Regional differences in India's food expenditure pattern: a complete demand systems approach

Abstract

This paper analyses India's food expenditure recognizing regional differences in preferences and prices. The results reveal large regional differences in expenditure pattern implying that nutrient enhancing programmes must recognize this diversity. Household composition is an important determinant of consumption, though the nature of demographic impact varies across regions. The popular AIDS yields biased elasticity estimates, especially for cereals, making its use inappropriate in developing countries. In policy applications, choice of a general demand system is important in evaluating the impact of price and income changes on basic consumption, and in designing optimal tax systems, but not necessarily in evaluating tax reforms. Copyright © 1999 John Wiley & Sons, Ltd.