A pet theme of officialdom and the dominant school of economists is that increasing prosperity has diversified Indian diets. According to this argument, there is no reason to be worried at the decline of calorie intake or of cereal consumption per head: Indians are now eating superior foods. A deputy governor of the Reserve Bank once explained the current food inflation thus: “as households move up the income ladder, their expenditure on food shifts relatively towards proteins, fruits and vegetables and so on, which exacerbates demand pressures. Nobody would dispute this simple assertion. People eat better (as reflected in a more diversified and balanced diet) as they grow richer.”
Indeed, it is true that if people were growing richer they would be eating better. However, as we mentioned in an earlier blog post, actual nutritional intake does not bear out the claim that people are eating better (see Table 1). As has been widely noted, calorie intake per head has gone down in both rural and urban areas. Some economists claim that this is because the calorie requirements of the Indian people have declined with development – even though people in more prosperous countries in fact consume far more calories than Indians.
But even if it were the case that declining calorie consumption is nothing to worry about, the claim of rising prosperity can hardly be reconciled with falling protein intake per head. This latter decline has taken place because consumption of cereals, the major source of protein in India, has declined, while other sources of protein have not risen sufficiently to make up for this loss. As can be seen from Table 2, consumption of pulses per head has declined; the same is true for meat, eggs, and fish (which are anyway negligible). The consumption of milk has risen a little in urban areas; but, as already noted, total protein intake went down even in urban areas. This is particularly striking when one considers that per capita protein intake before the onset of neo-liberal economic reforms in 1991 was steady in rural areas and slightly rising in urban areas.
Moreover, as Table 2 also makes clear, there has been a decline in per head consumption of vegetables, fruits, roots and tubers. This is clearly a poorer diet, not “eating better”.
Only one item of consumption shows a significant rise in both rural and urban areas: fats. Table 1 shows that fat consumption rose between 1993-94 and 2009-10 by almost 22 per cent in rural areas and 14 per cent in urban areas. As a result, the share of oil and fats in total calorie consumption rose by three percentage points in both rural and urban areas.
The growth of fat consumption is routinely taken as evidence of increasing prosperity. No doubt, fat is essential to human diets, providing energy and essential fatty acids to meet the body’s metabolic requirements and help absorb fat-soluble vitamins. And no doubt, the consumption of fat per head is much higher for the higher income groups.
However, rising fat consumption in India is not an indicator of increasing prosperity. Rather, it points to a shift in relative prices amid growing hardship. The dramatic fall in the price of edible oil relative to other food items since 1994 is one of the factors behind the increase in oil consumption. (Other factors include the growth of urbanisation and of migrant labour, which would increase the consumption of processed foods and cooked food from restaurants/stalls.) Fat consumption has thus risen even as total calorie intake has fallen.
Open door policy for edible oils imports
An important milestone in this process was the establishment of the World Trade Organisation (WTO) in 1994. The Government promptly abandoned its earlier Oilseeds Mission (which had promoted domestic production of oilseeds, and had thus virtually eliminated edible oils imports). The Government now brought edible oils imports under Open General License (i.e., removed non-tariff barriers to import), and reduced import tariffs drastically. Indeed, the Government reduced tariffs much below the levels required by the WTO.
Since palm oil from Malaysia and Indonesia was much cheaper than Indian edible oils, imports rose steeply (leading to a crisis for Indian growers of oilseeds, and stagnation in oilseeds production thereafter). From around 0.35 million tonnes in 1994-95, India’s edible oil imports rose to 8 million tonnes in 2009-10. They are estimated at 10.5 million in 2012-13 (November 2012-October 2013). India now depends on imports for 58.5 per cent of its edible oil requirements. The consumption of palm oil in India was very low before 1994; it now constitutes nearly half of all edible oil consumption in the country.
