Column: The poor are moving on

It is not cereals, they want more proteins, more processed food, more education, better medicines ?

While the critics of the Food Security Bill (FSB) have largely focused on its costs and the leakages (40-50% of the food doesn?t go to the target groups) as compared to cash transfers of the type envisaged under the direct benefits transfer (DBT) scheme, the larger issue is of whether the poor want what the FSB is offering them?wheat and rice, primarily, at vastly subsidised prices.

No one will not welcome cheaper cereals, but the important thing to keep in mind is that the poor have moved on. They spend a lot less money on cereals in comparison with even a decade ago, they spend a lot more on protein food, a lot more on packaged food, on health, on education and even entertainment.

A detailed break-up of the expenditure patterns of each population group is given in the NSS data over the years and, based on trends, we have tried to do some extrapolation for next year (see table). The results are instructive. While the table has details for all per capita household quintiles, let?s focus on just the poor, the bottom 20% of the population. In real terms, this group?s annual household expenditure on cereals (rice, wheat, millets, etc) has actually fallen, from R5,746 at 2004-05 prices to a likely R5,559 in 2014-15. In sharp contrast, expenditure on what can be called protein food?milk and milk products; pulse and pulse products; eggs, fish and meat)?has risen around 80%, from R2,331 to R4,189. In terms of the share of household expenditure of the bottom 20%, this has risen from 10.8% in 2004-05 to a projected 14.7% in 2014-15.

It is not just protein food that the poor are spending on; they are buying a lot more beverages and processed foods. From 3.4% of their consumption budgets in 2004-05, the share of these items is expected to rise to 8.1% next year, representing the single-biggest hike in expenditure in any commodity for this group of people.

In the case of expenditure on communication (mobile phones primarily) or entertainment or on health and education, there has been a large jump, of around two-thirds in real terms in the last decade. As a proportion of household expenditure of the poor, this has risen from 6.5% in 2004-05 to a projected 8.1% next year.

None of this is really new in the sense that a look at the ownership pattern of the durables owned by the poor also tells the same story. In even 2004-05, 7.6% of the bottom quintile had a two-wheeler and 6.7% had a colour television, 16.9% had pressure cooker? None of these goods, it is obvious, are brand new and the scooters may even be 6th or 7th-hand, but they symbolise changing aspirations of the poor. They also suggest the poor are not as poor as is made out.

In some ways, the data shows, the poor are not very different from the non-poor, but with a lag. In 2004-05, around 17.7% of the middle quintile?the 3rd quintile (40-60%)?family?s annual expenditure was on cereals. In the case of the poor, this figure will be reached in a couple of years. Proteins comprise around 17.4% of the household expenditures of the 3rd quintiles?the figure for the poor is a lower 14.7%; as the table shows, the difference between the lowest quintile and the 3rd quintile is reducing over the years.

The absolute numbers, of course, tell a different story?important from the point of view of marketers. For instance, 14.7% spent on protein food by the bottom 20% households is equivalent to R4,189 per household per annum, while 11.5% spent on the same by the top 20% is equivalent to R12,537 per household. Similarly, 8.1% spent on beverages and processed food by the bottom 20% households is equivalent to R2,317, whereas 6.7% by the top 20% is equivalent to R7,295 per household. Also, even though the proportion might have come down, there might still be considerable increase in per household spending especially at current prices.

An interesting study by Sewa Bharat and UNICEF makes much the same point about the poor?s changing consumption habits. Sewa-UNICEF did an unconditional cash transfer in various villages?including tribal ones?in Madhya Pradesh over 12-17 months and looked at what the poor villagers did with their money. The results corroborate the point being made earlier. As the poor got more cash, they didn?t just rush to spend the money on more cereals, the pilot study showed they spent more on getting better medical facilities, on teaching their children in private schools (49% of villagers getting cash transfers had enrolled their children in private schools versus a much lower 30% in villages where there were no cash transfers). Households with cash transfers also tended to have better sanitation.

Given the various problems with the DBT in the sense the government has hardly been able to pump in any money directly to the bank/post office accounts of beneficiaries, this column is not getting into whether or not DBT is a good alternative to the existing PDS?it will be a good alternative only the day it starts to show some results. The purpose of this column is to point out the poor don?t necessarily want what the government wants to give them, which is subsidised grain.

The author is visiting professor,

Institute for Human Development. Views are personal