Food Subsidies and Administrative Identifi cation

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Since most targeting programs currently in existence directly or indirectly

rely on administrative classifi cation of households into those above and

below the poverty lines, it is useful to briefl y explain how this identifi cation

is undertaken. The exercise is intimately related to government efforts to

provide food security to the population through the Public Distribution

System (PDS). The PDS is a major component of aggregate subsidies spent

by the central government.

The PDS, in its earlier form, dates back almost fi fty years and was a

general entitlement scheme with universal coverage until 1992. It provided

a rationed quantity of basic food (rice, wheat, sugar, edible oils) and some

essential non-food items (kerosene oil and coal) at prices substantially

below market prices. The central government was responsible for procuring,

storing and transporting the PDS commodities up to central warehouses

in each state or union territory, while the state government was responsible

for distribution within the state.