• What other ways are there to deliver food subsidies?

If the government decides that it wants the poor to consume dal and oil at subsidised rates then it needs to find more efficient ways of targeting and delivering the subsidy. One proposal is to provide them with smart cards with the required amount of money credited to them and which can be used at certain retail outlets who will get reimbursement from the government. The expenditure will be limited largely to Rs 10 per kg or litre of the dal and oil actually bought by BPL households instead of more than double of that amount lining the pockets of traders on the way. No procurement for the PDS or supply chains will have to be set up as would need to be done for delivery of the PDS.

The writer is senior fellow, National Institute of Public Finance and Policy, New Delhi