In-kind transfers can provide insurance beneﬁts when prices of consumption goods vary, as is common in developing countries. We develop a model demonstrating that in-kind transfers are welfare improving to beneﬁciaries relative to cash if the covariance between the marginal utility of income and price is positive. Using calorie shortfalls as a marginal utility proxy, we ﬁnd that in-kind transfers are preferred for low-income Indian households. Expansions in India’s ﬂagship in-kind food transfer program not only increase caloric intake but also reduce caloric sensitivity to prices. Our results contribute to ongoing debates about the optimal form of social protection programs.