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Foodgrain Subsidies in India: Are they Reaching the Poor?

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  • Umali-Deininger, Dina
  • Sur, Mona
  • Deininger, Klaus W.

Abstract

Concerns about the slow down in agricultural growth and the macroeconomic impact of rising fiscal deficits have refocused attention to public expenditures in the agricultural sector. Rising levels of agricultural subsidies have been blamed for crowding out much needed productivity-enhancing investments. This study examines the potential welfare impacts of subsidy reform by tracing the beneficiaries of the farmer and consumer foodgrain price subsidies, and by assessing the distribution and level of these subsidies across households at the state level. Using benefit incidence analysis, we find that producer price subsidies benefited only a few states, and larger farmers within these states. The shift to the targeted public distribution system contributed to an increase in allocation and offtake in states with higher rates of poverty. Household participation rates at the national level on average improved, from 22.6 percent to 31.6 percent between 1993/94 and 1999/00, but delivery problems still leave the major share of the poor out of the system.

Suggested Citation

  • Umali-Deininger, Dina & Sur, Mona & Deininger, Klaus W., 2005. "Foodgrain Subsidies in India: Are they Reaching the Poor?," 2005 Annual meeting, July 24-27, Providence, RI 19486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19486
    DOI: 10.22004/ag.econ.19486
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    References listed on IDEAS

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    1. Angus Deaton & Jean Dreze, 2002. "Poverty and Inequality in India: A Re-Examination," Working Papers 184, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    2. Ravaillon, Martin & Datt, Gaurav, 1994. "How important to India's poor is the urban - rural composition of growth?," Policy Research Working Paper Series 1399, The World Bank.
    3. repec:pri:rpdevs:deaton_dreze_poverty_india is not listed on IDEAS
    4. Ravallion, Martin & Datt, Gaurav, 1995. "Growth and poverty in rural India," Policy Research Working Paper Series 1405, The World Bank.
    5. Umali-Deininger, Dina L. & Deininger, Klaus W., 2001. "Towards greater food security for India's poor: balancing government intervention and private competition," Agricultural Economics, Blackwell, vol. 25(2-3), pages 321-335, September.
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    Cited by:

    1. Kaushal, Neeraj & Muchomba, Felix M., 2015. "How Consumer Price Subsidies affect Nutrition," World Development, Elsevier, vol. 74(C), pages 25-42.
    2. Kannan, Elumalai, 2011. "Trends in India’s Agricultural Growth and Its Determinants," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 8(2), pages 1-21, December.
    3. Suman Chakrabarti & Avinash Kishore & Devesh Roy, 2018. "Effectiveness of Food Subsidies in Raising Healthy Food Consumption: Public Distribution of Pulses in India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1427-1449.
    4. Neeraj Kaushal & Felix Muchomba, 2013. "How Consumer Price Subsidies affect Nutrition," NBER Working Papers 19404, National Bureau of Economic Research, Inc.
    5. Felix M. Muchomba & Neeraj Kaushal, 2016. "Effect of Food Subsidies on Micronutrient Consumption," Indian Journal of Human Development, , vol. 10(3), pages 317-335, December.

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    Keywords

    Food Security and Poverty;

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