Real targeting: the case of food distribution in India

This paper discusses the objectives and practice of targeting of food subsidies, widely promoted and sometimes imposed by the World Bank in its attempt to reduce government expenditures in developing countries. The case studied is the Public Distribution System (PDS) in India, a large-scale rationing programme of subsidised foodgrains. For a long time this programme distributed foodgrains more or less to the whole population, but forced by an ever increasing subsidy burden as well as World Bank pressure the Government of India decided in 1997 to introduce targeting. The paper investigates the impact of this decision in two different contexts: in Bihar, a North Indian State, where the decision meant an increase of foodgrains to be distributed, and in Karnataka, a South Indian State, where the decision meant a sudden reduction of subsidised food. The focus of this analysis is especially on the administration and institutions involved in food distribution. The paper concludes that targeting may seem a very attractive idea, but that, as far as the PDS is concerned, it is unlikely to solve the problem it is meant to solve and that it may have several disadvantages, once implemented. It is therefore not advisable to regard targeting as a standard recipe to be implemented in all those countries which practise universal food subsidies and which have to correct their budgetary deficits.