes, so that there was a fresh round of loss of purchasing power.






What is to be done? Bold measures are required, not the timid and reluctant half-measures we see. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) needs to be seriously implemented to raise purchasing power and extended to urban areas that have seen a steep rise in poverty. For example, in Delhi state the percentage of persons not able to afford 2100 calories per day rose from 35 to 57 between 1993-4 and 2004-5 and the situation by now is definitely worse. MGNREGS can be used as well for a crash programme of building storage facilities for food grains now rotting in the open.


Food distribution through the PDS should be universal, freed from targeting, from the shackles of arbitrary and incorrect official poverty estimates. The recent decision to do away with targeting only in some districts will help very little. The government wishes to restrict the food subsidy but fails to realise that a version of the paradox of thrift operates here as well — the more it tries to reduce subsidy by restricting access, the more the subsidy will rise uselessly to finance holding unsold food stocks as now.


This country can afford to feed all its people at a decent level — what is holding it back is not lack of resources but ignorant and incorrect ideas. Will the economists at the highest levels of policymaking abjure dogmas and think the problem through rationally? Or will they inflict more punishment on the people, subjecting this country to the shame of falling even further behind the least developed countries and Africa?


(Sub-headings have been added)