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How can Food Subsidies Work Better? Answers from India and the Philippines

35 Pages Posted: 8 Dec 2010  

Shikha Jha

Asian Development Bank

Bharat Ramaswami

Indian Statistical Institute

Date Written: September 1, 2010

Abstract

This study explores the outcomes of food subsidies to the poor in the case of India and the Philippines. Both countries operate in-kind food subsidy programs with similar mandates, commonalities in functioning, and substantial budgetary outlays. The goal of the study is to quantify the gains to the poor from an additional unit of public spending on food subsidies. We find the expected income impacts on the poor are not more than 5% of incremental spending in either country. Part of the reason for such a low impact is poor participation in the program. But equally, it is also the case that the share of the poor in the total food subsidy is small. The reason why the poor receive such small shares is not just poor targeting. The main factor is program waste (due to fraud and excess costs). Such waste accounts for as much as 71% of the total public spending.

Keywords: Public Spending, Food Subsidy, Targeting, Leakage, Program Waste, India, Philippines

JEL Classification: D12, H23, I38

Suggested Citation

Jha, Shikha and Ramaswami, Bharat, How can Food Subsidies Work Better? Answers from India and the Philippines (September 1, 2010). Asian Development Bank Economics Working Paper Series No. 221. Available at SSRN: https://ssrn.com/abstract=1721907 or http://dx.doi.org/10.2139/ssrn.1721907

Shikha Jha (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Bharat Ramaswami

Indian Statistical Institute ( email )

7 S. J. S. Sansanwal Marg
New Delhi, 110016
India
91 11 6514594 (Phone)
91 11 6856779 (Fax)

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