Food subsidy: concept, rationale, implementation design and policy reforms

Abstract

This paper counters negative advocacy about the food subsidy, the public distribution system, and farm price supports. It argues that the public food supply chain for market intervention has a favourable impact on the cost-benefit ratio, poverty reduction, calorie consumption by the poor and productivity-led agricultural growth. The paper proposes reforms for the six pillars of the public food supply chain. These include: an alternative poverty line concept that is linked to the minimum “norms” for calorie intake enabling a reduction of the exclusion and inclusion errors, procurement just for the PDS and buf fer stocks to be purchased at a farm price that is fully cost-based, fair price shops with fixed and adequate time of operations, “indent” of the demand, doorstep delivery, and so on.