“Trade Liberalization, Poverty and Food Security in India”

 

Citation: Panda, M. and A. Ganesh-Kumar. 2008. “Trade Liberalization, Poverty and Food Security in India”. Paper presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland, June 12-14, 2008, Working Paper 2008-013, Indira Gandhi Institute of Development Research, Mumbai.

 

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Abstract: Goal 1 of Millenium Development Goals (MDGs) is concerned with poverty and hunger. Food insecurity at the household / individual level is often attributed to lack of adequate income (purchasing power). Poverty line for a base year is typically defined in terms of income / total consumption expenditure that assures a minimum calorie intake. For subsequent years the poverty line is usually updated for inflation such that a household at the poverty line can afford the base year consumption basket. This, however, does not guarantee that the person at the poverty line would obtain the minimum calorie intake. Indeed marked divergence has been observed in India between changes in poverty over time and nutritional intake of the poor. While poverty has declined substantially over the last 2-3 decades, widespread malnutrition continues to prevail. The major reasons often cited include changes in consumption pattern between food and non-food items and within food between cereals and non-cereals. This divergence between income poverty and nutritional poverty is a developmental issue that could be of concern in the context of Doha trade negotiations.

In this paper we examine the likely impacts of Doha trade liberalisation proposals on poverty and food security in India at the household level using a national CGE model that distinguishes several household types. It draws upon simulations of a global CGE model (MIRAGE) of a potential Doha scenario, and passes the trade impacts on India to the national CGE model. While earlier studies on trade liberalisation focused only on impacts on income poverty, this paper brings out the need to distinguish the impacts on income poverty and nutritional deficiency.