Two decades ago, the story of food in India was easy to understand. A large share of household budgets went toward food, and most of that food was cereals. Rice or wheat anchored every meal. Diets were repetitive, shaped by necessity more than preference.

Today, that world has changed. The share of income spent on food has fallen to about 47% of total expenditures in rural India and roughly 40% in urban India as of 2023–24. Plates look more varied. Markets are fuller. Choice, at least on the surface, has expanded.

It is tempting to read this as a familiar story of progress. As incomes rise, households spend proportionally less on food. This is what economists have long described as Engel’s Law. As people move beyond basic subsistence, they diversify their diets, shifting away from staples toward more nutrient-rich foods such as fruits, vegetables and animal products—that is Bennett’s Law.

At first glance, India appears to be following both. The numbers say so. The theory fits.

Except it doesn’t. Not quite.

If diversification is truly happening, why are nutrient-rich foods not rising consistently across households? Why are processed foods growing faster than fruits or proteins? And why does higher income no longer reliably translate into better diets?

The answers lie in what is actually filling the space that cereals once occupied.

The old diet is changing, but it’s not more nutritious

The decline in food’s overall budget share does not mean food matters less. It reflects something broader. Other needs such as education, healthcare, mobility and aspiration now take up more space in household budgets. The food rupee is being reallocated within a smaller share. The question is whether it is being used better.

Cereals and pulses no longer dominate household food budgets the way they once did. That shift is real, though part of the recent decline reflects large-scale post-pandemic grain distribution, which mechanically reduced market purchases of cereals. What has grown in their place is milk and dairy, some fruits, and certain higher-value foods. Progress, in part.

But the gains are uneven in a telling way. Vegetables, for instance, rise modestly between 2004–05 and 2011–12 but show little further increase in recent data. Animal-based proteins follow a similar pattern, expanding in the earlier period but flattening thereafter. The picture is one of movement without a clear nutritional direction, and this is where the familiar narrative of dietary progress begins to break down.

When an old idea meets a new food system

The notion that diets improve with income is simple. As households grow richer, they move away from cheap, calorie-dense staples toward nutritionally richer foods. Diversification and nutrition went hand in hand because the available alternatives were genuinely better.

But that intuition was built for a very different food environment.

It did not account for a world of instant noodles, packaged biscuits and flavored beverages. It did not anticipate an India where a small neighborhood grocery store in a rural village stocks the same branded snacks as a supermarket in a major city. The set of choices has expanded, but not in a way that consistently favors nutrition.

That changes what “diversification” really means.

The packet has replaced the pot, not the grain inside it

Here is the central irony of India’s dietary transition: by 2023–24, beverages and processed and packaged foods had become the single largest food expenditure category for both rural and urban households, overtaking cereals, milk and vegetables. A category that barely registered two decades ago now tops the food budget.

This is not just an urban, middle-class phenomenon. Improved supply chains and falling prices have carried processed foods deep into rural markets, into lower-income homes, across geographies that once seemed out of reach for packaged consumption.

But a closer look reveals something important. Much of this growth is not replacing staples. It is repackaging them. Instant noodles, biscuits, fried snacks and packaged grain products are still built on wheat and rice. The cereal has not disappeared. It has returned in a different form, with branding, longer shelf life and higher value. What appears to be diversification is often a shift from unprocessed to ultra-processed versions of the same basic ingredients.

Staples are not being replaced. They are being reconfigured. Bennett’s Law may be technically satisfied, but its underlying promise, that this shift improves nutrition, no longer holds in the same way.

Convenience didn’t just change what we eat; it changed why

This transformation cannot be explained by income alone. Something deeper has shifted in how dietary decisions are made.

Urbanization has increased the value of time. More women in the workforce, longer commutes and smaller households leave less time for cooking from scratch. Processed foods are not just affordable. For many households, they are the rational choice.

At the same time, aspirations have changed. Packaged foods carry a sense of modernity that traditional meals often do not, especially for younger consumers.

Income opens the door, but convenience, availability and aspiration decide what walks through it. This is why the income-diet relationship that economists once took for granted is weakening, and why simply having more money is no longer a reliable path to eating better.

The gap between rich and poor has changed shape, not disappeared

One of the clearest shifts over the past two decades is the convergence of rural and urban diets. Rural households are diversifying. Processed foods are now common across geographies. The direction of change is increasingly shared.

But inequality has not disappeared. It has taken a different form.

For lower-income households, the constraint is still access. Better diets remain difficult to achieve, and improvements are gradual. For higher-income households, the constraint is no longer affordability; it’s navigation. A wider food environment means more choices, but not always better ones. More money buys more variety but it doesn’t automatically buy more nutrition. Two distinct problems, masquerading as one.

More money, more choices, but not necessarily more nutrition

For a long time, development thinking rested on a simple logical chain: growth raises incomes, higher incomes improve diets, better diets mean better health. Data from India over the past two decades suggests this chain has snapped at its middle link.

Diets are more varied and the dominance of raw staples is declining, but that variety isn’t translating neatly into better nutritional outcomes. The new variety is, in large part, processed, refined and calorie-dense rather than nutrient-dense.

Engel’s Law still holds. Bennett’s Law still points toward diversification. But much of that diversification is toward processed versions of the same base, rather than toward genuinely more nutritious foods, complicating the link between shifting diets and improved nutrition.

The plate has changed. Has our thinking?

India’s food story is no longer about scarcity. It is about what happens when scarcity gives way to choice in a food system shaped by convenience, aspiration and market forces that do not naturally steer toward nutrition.

That is a different problem from the one India’s food policy was built to solve. And it demands a different way of thinking, one that looks not just at how much households spend on food, but at what is shaping those decisions.

Because the uncomfortable truth is this: India’s plate is changing, but nutrition is not keeping pace. And until we confront that gap, rising incomes will keep changing diets without improving them.

Note from the author: This post was prepared using data cleaned and provided by Raghav Puri. 

Annie Gurmeher Kaur is a TCI scholar and an MS-PhD student in the field of applied economics and management. 

Featured image: Processed snack foods are sold in shops across India. (Photo by Ricky Singh/Unsplash)