Delivering Food Subsidy - The Oxford Topic of Food, Politics, and Society - page 300

priorities. Those who rank other priorities ahead of food subsidy find it convenient to
point at the waste and corruption of a delivery system and argue for limiting the cover-
age much below what is needed. There is thus pressure on those advocating food subsi-
dies to come up with an effective delivery system—a system that would cover most of
the needy at an affordable cost to the public.
In a statist model, the government puts in mechanisms to procure, store, and distrib-
ute food to defined target populations at prices below market cost. In some sense, this is
a natural intervention. After all, in the absence of an intervention the market in free play
leads to outcomes that are deemed undesirable. The response is to displace (and in some
cases suppress) food markets by direct state interventions. However, this is not the only
possible response. The alternative is to use markets to deliver subsidies. In this market
model, subsidies are monetary or cash transfers, compared with in-kind transfers of the
statist model.
Inevitably, a search for a more efficient system leads to a debate over whether a system
that uses market for the delivery of the subsidy should be preferred over a system where
all the activities from procurement to distribution are handled by the government. The
purpose of this chapter is to examine various issues that invariably come up in a discus-
sion over how to deliver food subsidy. While our focus is on the cash versus in-kind
transfers debate, we also comment on the implications for the targeting debate.
Neither of these debates is unique to developing countries. The size of welfare pro-
grams and whether the targeting criteria expand or contract their reach is a live issue
in rich countries. However, as argued in this chapter, the administration of targeting is
a much bigger issue and therefore an important component of the debate in develop-
ing countries. Similarly, rich countries also debate the choice between cash and in-kind
transfers. In fact, despite the ideological dominance of the market as an economic insti-
tution in these countries, in-kind transfers are much more important than cash trans-
fers—thanks to the subsidies on health, education, and housing (Currie and Gahvari
2008). However, rich-country debates do not stress the corruption and poor governance
that are commonly associated with statist models in poor countries.
As always, context matters, and this chapter is firmly anchored to the issues relevant
in poor-country debates. The debate often has an ideological subtext, and no analysis of
the political economy of food security policy would be satisfactory without taking stock
of the ideological divide among those with a voice in policymaking. Economists typi-
cally attach value only to economic outcomes. The state and the market are economic
institutions, and, a priori, neither is privileged. Other social scientists and civil society
participants may, however, mark either of these institutions as special for their effect on
democratic politics and community institutions.
Though many of the arguments discussed herein are not country specific, the focus is
on India for several reasons—besides the fact that we know India the best. First, India
has more than a quarter of the world's poor (i.e., those who live on less than $2 a day).
This means that it is home to more of the world's poor and to more malnourished people
than any other country. One-third of the population and over 40% of the children under
the age of three are underweight. More than half the women are anemic. In short, India