The Food Stamp Scheme in Sri Lanka: Costs, Benefits, and Options for Modification

Many developing countries attempt to assist low-income households to improve their nutritional intake by providing direct or indirect income transfers. The latter are more common and usually take the form of price subsidies on a range of staple foods. Direct transfers, such as issues of food coupons, are not as widely used as price subsidies. In this regard, the case of Sir Lanka is somewhat unusual, for over four decades it followed a policy of subsidizing food prices, and during the late 1970s, this policy was replaced by a direct transfer scheme in the form of food stamp program. An analysis of the former food subsidy scheme of Sri Lanka was the subject matter of IFPRI Research Report 13, The Impact of Public Foodgrain Distribution on food Consumption and welfare in Sri Lanka, by James D. Gavan and Indrani Sri Chandrasekera. This research report by Neville Edirisinghe provides an analysis of the food stamp scheme, which is but one element of a package of policy reforms aimed at greater economic growth undertaken recently in Sri Lanka. Insight from the Sir Lanka cases should prove useful in planning income assistance programs to accompany structural changes in economies to bring about greater growth. This report adds to an array of studies undertaken by IFPRI in the area of food price policies in general and food subsidies in particular. Several such studies have been published, including studies of policies in Brazil, Bangladesh, Kerala State in India, Sri Lanka and Egypt.