Changes in the household expenditure basket in India during COVID-19

Abstract

BACKGROUNDThe COVID-19 pandemic wreaked havoc across countries, causing an unprecedented healthcare crisis and supply chain disruptions.Our paper focuses on how households coped and the role of expanded Indian government food subsidies in mitigating food insecurity. OBJECTIVEWe use panel data from two rounds of household surveys (2019 and 2021) to examine changes in per capita household expenditure and how these differed across occupation and income groups.We also discuss the role of in-kind assistance, extended during the pandemic, in smoothing food consumption. METHODSWe use fixed effects panel regression to estimate changes in per capita expenditure on various items in the household budget before and after the onset of the pandemic.We also estimate shifts in the composition of the household food basket between the two time periods. RESULTSIn the survey area, both per capita incomes and per capita household expenditure decreased, but the expenditure decrease was largely concentrated in discretionary items, leaving food consumption unchanged.The government policy of distributing practically free cereals, combined with household emphasis on protecting food expenditure, helped avert a substantial decline in food consumption and even led to a slight increase in dietary diversity.