India's Food Security: PDS Expansion and Price Management
In India, where food expenses account for over 40% of average household spending, food prices and affordability significantly impact living standards and overall well-being. The Covid-19 pandemic highlighted the effectiveness of the Indian system, with the government swiftly expanding Public Distribution System (PDS) distributions during lockdowns.
The Indian government uses various instruments to manage food prices and support farmers. The Open Market Sale Scheme (OMSS) is employed to release wheat when prices surge or purchase additional stocks when prices dip below the guaranteed minimum price. In 2019-2020, the state procured around 30% of national wheat production and 40% of rice production, totaling over 60 million tons of grain annually.
Established in 1964, the Food Corporation of India (FCI) plays a pivotal role. It purchases grain at a predetermined minimum support price (MSP) to ensure farmers a fair income, builds reserves, and distributes grain through the PDS. Alongside the state procurement system, PDS is the core instrument India uses to ensure food security and maintain remunerative prices for farmers. However, the reach of this system is limited for other staple foods like pulses and oilseeds. In 2022, the Indian Cabinet Committee on Economic Affairs raised the procurement ceiling for pulses to 40% of the marketable surplus to stabilize prices, increase procurement volumes, and strengthen food security.
The PDS, the world's largest state-run food supply program, is a crucial tool for regulating the grain market, stabilizing prices, and supporting farmers while also contributing to food security. During the Covid-19 pandemic, it prevented a hunger crisis by providing free grain rations to around 800 million people. Despite its success, expanding its reach to other staple foods remains a challenge for the Indian government.
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