Abstract:
India’s Public Distribution System (PDS) is one of the largest food-based social safety net programs in the developing world. A significant component of the government of India’s social policy, PDS addresses food insecurity faced by the poor and vulnerable by entitling eligible households to purchase their monthly quota of selected commodities at subsidised prices. Although PDS has been functioning for over 50 years, its efforts to provide access to sufficient food have remained inadequate and its efficacy in reducing poverty has been questioned. This study examined the effectiveness of PDS as a social safety net in reducing rural poverty through government transfers using panel household level data generated from the Village Level Studies (VLS) conducted by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT). The Foster-Greer-Thorbecke (FGT) class of decomposable poverty measures was used to estimate the impact of PDS on the incidence and depth of poverty in more than 340 rural households across seven villages in the states of Andhra Pradesh and Karnataka from 2009 to 2011. The results of the empirical analysis suggest that PDS has a significant impact on the reduction of poverty in the selected study sites. The poverty-reducing impact of PDS is more pronounced on percentage changes in poverty gap indices than headcount poverty, which implies that the lower stratum of rural poor are more critically dependent on PDS support than others. This study contributes to a growing body of literature on the role of PDS as a food-based intervention in ensuring food security and alleviating poverty, particularly in the rural areas of the semi-arid tropics of India. It adds to the ongoing policy dialogue on cash versus in-kind transfers and puts forward avenues for future research. Key words: India, public distribution system, social safety nets, food security, poverty