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Elasticity of Food in Indian Market
Agricultural Economics Research Review Vol. 24 January-June 2011 pp 1-14

Estimation of Demand Elasticity for Food Commodities in India§
Praduman Kumar*, Anjani Kumar, Shinoj Parappurathu and S.S. Raju
National Centre for Agricultural Economics and Policy Research, New Delhi-110 012

Abstract
The food demand in India has been examined in the context of a structural shift in the dietary pattern of its population. The results have reinforced the hypothesis of a significant diversification in the dietary pattern of households in recent years and has found stark differences in the consumption pattern across different income quartiles. The food demand behaviour has been explained using a set of demand elasticities corresponding to major food commodities. The demand elasticities have been estimated using multi-stage budgeting with QUAIDS model and another alternative model, FCDS. The study has revealed that the estimated income elasticities vary across income classes and are lowest for cereals group and highest for horticultural and livestock products. The analysis of price and income effects based on the estimated demand system has suggested that with increase in food price inflation, the demand for staple food (rice, wheat and sugar) may not be affected adversely but, that of high-value food commodities is likely to be affected negatively. Therefore, the study has cautioned that if inflation in food prices remains unabated for an extended period, there is the possibility of reversal of the trend of diversification and that of consumers returning to cereal-dominated diet, thus accentuating under-nourishment. Key words: Food demand, Demand elasticity, QUAIDS model, FCDS model, Household food demand JEL Classification: Q11, Q18

Introduction
One of the conspicuous outcomes of the economic development India has experienced in recent years is a marked change in the dietary pattern of its population. Several studies have shown dietary diversification of Indians


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