Do food subsidies improve food security: Evidence from India’s public distribution system

Research Seminars
Academic Areas Economics and Public Policy
Aditya Shriniwas, PhD candidate, Department of Agricultural and Consumer Economics, University of Illinois at Urbana - Champaign
June 16, 2017 | 3:00 PM - 4:00 PM | Friday
AC2 MLT, Level 2, ISB, Hyderabad, India
Contact: Neha Gupta,,
By Invitation
Abstract: India’s public distribution system (PDS) is the largest food grain distribution system in the world that provides basic staples at highly subsidized prices to more than a billion people. In this paper, we examine the impact of PDS on food security using ICRISAT’s panel data from 30 villages across India during 2010-2015, a period that includes the National Food Security Act. We use the spatial and temporal variation in the PDS subsidy rules as a source of exogenous variation to study the impact of PDS. Three dimensions of food security are examined. First, we ask whether PDS improves food availability. That is, if the statutory subsidy reaches intended beneficiaries and translates into availability of PDS grains at the household level. Second, we ask whether PDS improves food access by diversifying diets and increasing overall calorie intake. The third dimension examines food stability, whether PDS insures consumption against weather shocks. We find that PDS improves food availability and food access but fails to stabilize consumption. On average, 60 to 70% of the statutory subsidy reaches the intended beneficiaries, with the highest incidence in Karnataka and Andhra Pradesh. PDS improves consumption of staple cereals, pulses, milk products and oils. The elasticities with respect to the value of subsidy are 0.35 Kcals, 0.32 gms of proteins and 0.42 gms of fat . However, PDS fails to buffer the impact of rainfall shocks on staple cereal consumption. We argue that the latter effect may be due to low uptake during rainfall shocks.