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Taking the ‘pulse’ of the public distribution system

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Avinash

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Taking the ‘pulse’ of the public distribution system

  1. 1. Taking the ‘Pulse’ of the Public Distribution System Courtsey: Shruti Cyriac (2015) Suman Chakrabarti, Avinash Kishore and Devesh Roy
  2. 2. Pulse consumption is declining in India 0 10 20 30 40 50 60 70 0 2 4 6 8 10 12 14 1983 1988 1993 1999 2004 2009 2011 Rs/kg kg/person/year BPL Households APL Households Pulse Price (Rs/kg)
  3. 3. 25 30 35 40 45 50 55 60 65 70 75 2004-05 2009-10 2011-2012 Pulse Prices (Rs/kg) Arhar Chana Moong Masur Udad The difference in prices between the cheapest pulse and the more expensive ones has increase significantly over the last 10 years.
  4. 4. Chickpea Pigeonpea Mungbean Blackgram Lentil Chickpea -0.92 0.07 0.02 0.02 -0.19 Pigeonpea 0.06 -0.86 0.05 0.04 -0.28 Mungbean -0.08 -0.097 -1.05 -0.03 -0.04 Blackgram -0.06 -0.08 -0.04 -1.02 0.19 Lentil 0.025 0.05 0.01 0.02 -1.10 But it doesn’t help, because you cannot make sambhar with chana daal Elasticity of substitution between pulses is quite low
  5. 5. Pulses in PDS • PDS subsidizes rice and wheat only • Discourages dietary diversity (Desai, 2014; Jha,) • Demand to diversify the PDS basket • Rapid rise in price of key pulses • Low cross-elasticity of substitution • Pressure to make pulses more affordable
  6. 6. Who does what in PDS? Pulses Andhra Pradesh Himachal Pradesh Punjab Tamil Nadu Arhar 1kg/family @ Rs.30/kg N/A N/A 1 kg/family @Rs.30/kg Udad Dal N/A 1kg/family @ Rs. 34.99/kg Chana Dal, Moong whole & Urd whole at the scale of 0.5 kg per member to a maximum of 2.5 kg per family @ Rs. 20.00 per kg. 1kg/family @Rs. 30/kg Chana Dal N/A 1kg/family/month @ Rs. 25/kg to all cardholders N/A Moong N/A 1kg/family with>=5 members @ Rs. 49.99/kg N/A Did consumption of pulses increase due to inclusion in PDS? By how much?
  7. 7. Data • NSSO Consumption Expenditure Survey (CES): thick rounds • Collects data on total quantity and expenditure on 8 pulses • Pulses were introduced in PDS between 61st & 66th rounds in all 4 states • We use data from earlier rounds (50th & 55th) to test for parallel trends • NSSO CES does not collect data separately on pulse sources from PDS • We see only weighted average price of PDS and market purchases
  8. 8. The effect of Pulse subsidy is traceable in NSSO data Price (Rs./kg) of Pulses that were subsidized in 2009-10 (66th round) Pulse Andhra Pradesh Himachal Punajb Tamil Nadu Rest of India Arhar 74.53 60.84 74.38 Udad 33.4 60.9 56.60 60.91 Chana dal 28.8 40.68 50.60 Moong 70 76 70.6
  9. 9. (1) (2) OLS (without controls) OLS (with HH controls) Post treatment year 2009/10 -0.381*** -0.521*** (-5.1) (-7.7) States that provided pulse subsidy through PDS 0.109 0.087 (0.3) (0.3) Difference in differences estimator 0.296* 0.214* (2.6) (2.7) Constant 3.596*** 2.325*** (14.3) (8.6) R2 0.003 0.067 N 225499 225499 Impact of PDS Subsidy on Pulse Consumption
  10. 10. VARIABLES Pulse (kg/hh/month) Himachal Pradesh 0.383*** Punjab 0.133* Andhra Pradesh 0.210*** Tamil Nadu 0.456*** Constant -0.391 Observations 225,233 R-squared 0.288 Biggest impact in Tamil Nadu and Himachal Pradesh; Smaller effects in Andhra Pradesh and Punjab
  11. 11. (1) (2) Poor HHs (kg/hh/month) Non-poor HHs (kg/hh/month) Post treatment year 2009/10 -0.591*** -0.694*** States that provided pulse subsidy through PDS 0.088 0.170 Difference in differences estimator for 2009/10 0.064 0.334* Constant 1.634*** 2.594*** R2 0.054 0.061 N 78497 56072 Surprisingly, PDS subsidy on pulses does not lead to a significant increase in consumption of pulses for the poorest households
  12. 12. Variables (1) (2) Total protein consumed (gm/hh/month) Protein from pulses (gm/hh/month) Post treatment year 2009/10 -44.751*** -98.181*** States that provided pulse subsidy through PDS -44.185* 6.383 Difference in differences estimator for 2009/10 10.410 50.086* Constant 87.894*** 74.776 R2 0.433 0.202 N 225499 225499 Though consumption of pulse protein increases, total protein consumption does not change significantly
  13. 13. 20 rupees in pulse subsidy leads to increase in pulse consumption by 300gm/household/month VARIABLES (1) Pulse (kg/hh/month) posttreatment -0.436*** Impact_per_rupee_subsidy_entitlement 0.0153*** Constant 3.580*** Observations 225,233 R-squared 0.288
  14. 14. To sum up… • Provision of 1 kg subsidized pulses leads to increase in household consumption of pulse by about 135-450 gms • What happens to the other 550-870 gms? • 3 possibilities • Only some households buy PDS pulse while our estimate is an average over all households—compliers and non-compliers • Households reduce market purchase of pulses when it becomes available from PDS and • Some of the PDS pulse is diverted to the black market • NSSO-CES is a repeated cross-section • We cannot check relative importance of these mechanisms in this data
  15. 15. ICRISAT-VDSA • Panel data with HH consumption module • Monthly data on household consumption of different food items—by source • Pulse purchase data by 600 households from 4 villages in Maharashtra and 2 villages of Andhra Pradesh for years 2006 and 2008 • Including data on quantity of tur dal purchased from PDS • None of the households in either state received subsidized pulses in 2006 • Households in AP start getting subsidy on Tur dal in 2008 • An average household in AP got 10 kg of subsidized Tur dal in 2008
  16. 16. With cheaper pulse in PDS, HHs reduce market purchase and use of other pulses (1) (2) (4) (5) VARIABLES Tur_total(PDS+Mkt) Tur_market dalotherthantur totaldal Impact of 10kg pulse in PDS 6.222*** -3.841*** -2.370*** 2.904*** Constant 11.72*** 11.73*** 10.61*** 33.94*** Observations 1,266 1,266 1,266 1,266 R-squared 0.150 0.087 0.391 0.289 Number of Households 685 685 685 685
  17. 17. Lagta nahin yun daal galegi… • Infra-marginal transfers will not change consumption patterns significantly • Works like cash transfer, not nutrition intervention • Cost of achieving nutritional goals through prices subsidy can be high • Increasing protein intake by 1gm/day = Rs. 300/capita/year • Not enough pulse to subsidize significant quantities • 1kg/family/month = 300 gms/family/month = 0.12 gm protein/person/day • Instead of subsidizing consumers; focus on increasing production & productivity
  18. 18. Thank You!

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