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Delhi Belly

19 December 2011 By Jeff Glekin

India still suffers from this most basic sort of poverty – 74 percent of children are anaemic. The government plans to double its food subsidies, to 2 percent of GDP. The idea is good, but such programmes should be well targeted and affordable. The new plan is neither. Critics claim the planned new food security law is the worst kind of pork barrel populism. The timing of these new state handouts from the beleaguered central government supports the cynical reading. Important state elections are round the corner and a general election is coming in 2014.

But malnutrition in India is not merely something for politicians to use as a vote-winning tool. It is a scandal – India has worse rates of child undernourishment than sub-Saharan Africa – and an impediment to development. Malnourished children tend not to reach their potential, physically or mentally. The World Bank estimates the cost of India’s inadequate food at 3 percent of GDP.

The new plan will provide subsidised grain to 75 percent of people in the countryside and half the urban population deemed too poor to eat properly. A total of 810 million people could benefit. That sounds good, but the plan has two problems.

First, it just extends existing programmes, which are too inefficient and corrupt to do much good. Despite rapid economic growth, the rate of malnutrition has decreased by only a few percentage points. It would be more effective to target pregnant mothers and children under two rather than to continue to work mostly through the school system, where these most needy people are not generally found.

Second, there’s a question of affordability. The plan will cost as much as $12 billion in additional subsidies per year. Delhi’s finances are already in bad shape. An extra percentage of GDP would be money well spent if it generates three in return. But the government can’t afford just to keep spending. If it wants to prioritise food, then it could look to the 3.5 percent it spends on fuel subsidies. Cutting that would provide cash, but might cost votes.


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