Food subsidy: Effectiveness and implications

Abstract

Despite the ever rising food bill, there has been continuous debate over the benefit received by the target consumer. Our project aims at analyzing the trends in food subsidy in India over years and making recommendations to increase its effectiveness or propose an alternate way to utilize the quantum of funds. We did the project in two phases. Phase 1: This phase aims at understanding the current food security bill by laying down the flow of funds and food grains from producer to target segment. Each link is analyzed for inefficiencies using past 10 years data present at various government sites. The outcome of this phase is to analyze the bill’s effectiveness from a cost benefit lens. Phase 2: This phase aims at going a step further to look into the ground realities. It aims at testing the hypothesis generated in phase 1 using secondary data available as part of various research papers. This also includes understanding the external factors like politics, corruption and other policies which affect the food security bill. The outcome of this phase is to analyze the bill’s effectiveness from a cost benefit lens taking into consideration the opportunity cost of using the funds for alternative policies (direct transfer etc.).