Food subsidies in India: Revisiting the estimates

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dc.creatorNarayanan, Sudha
dc.creatorSaha, Shree
dc.date2026-06
dc.date2026-02-24T21:40:07Z
dc.date2026-02-24T21:40:07Z
dc.date.accessioned2026-06-27T15:35:09Z
dc.descriptionThere is a view that the fis­cal bur­den of food sub­si­dies in India is un­sus­tain­able. Yet pop­u­lar de­bate and dis­cus­sion around the costs of these food sub­si­dies, rel­a­tive to their ben­e­fits, are mis­lead­ing for two rea­sons. First, they typ­i­cally treat re­ported bud­getary sub­sidy es­ti­mates—i.e. the fis­cal cost to the gov­ern­ment of the dis­tri­b­u­tion of food via ra­tion shops—as equiv­a­lent to “trans­fers” to ben­e­fi­cia­ries. Sec­ondly, they tend to focus ex­clu­sively on con­sumers. In doing so, they ne­glect the two-part na­ture of the food dis­tri­b­u­tion sys­tem, which in­cludes pay­ments to farm­ers at the time of pro­cure­ment. This paper ex­am­ines ways of mea­sur­ing the costs and value of the food sub­sidy. We pre­sent es­ti­mates that com­bine the im­plicit value of ben­e­fits to con­sumers aris­ing from the re­duced price of grain sold to con­sumers via ra­tion shops, with im­plicit ben­e­fits to farm­ers, in terms of the price dif­fer­ence be­tween what farm­ers are paid by the gov­ern­ment and what they would have ob­tained in the open mar­ket. This ap­proach shows that each rupee of the “food sub­sidy” re­ported in gov­ern­ment ac­counts rep­re­sents a trans­fer worth Rs 1.29 to con­sumers and farm­ers, on av­er­age, over the pe­riod 2001–02 to 2022–23. That is, each rupee trans­ferred to these groups is as­so­ci­ated with a cost of Rs 0.79 to the gov­ern­ment.
dc.identifierhttps://hdl.handle.net/10568/181840
dc.identifier.urihttp://hdl.handle.net/123456789/108606
dc.languageen
dc.publisherFoundation for Agrarian Studies
dc.rightsOpen Access
dc.sourceNarayanan, Sudha; and Saha, Shree. 2026. Food subsidies in India: Revisiting the estimates. Review of Agrarian Studies 16(1). 14 p. http://ras.org.in/food_subsidies_in_india
dc.subjectsubsidies
dc.subjectfood aid
dc.subjectsocial protection
dc.subjectfiscal policies
dc.subjectcost benefit analysis
dc.subjectcash transfers
dc.titleFood subsidies in India: Revisiting the estimates
dc.typeJournal Article

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Instituto Internacional de Investigación sobre Políticas Alimentarias (IFPRI)