India's Public Distribution System: Utilisation and Impact

Abstract

Abstract This article studies the effectiveness of India's Public Distribution System (PDS) as a food security intervention, using field survey data collected by the author in Rajasthan. Utilisation is low, and many households purchase wheat from the market at higher prices before exhausting PDS quotas. This ‘puzzle of under-purchase’ is analysed by extending the dual-pricing model to account for supply-side (for example, diversion) and demand-side (for example, transaction costs) constraints. Primary and secondary data as well as field observations suggest that under-purchase is mainly due to supply constraints. I also find that the PDS affects the composition (away from more nutritious ‘coarse cereals’), rather than level, of cereal consumption.