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Indian Food and Welfare Schemes: Scope for Digitization Towards Cash Transfers


  • Shweta Saini


  • Sameedh Sharma


  • Ashok Gulati
  • Siraj Hussain


  • Joachim von Braun


The paper presents a case for a phased rolling out of direct benefits transfer (DBT) for Food in India. By studying all states and Union Territories on three broad parameters: demographics, performance of the existing Public Distribution System (PDS), and current state of banking infrastructure, the paper evaluates their “readiness†for shifting away from the existing physical grain distribution system under PDS to the ICT based DBT where a food subsidy amount (in lieu of PDS grain entitlement) is directly transferred into the Aadhaar-linked bank account of identified beneficiaries. The analysis reveals that all 36 states can implement DBT-food in the next five years i.e. by the year 2022 and this should happen in four phases. The states that are urban, have sufficient open market grain availability, are financially inclusive, and have lesser percentage of poor and malnourished may make the shift almost immediately. For rest, an interim phase of a reformed and IT based PDS system with identity verification of beneficiaries is built-in. In order to make the transition to DBT feasible and successful, the paper recommends improvements and investments by states/UTs into ensuring adequate food grains in the open markets, inclusive banking infrastructure and diverse payment channels, sufficiency of the food subsidy amount and display of leadership and political will to reform the PDS through DBT. This paper argues that DBT has a potential to make way for a system of social security or universal basic income, where every citizen receives income support – the size of which can be adjusted based on his/her needs and vulnerability.

Suggested Citation

  • Shweta Saini & Sameedh Sharma & Ashok Gulati & Siraj Hussain & Joachim von Braun, 2017. "Indian Food and Welfare Schemes: Scope for Digitization Towards Cash Transfers," Working Papers id:12033, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:12033
    Note: Institutional Papers

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    References listed on IDEAS

    1. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications, The World Bank, number 14902, June.
    2. Jesse M Cunha & Giacomo De Giorgi & Seema Jayachandran, 2019. "The Price Effects of Cash Versus In-Kind Transfers," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 240-281.
    3. Seth R. Gitter & James Manley & Vanya Slavchevska, 2010. "How Effective are Cash Transfer Programs at Improving Nutritional Status?," Working Papers 2010-18, Towson University, Department of Economics, revised Dec 2012.
    4. Marta Kozicka & Dr Matthias Kalkuhl & Jan Brockhaus, 2015. "Food Grain Policies in India and Their Implications for Stocks and Fiscal Costs: A Partial Equilibrium Analysis," EcoMod2015 8377, EcoMod.
    5. Johannes Haushofer & Jeremy Shapiro, 2016. "The Short-term Impact of Unconditional Cash Transfers to the Poor: ExperimentalEvidence from Kenya," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1973-2042.
    6. Ingrid Woolard & Murray Leibbrandt, 2010. "The Evolution and Impact of Unconditional Cash Transfers in South Africa," SALDRU Working Papers 51, Southern Africa Labour and Development Research Unit, University of Cape Town.
    7. Paul Glewwe & Ana Lúcia Kassouf, 2010. "What Is the Impact of the Bolsa Família Programme on Education?," One Pager 107, International Policy Centre for Inclusive Growth.
    8. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications, The World Bank, number 6582, June.
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