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Please use this identifier to cite or link to this item: http://hdl.handle.net/2259/182

Title: Food prices and the efficiency of public intervention: the case of the public distribution system in India
Authors: Balakrishnan, Pulapre
Keywords: Food Prices
Food Policy
Food Subsidies
Issue Date: 2002
Publisher: Pergamon
Abstract: As public intervention is a pervasive influence on food prices, this paper asks whether and how the inefficiency of state institutions matters to food prices. In the context of the wheat subsidy scheme in India, the paper models the implications of quality differences between public and private grain supply. As both are procured at similar prices, the lower quality of public grain marks the inefficiency of government operations. The paper proposes and empirically validates a method to test for demand switches that occur as a result of quality preference. As a result, a reduction in food subsidies increases food prices and hurts the poor even when they are not major recipients of the subsidy. This seeming paradox is contingent on the inefficiency of public nterventions. Thus, the outcome will be different if the reduction in food subsidy were to be accompanied by reforms in the associated state agencies.
Description: 2002 Elsevier Science Ltd. Food Policy 27 (2002) 419–436
URI: http://hdl.handle.net/2259/182
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