The expansion of India’s food transfer programme prevented approximately 1.8 million children from being stunted, while also raising wage incomes and improving dietary diversity.
Undernutrition remains a critical public health concern in developing countries. Infants and children are particularly vulnerable, as the risk of morbidity and mortality from undernutrition is highest in children under five years of age (Black et al. 2013). Child undernutrition delays cognitive development, productivity and earnings in adult life and contributes to intergenerational transmission of poverty (Currie and Almond 2011). Globally, an estimated 150 million children under five are stunted, with India accounting for a staggering 30% of the total. Within India, more than one-third (36%) of young children are stunted, highlighting the severity of the challenge.
Food transfers and subsidies are among the most widely implemented social protection measures worldwide, reaching approximately 1.5 billion people (World Bank 2018). Food transfer programmes are partly supported for their potential long-term benefits on child nutrition and development, but little work has evaluated their efficacy.
In our recent research (Shrinivas et. al. 2024), we provide evidence on the effects of food transfers on child nutrition through India’s Public Distribution System (PDS) —the world’s largest food transfer programme and India’s most far-reaching social safety net. The PDS programme provides highly subsidised rations of staple food to the poor through a network of over 500,000 fair price shops, making it one of the world’s largest social transfer programmes of any kind. The PDS accounts for 60% of India’s social assistance budget, in 2019-20, costing about Rs. 1.8 trillion (US $26 billion), about three times as much and covering about eight times as many people as the better studied National Rural Employment Guarantee Act (NREGA).
The National Food Security Act significantly expanded India’s food transfer programme
The National Food Security Act (NFSA), introduced in 2013, led to one of the largest expansions in food transfers in history, affecting over 500 million people. In particular, the National Food Security Act standardised entitlement quantities and prices, mandating the provision of 5 kg of staple grains per person per month at a price of no more than 3 Rs/kg for rice and 2 Rs/kg for wheat (NFSA 2013). Before the National Food Security Act, states had discretion over the prices and quantities they offered to PDS beneficiaries. After the act, all states had to comply with a new national minimum mandate. This provision generated three key sources of variation:
- State-level variation: States with less generous pre-National Food Security Act policies had to expand their food transfers more substantially to align with the new minimum mandate, while states already in compliance did not.
- Within state variation by household size adjustments: The shift from per-household to per-individual entitlements benefitted larger families.
- Eligibility differences: Households with ration cards experienced substantial gains, while non-eligible households serve as an internal control group.
Using this variation in entitlements, we constructed a precise measure of PDS transfer value before and after the National Food Security Act and estimated the impact of PDS transfers on child nutrition using individual-level data from ICRISAT’s “Village Dynamics in South Asia” dataset, which covers 30 villages across eight states.
The transformative effects of food transfers in India
Reduction in stunting: The National Food Security Act reforms significantly reduced stunting among children aged between zero and five years. For instance, the average PDS expansion led to a 7.2 percentage point reduction in stunting prevalence. These effects were most pronounced in children aged zero to two years, a critical window during which a child’s development is highly sensitive to nutritional intake.
Improved dietary diversity: Although the PDS primarily subsidises staple grains, we find that PDS transfers improved dietary diversity by “crowding in” the consumption of nutrient-dense foods, particularly animal proteins such as milk and meat. This shift is likely explained by reduced out-of-pocket spending on staple foods, which frees up household food budgets for higher-quality, nutrient-dense foods. Consistent with this explanation, we find that PDS transfers increase the share of the food budget spent on animal proteins while decreasing the share spent on grains. The resulting increase in animal protein intake is large enough to account for the observed reduction in stunting, consistent with well-established evidence in nutritional science (Murphy and Allen 2003).
Increased labour incomes: PDS transfers increased daily wages and total wage income, improving the welfare of poor households who are typically net labour suppliers. These results are consistent with recent evidence that cash transfers can increase the incomes of recipient households by more than the amount of the transfer through a labour market mechanism (Carneiro et al. 2021). These additional “second-round” effects may partly explain the large effect of food transfers on stunting in our context.
Resilience against climate shocks: The effect of PDS transfers on child stunting was particularly large during years with low rainfall. These results suggest that a nutrition-sensitive safety-net like the PDS supports food security, making child nutrition outcomes less sensitive to local climate shocks.
Food transfer programmes hold significant potential
Our results have important implications for the policy debate around the effectiveness of food transfers. Critics often argue that food transfer programmes suffer from inefficiencies, poor targeting, and promote "empty calories”. However, our results reject these criticisms for the case of India’s Public Distribution System.
We find that expansions in India’s PDS programme that followed the National Food Security Act effectively reached the intended beneficiaries and had large positive impacts in our study sample. PDS transfers improved dietary diversity and increased labour incomes. Our back of the envelope calculations that extrapolate our estimates to the aggregate level suggest that the PDS expansions from the National Food Security Act, prevented approximately 1.8 million children from being stunted.
References
Black, R E, C G Victora, S P Walker, Z A Bhutta, P Christian, M de Onis, M Ezzati, S Grantham-McGregor, J Katz, R Martorell, and R Uauy (2013), “Maternal and child undernutrition and overweight in low-income and middle-income countries,” The Lancet, 382(9890): 427–451.
Carneiro, P, L Kraftman, G Mason, L Moore, I Rasul, and M Scott (2021), “The impacts of a multifaceted prenatal intervention on human capital accumulation in early life,” American Economic Review, 111(8): 2506–2549.
Currie, J, and D Almond (2011), “Chapter 15 - Human capital development before age five,” in Handbook of Labor Economics, Vol. 4, ed. by D Card and O Ashenfelter, pp. 1315–1486, Elsevier.
Murphy, S P, and L H Allen (2003), “Nutritional importance of animal source foods,” The Journal of Nutrition, 133(11): 3932S–3935S.
Shrinivas, A, K Baylis, and B Crost (2024), “Food transfers and child nutrition: Evidence from India’s Public Distribution System,” American Economic Journal: Applied Economics, forthcoming.
World Bank (2018), The State of Social Safety Nets 2018, Washington D.C.: The World Bank.