Status of Food Security among the Vulnerable Sections of Rural Households: An Application of Almost Ideal Demand System (AIDS) Model

Consumption behaviour studies are essential in order to define poverty lines on the basis of food intake of the population. It is important tounderstand how the consumer reacts to the sudden price changes in the market as it would help governments to decide whether to subsidize the food commodities or not. In this study, Almost Ideal Demand System (AIDS) model has been employed to estimate the system of demand functions for cereals, pulses, oils, salt and spices, meat, milk, and sugar. The statistical significance of the coefficients suggested that the demand for various food commodities was responsive to prices. The expenditure elasticities were positive and significant for all the commodities. All the food commodities were found to be normal goods. In addition all the goods were also found to be income elastic. This implied that the expenditure share on these commodities would increase with an increase in real income and vice-versa. The own price elasticities of the commodities revealed that the subsidized commodities (cereals, pulses, oil and sugar) were found to comprise the predominant source of food basket of the rural households and their signs were also expectedly positive. At the same time since the other remaining commodities including being not subsidized, their signs were found to be negative. Further, as all the commodities (except sugar) were price elastic any change in their prices would have strong negative or positive effect on expenditure basket of the households. Thereby the possibility of food inflation could severely hamper their consumption status and make the households vulnerable to food security.