Monday, August 9, 2010

How should India provide for its poor?

Front page NYT story today on the debate going on in India about how to best distribute food aid to the poor.  Currently families are rationed so much food and oil each month, but rampant corruption and distribution issues prevent many families from receiving their ration.  The article claims that "70 percent of a roughly $12 billion budget is wasted, stolen or absorbed by bureaucratic and transportation costs."  As a result malnutrition remains a serious problem. 

One alternative being considered is replacing the rations with either food coupons (that could be used to buy food directly from the private sector) or cash.  Basic economics would support this approach as it would allow consumers to choose the items they want and would have lower operating costs.  However, one would expect opposition from the vested interests that benefit from the current system. 

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