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Food Subsidy, Income Transfer and the Poor: A Comparative Analysis of the Public Distribution System in India's States

  • Raghbendra Jha
  • Raghav Gaiha
  • Manoj K. Pandey
  • Nidhi Kaicker

The Targeted Public Distribution System (TPDS) — the largest food subsidy programme in India — has been a dismal failure in targeting the poor. The present paper examines its performance in three Indian states — Andhra Pradesh, Maharashtra and Rajasthan, based on primary data collected for this study. As real income transfers through food price subsidies are a tiny fraction of expenditure per person under this scheme, a contribution of the present study is to model determinants of real income transfers through subsidised wheat, rice and sugar. The analysis throws new light on how income transfers vary with economic status of a household, inequality in the distribution of land in a village, amount of food price subsidy, transaction costs of buying from 'fair price shops' (FPS), and supply shortages. The policy implications of these results are profound. Desperate measures such as a universal food subsidy enshrined in a proposed National Food Security Act are rejected on the grounds that the enormous leakages and wastage under the present TPDS would only get worse. Assertions that a universal food subsidy is the only option consistent with the right to food are rejected as mistaken, as the latter could be interpreted as a right to a right, or, more specifically, as a right to sensible livelihood expansion and price stabilisation policies.

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File URL: https://crawford.anu.edu.au/acde/asarc/pdf/papers/2011/WP2011_16.pdf
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Paper provided by The Australian National University, Australia South Asia Research Centre in its series ASARC Working Papers with number 2011-16.

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Length: 37
Date of creation: 2011
Date of revision:
Handle: RePEc:pas:asarcc:2011-16
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  1. Reetika Khera, 2011. "India's Public Distribution System: Utilisation and Impact," Journal of Development Studies, Taylor & Francis Journals, vol. 47(7), pages 1038-1060.
  2. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-64, July.
  3. Saleth, R. Maria & Dinar, Ariel, 2009. "The Impact of Multiple Policy Interventions on Food Security," Journal of Policy Modeling, Elsevier, vol. 31(6), pages 923-938, November.
  4. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier.
  5. Karami, Ayatollah & Esmaeili, Abdoulkarim & Najafi, Bahadin, 2012. "Assessing effects of alternative food subsidy reform in Iran," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 788-799.
  6. Kochar, Anjini, 2005. "Can Targeted Food Programs Improve Nutrition? An Empirical Analysis of India's Public Distribution System," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 203-35, October.
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