David Watts investigates India's hunger problem, the changing priorities of the middle poor, and explains why simply handing out food is not the answer.

The Indian government's Food Security Bill now going through the legislative process is unlikely to tackle effectively the country's hunger problems.

That is the view of Abhijit Banerjee, who warns that just directing large quantities of food at the poor will not deal with the problem. He believes that the great majority of people in India thought to be suffering from hunger are not in that position because they do not have enough food.

"They don't prioritize food because they are rational beings who like living a life that's pleasurable. Unless you work with that and you can find ways to make them understand the value of nutrition or find ways to deliver nutrition in ways that they will not resist, food aid programmes will not be successful."

He said the thinking that just by giving them a bag of grain you were going to i

mprove their nutrition was rooted in the old and inaccurate notion that the poor were always hungry.

Some of those in poverty certainly were but many of them were not; they were merely prioritizing according to their own perception of what their requirements were. Governments and others must not get into the habit of imposing their own perceptions of their requirements onto them. The result would be a failure of their programmes to meet the needs of the less well off.

India's Food Security Bill aims to provide heavily-subsidized food grains to 75 per cent of the country's rural population and up to 50 per cent of those living in cities. Under the scheme some 800m people will get seven kilogrammes of food per person while the pregnant and elderly will be supplied with hot meals. This will increase the nation's food subsidy bill by about $6 billion.

Banerjee's thesis is reinforced by the fact that the most serious increase in malnutrition is among the middle sector of the Indian poor — those who are failing to eat nourishing foods and using their money on mobile phones and the like.

The world food situation has been transformed over the past 200 years when notions of poverty and hunger went together with good reason: there was real hunger in the world caused by real food shortages.

Today that is not the case: there is plenty of food in the world and production is so plentiful that prices are relatively cheap. It is just that food does not always get to the right people, those who need it.

"If you look at the actual amount of food a person on $1 a day can have, in most countries of the world they can afford substantially more than the minimum number of calories to sustain themselves and to give an entire family adequate nutrition with money left over. The minimum requirement is something like 35 cents a day.

"But there's a catch, it's that it's entirely possible to have nutritional meals on $1 a day but most people don't.

"If you look at South Asia — it's currently the malnutrition capital of the world — something like 40 per cent of South Asian children are extremely malnourished. That's striking not only because there's enough food but it's a much higher rate than in Sub-Saharan Africa — people in the middle income bracket show much more malnutrition than Sub-Saharan Africa; much richer people show much more malnutrition."

Addressing the Royal Institute of International Affairs at Chatham House, Banerjee used the example of a Moroccan man he had encountered to reinforce the point. He and the co-author of his best seller Poor Economics, fell into conversation with the man outside his home. He was deemed to be among the hungry. He was asked what he would do if he had a little more money. He said he would buy food. If he had a little bit more on top of that, what would he do? He would perhaps buy some more food and some clothes.

Banerjee and Esther Duflo, his co-author, were invited into his home. To their amazement they found not only a television with a parabolic antenna but a DVD player. "We asked, what's that? You're hungry." He responded very off-handedly: "TV is more important than food."

He said that if policymakers did not recognize that the poor wanted to have a life with some pleasure rather than just existing they would get the wrong reading on a lot of policies. "It's important because there's enormous pressure, where there is malnutrition, to have a policy of 'let's give poor people food' but if they don't want the food they won't eat it — they will sell it. That's the priority for them — if they want a cell phone more than they want food they're going to sell the food."

Banerjee had a cautionary tale to tell on micro-credit, once seen as the salvation of the rural poor in the sub-continent, which he said had "lost its sheen."

For the poor, suffering interest rates of anywhere between 60 per cent and 200 per cent, the appearance on the scene of micro-credit had certainly had the effect of reducing overall rates in the market for poorer people down to about 25per cent.

"The premise of micro-credit was that it would change life — it would make poor people rich by investing money," but randomized testing his organization had done in India, Morocco and Mongolia indicated that it had not succeeded in the way that had been expected. The businesses set up with micro-credit did not make money and did not change things.

"This should not be surprising to us: because these people are very poor they have few skills and when they invest in an industry they invest in exactly the same industry as their neighbours so they all sell to markets or set up little grocery stores. When you do that the returns are not going to be very high."

This notion of the poor as natural entrepreneurs was based on that of the originator of the micro-credit idea, Muhammad Yunus, who believed that the poor had a unique talent for small business.

"Where does this idea come from? It comes from another misreading of what the world looks like." A small number of people might describe themselves as entrepreneurs but 50 per cent of poorer people described themselves as self-employed, so up to 70 per cent of poor people were entrepreneurs, in some sense, but that was not to say that they wanted to be entrepreneurs. They became entrepreneurs because they could not find jobs.

In a survey across a number of countries poor people were asked what they would like their children to become or how they would use a lottery win to set up their children in a business or some other activity. Eighty per cent of parents responded that they wanted their children to have a government job.

"So it's resoundingly clear that being an entrepreneur is not an aspiration for them, it's a default. It's because other people are not employing them that they've become entrepreneurs.

"So if we start with the wrong reading we immediately expect miracles from micro-credit because we assume the people want to be entrepreneurs when they're not particularly gifted to do that. If you misread the data you'll end up with the wrong story."

In his campaign to challenge the status quo Banerjee took on another solidly entrenched belief in the running of poor, rural villages: that women should have no part in their management. When the prospect of reserving the position of one out of every three village committee heads for women was proposed, he polled villages on what the effect would be.

The response was overwhelming and predictable: it was met with a wall of contempt; 'this is never going to happen' was the universal response and if it did it would make absolutely no difference. If it was the law they would follow it but any decision-making that had to be done would be in the hands of their brothers or husbands.

Five years after its introduction, a comparative survey of villages run by women and those run by men was made, looking at the spending patterns. In particular, villages run by women put more spending into the water supply, perhaps hardly surprising since it was the responsibility of the women to gather it, which could mean a walk of up to three miles. But while spending on water went up, spending on education — perhaps surprisingly — went down to compensate.

The same prejudices attended women leaders speaking. Initially, even though identical texts were given to both men and women leaders, the villagers would always rule that the men were better, in the initial stages. But in villages where, by administrative fluke, women leaders had run the government for two five-year terms, the women were initially ruled on a par with their male counterparts and later as superior.

"So 'immutable' preferences don't seem to be immutable. Unless you look hard at what's going on and think hard about it and are open-minded about what you find, you'll end up with a lot of stories which have nothing to do with reality," he said in a clear signal to aid donors and NGOs to approach their tasks with more precision.

Asked about the roles of democracy and the media in improving governance in poorer countries, he said there was a clear relationship between media reporting on a politician's committed support of a policy, and subsequent voting patterns.

Even more telling was an example from Kenya of aid money for education failing to reach the schools for which it was intended. Before a local newspaper started reporting the amounts of cash and specifying the schools to which it was going, only 13 per cent of the total was reaching its target. Once the newspaper started publishing the details 80 per cent got through to benefit the children.

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