Cash transfers more effective than PDS, says ICRIER-OECD report -TV Jayan

-The Hindu Business Line

Direct bank transfers plug leakages in food distribution, ensure better nutritional security

New Delhi:
Irrespective of teething problems encountered in places where it was launched as pilot, direct cash transfers are far more effective than food subsidy in reducing food insecurity and nutritional imbalances among the Indian population, a new report has shown.

Currently, India spends ?1,45,400 crore — about 1.3 per cent of its GDP — to give food at highly subsidised rates (subsidies on grains like rice and wheat are as high as 90 per cent) to 67 per cent of the population. While State-owned firms such as Food Corporation of India procure, stock and supply rice and wheat in many States, in others, the States themselves do the same for which funds are released proportionately by the Centre. Nearly 30 per cent of rice and wheat produced in the country are procured at minimum support prices (MSP) for public distribution.

But, a study, recently published by the Indian Council on Research on International Economic Relations (ICRIER) and the Organisation of Economic Cooperation and Development (OECD), said direct bank transfers (DBT) would work better than the existing targeted Public Distribution Scheme (tPDS) as the former not only plugs the leakages, but also helps in ensuring better nutritional security. According to the ICRIER-OECD report, Agricultural Policies in India, released last week, thanks to tPDS, food consumption in the country is skewed towards wheat and rice and away from cheaper and more nutritious food.

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The Hindu Business Line, 10 July, 2018,

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