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Is the PDS Already a Cash Transfer? Rethinking India's Food Subsidy Policies

Author

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  • Sujata Balasubramanian

    (Division of Social Science, Hong Kong University of Science and Technology
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

Abstract

Critics argue that India’s mismanaged Public Distribution System (PDS), which sells subsidized cereals to poor families, should be replaced by cash transfers. Others fear cash may be misused. Using National Sample Survey data, this paper demonstrates that families treat additional PDS subsidies wholly as a source of cash - exactly like a cash transfer. More worryingly, cereal consumption has not increased, despite higher real subsidies. Moreover, neither the PDS nor cash transfers are likely to raise total food expenditure in poor families. Finally, therefore, the paper explores how higher food consumption and other objectives of PDS subsidies may be achieved

Suggested Citation

  • Sujata Balasubramanian, 2015. "Is the PDS Already a Cash Transfer? Rethinking India's Food Subsidy Policies," HKUST IEMS Working Paper Series 2015-16, HKUST Institute for Emerging Market Studies, revised Mar 2015.
    • Handle: RePEc:hku:wpaper:201516
    as

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    File URL: http://iems.ust.hk/assets/publications/working-papers-2015/iemswp2015-16.pdf
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    References listed on IDEAS

    as
    1. Breunig, Robert & Dasgupta, Indraneel & Gundersen, Craig & Pattanaik, Prasanta, 2001. "Explaining The Food Stamp Cash-Out Puzzle," Food Assistance and Nutrition Research Reports 33869, United States Department of Agriculture, Economic Research Service.
    2. Sujata Balasubramanian, 2013. "Why Micro-Credit May Leave Women Worse Off: Non-Cooperative Bargaining and the Marriage Game in South Asia," Journal of Development Studies, Taylor & Francis Journals, vol. 49(5), pages 609-623, May.
    3. repec:pri:rpdevs:deaton_price_trends_in_india_version_3_jan_08_all is not listed on IDEAS
    4. Afridi, Farzana, 2010. "Child welfare programs and child nutrition: Evidence from a mandated school meal program in India," Journal of Development Economics, Elsevier, vol. 92(2), pages 152-165, July.
    5. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-383, June.
    6. repec:pri:rpdevs:deaton_price_trends_in_india_version_3_jan_08_all.pdf is not listed on IDEAS
    7. Harold Alderman & Donald Bundy, 2012. "School Feeding Programs and Development: Are We Framing the Question Correctly?," The World Bank Research Observer, World Bank, vol. 27(2), pages 204-221, August.
    8. Donald Bundy & Carmen Burbano & Margaret Grosh & Aulo Gelli & Matthew Jukes & Lesley Drake, 2009. "Rethinking School Feeding Social Safety Nets, Child Development, and the Education Sector," World Bank Publications - Books, The World Bank Group, number 2634, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Phadera,Lokendra & Sharma,Dhiraj & Wai-Poi,Matthew Grant, 2020. "Iraq's Universal Public Distribution System : Utilization and Impacts During Displacement," Policy Research Working Paper Series 9155, The World Bank.
    2. Vandita Dar & Madhvi Sethi & Saina Baby, 2023. "Direct Cash Transfers in Emerging Economies: The Case of India," Business Perspectives and Research, , vol. 11(2), pages 287-308, May.
    3. Jaspars, S. & Sathyamala, C., 2021. "Digital bodies and digitalised welfare: North-South linkages in the politics of food assistance and social welfare," ISS Working Papers - General Series 687, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    4. Aurino, Elisabetta & Morrow, Virginia, 2018. "“Food prices were high, and the dal became watery”. Mixed-method evidence on household food insecurity and children’s diets in India," World Development, Elsevier, vol. 111(C), pages 211-224.

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    More about this item

    Keywords

    public distribution system; food subsidies; cash transfers; India;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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