Trade Liberalization, Poverty and Food Security in India

This paper attempts to assess the impact of trade liberalization on growth, poverty, and food
security in India with the help of a national level computable general equilibrium (CGE)
model. It shows that GDP growth and income poverty reduction that might occur following
trade liberalization need not necessarily result in an improvement in the food security /
nutritional status of the poor. Evidence from simulations of (partial) trade reforms reflecting
a possible Doha-like scenario show that the bottom 30% of the population in both rural and
urban areas suffer a decline in calorie and protein intake, in contrast to the rest of the
population, even as all households increase their intake of fats. Thus, the outcome on food
security / status with regard to individual nutrients depends crucially on the movements in the
relative prices of different commodities along with the change in income levels. These results
show that trade policy analysis should consider indicators of food security in addition to
overall growth and poverty traditionally considered in such studies.