Meanwhile, as a result of State policy, agricultural investment in India has languished, notwithstanding some improvement in recent years. Thus overall agricultural output has lagged well behind the requirements of the vast majority of people. Moreover, the system of distribution has become increasingly perverse. Crucial to this process was the drastic reduction of the public distribution system (PDS) from 1997 on (the ‘Targeted’ PDS). Public and private distribution between them failed to deliver at affordable prices even such food commodities as were available.
Edible oil was the lone exception. As can be seen from the chart below, the prices of most food items rose steeply since 1994; but the average price of all edible oils grew much more slowly. This was because the wholesale price of imported edible oils (shown separately in the chart) actually fell.
Cheap imported edible oil has had certain seeming benefits. Per capita availability of edible oil has more than doubled between 1993-94 and 2011-12. No doubt, India’s per capita level is only 70 per cent of the world average, which is itself less than half the figures for the US and the EU. The average level of edible oil consumption in India does not appear excessive.
As can be seen from Table 4, the growth of fat consumption in the period since 1994 has been fastest among the lower income groups; growth slows as one goes up the income ladder. For the top 10 per cent, fat consumption actually falls in recent years.
However, as can be seen from the actual pattern of consumption depicted in Tables 1 and 2, India’s open door policy for edible oil imports has not served the cause of improving people’s diets. Rather, diets have continued to deteriorate with respect to everything but fat.
In a sense, then, the policy has merely facilitated successive Indian governments’ policies of neglecting investment and growth in agriculture, and of weakening the PDS. That is, the effect of those ruinous policies was partly cushioned with cheap edible oil. Without this cushion, the overall price level would have risen even more steeply, consumers would have had an even more difficult time meeting their food requirements, and the Government of the day would have had to face sharper public anger.
Of course, this cushioning was accomplished at a heavy cost in foreign exchange – $11.2 billion in 2012-13, a near-doubling in just three years (see Table 3). And given the scale of dependence on imports – now nearly 60 per cent of domestic edible oil consumption – India is very vulnerable to any sharp increase in international edible oils prices in future (e.g., with increased diversion to bio-fuels, a sudden depreciation of the rupee, or any change of policy in edible oil-exporting countries).
Moreover, palm oil is very high in saturated fats, and has been significantly associated with increased mortality rates for myocardial infarction (heart attacks) in low and middle income countries. A recent study attempted to mathematically model the effects of a 20 per cent excise tax on palm oil for domestic consumption; it claimed that it would avert between 7,10,000 and 9,30,000 deaths from myocardial infarction and stroke (a 2-3 per cent reduction) over the period 2014-23.
Since higher palm oil prices would simply increase the hardship of the masses, a more socially efficient method of shifting from palm oil (though less acceptable to neoliberal rulers) would be to provide a negative tax, i.e., a subsidy, on edible oils low in saturated fats. Such a subsidy, delivered through the PDS, could continue till an increase in public sector investment in agriculture brought about sufficient domestic production of other oilseed crops.
An increase in domestic production is feasible through improved yields of oilseed crops, which in India are 50-60 per cent of the world average. There is a large gap between the actual yields obtained and the yields demonstrated at the farm level with existing crop technologies available in the public sector. And of course, this must be part of a general improvement in agricultural production, the system of food distribution and thus people’s diets. However, none of this is on the cards. As long as the cost of the present policies is silently borne by the people, there is no likelihood of any change.
 These figures of net availability (roughly, domestic consumption) are calculated by the Ministry of Consumer Affairs, Food and Public Distribution based on production and net imports; secondly, they refer to visible fat alone. Thus they do not necessarily tally with the figures of fat consumption obtained from the National Sample Survey, which is a household survey, and moreover includes invisible fat.
 We are not arguing that edible oils were simply substituted for other food items, and that this substitution alone explains their growth. There are other factors as well behind the growth of fat consumption.
 Basu, S. & ors., “Palm oil taxes and cardiovascular disease mortality in India: economic-epidemiological model”, BMJ 2013;347:f6048, http://www.bmj.com/content/347/bmj.f6048