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Symposium 2009

Solution for Fighting Against Poverty in the Crisis Aftermath

The Challenge

Poverty reduction has become the central objective of development policy, as reflected in the United Nations’ Millennium Development Goals (MDGs). While economic growth is seen as an important ing ...

Poverty reduction has become the central objective of development policy, as reflected in the United Nations’ Millennium Development Goals (MDGs). While economic growth is seen as an important ingredient in achieving sustainable poverty reduction, the emerging consensus is that growth has to be pro-poor to reach such ambitious targets as the MDGs.

Reform food policy by replacing the public distribution system with a system of food stamps for the poor, combined with private sector activity to purchase, store, move, and distribute affordable food.

In various developing and emerging economies, food subsidies are restricted to the poor and food distribution to the poor is often in public hands. For example, in India’s targeted public distribution system (TPDS), introduced in 1997, subsidies are restricted to households below the poverty line. Restricting the public distribution system to serving the poor affects the economic viability of retail outlets. Thus, the government becomes deeply involved in the physical handling of foodstuffs (such as grain).

An alternative to this arrangement is a system of food stamps. In this scheme, the purchase, storage, movement, and distribution of grain is performed by the private sector. A food stamp is a cash voucher which can be exchanged by the recipient only for food. It is usual to restrict the list of foods by excluding alcoholic beverages, snacks, and other processed food.

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