Path dependency, a concept widely discussed in policy studies, highlights how past decisions shape present and future policy directions, often leading to inefficiencies. A classic example is the QWERTY keyboard. It was designed in the 19th century to prevent typewriters from jamming. Despite more efficient alternatives like the Dvorak layout being available, QWERTY persists due to historical inertia.
In India, a similar path dependency can be observed in the country’s agricultural policy, particularly in its focus on wheat and rice. This fixation, rooted in the Green Revolution of the 1960s, has institutionalized wheat and rice as the primary staples for procurement and subsidy programs, even though consumption patterns have diversified over time.
It is often assumed that cereals, such as rice and wheat, are the preferred staples in India, a belief deeply ingrained in the country’s agricultural policy. However, this path dependency—where past decisions and entrenched practices shape present actions—has locked India into an agricultural strategy that disproportionately favours cereal production. Despite shifting consumer preferences driven by rising incomes and urbanization, India’s agricultural policies remain stuck in the past, prioritizing cereal production over more nutritious and high-value foods such as fruits, vegetables, and proteins.
There is now substantial evidence that India’s consumption patterns are undergoing a notable transformation. A recent Working Paper by the Economic Advisory Council to the Prime Minister (EAC-PM) analyses the results of the 2023-24 Household Consumption Expenditure Survey (HCES) and compares them with the 2011-12 HCES data. Although there are issues of comparability between the two surveys due to changes in methodology, the paper provides valuable insights into how India’s consumption pattern has evolved over the last decade. These shifts are particularly evident in the composition of household spending, reflecting broader socio-economic changes across rural and urban areas.
The EAC-PM paper reveals a significant shift in India’s food consumption patterns, with food expenditure now comprising less than 50% of the monthly consumption basket for the first time in modern India. This trend is observed in both rural and urban populations. For rural households, the share of food expenditure fell from 53.0% in 2011–12 to 46.5% in 2022–23, primarily due to a decline in cereal spending, which dropped from 10.7% to 4.9%. This shift was largely driven by government schemes providing free wheat and rice. A similar trend is seen in urban households, where food expenditure declined from 42.7% to 39.2%, with cereal spending dropping from 6.6% to 3.6%.
Meanwhile, fresh fruits, milk & milk products, and eggs, fish & meat saw notable increases in both household consumption and average per capita intake. For example, the proportion of households consuming milk & milk products grew substantially, with average per capita consumption rising from 6.3% to 8.6% for the bottom 20% in rural areas. Similarly, the consumption of eggs, fish & meat increased from 3.9% to 5.3% in rural households and from 4.4% to 5.2% in urban households.
Additionally, the availability of fresh fruits showed a significant improvement, reducing seasonal fluctuations in consumption. This shift is underpinned by better infrastructure and logistics, as fresh fruit consumption increased from 1.4% to 2.2% in the bottom 20% of rural households. This trend extends to urban areas as well, where the share of expenditure on fresh fruits grew from 2.0% to 2.5%. The overall increase in dietary diversity, marked by higher consumption of perishable items, suggests a profound change in Indian diets, which is likely to impact health outcomes positively, especially regarding micronutrient intake. The reduction in cereal consumption, combined with free foodgrains provided by government schemes, has enabled lower-income households to reallocate spending towards more diverse and nutritious food sources, potentially reshaping future agricultural policies and cropping patterns across the country.
This, however is a good news for India. As economies develop, a marked transition in consumption patterns occurs, often described by Engel’s Law, which states that as household incomes increase, the proportion of income spent on food decreases, but the absolute quantity and quality of food consumed changes. This shift is characterized by a decline in the consumption of basic staples, such as cereals, and an increase in the demand for higher-value foods like proteins, fruits, vegetables, and processed foods. This is referred to as the “nutrition transition,” wherein rising incomes and urbanization lead to dietary diversification.
Regardless, this will have six key implications for India’s agricultural policy in medium and long term. First, the reallocation of public support, including Minimum Support Prices (MSP), procurement policies, and subsidies, must shift from cereals to high-value horticultural and livestock products to align with market demands.
Second, supply-side interventions will be essential, focusing on improving productivity and efficiency in non-cereal crops through targeted research and development in agri-tech, plant genetics, and sustainable farming practices.
Third, investment in infrastructure must pivot towards developing robust cold chains, processing facilities, and storage systems, reducing post-harvest losses for perishable commodities.
Fourth, policies should encourage crop diversification by promoting financial and risk management tools, such as crop insurance and futures markets, that incentivize farmers to transition from cereal-centric farming systems to diversified, higher-return agricultural models.
Fifth, regulatory frameworks may need revision to support contract farming and direct marketing models, enabling efficient farm-to-market linkages for perishable goods.
Finally, recalibrating water and resource management policies to support the shift toward water-efficient crops, particularly in water-stressed regions, will be vital in ensuring the sustainability of this consumption-driven transformation in Indian agriculture.
The EAC-PM Working Paper serves as a reminder that India’s agricultural policies, particularly those rooted in the Green Revolution, must evolve to meet the changing consumption patterns of the population. The entrenched focus on cereals, especially in the Green Revolution belt, represents a classic case of path dependency, where past decisions continue to dictate current policy, despite shifting realities. To break free from this cycle, more needs to be done to nudge farmers toward diversified cropping patterns that align with the rising demand for high-value foods such as fruits, vegetables, and proteins. This will require rethinking procurement policies, MSP frameworks, and subsidy allocations, particularly in regions that have long relied on wheat and rice.
Aditya Sinha (X: @adityasinha004) is OSD, Research, Economic Advisory Council to the Prime Minister of India. The views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
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